Jobs
Thousands & Thousands of Financial Jobs At Risk (AIG, WM, LEH, MER, C)
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There are hundreds of thousands of jobs at stake if the current trends continue in the financial services sector. When you tally up the employment just at five troubled firms noted below, there are roughly 600,000 jobs. Add in all the smaller institutions not doing well and you have a major risk. Will all at-risk financial institutions fail? No, we seriously doubt that. But some may. Does that also mean all of these jobs are suddenly on the street? Doubtfully. We do not want to implant the thought of bread lines forming in front of the NYSE and it is obvious that many of these jobs would simply be added over at stronger competitors.
These numbers are also about one quarter, old so the ranks may already be thinner than the numbers below:
- AIG (NYSE: AIG) had roughly 116,000 employees
- WaMu (NYSE: WM) had 43,000 employees
- Lehman Brothers (NYSE: LEH) had 26,000 employees
- Merrill Lynch (NYSE: MER) had 64,000 employees
- Citigroup (NYSE: C) had 374,000 employees
There is another sad thing here, even if these jobs do get transferredover to stronger competitors. Worker pay can be destroyed. When thereis a flood of people suddenly available for the same position it cancreate a theoretical Dutch Auction where the hiring firms can lower andlower the entry salary until people quit saying they’ll take it. Thathasn’t happened as much as many have feared, thankfully.
Financial firm jobs also tend to pay more than elsewhere. Out-of-work junior stock brokers, their assistants, back office teams,tellers, accountants, and secretaries tend to not make the best ditchdiggers and highway workers.
The good news is that Lehman is in talks to be bought, or at leastpartially and we could see an announcement out of then any day. Buteither way, there are fewer chairs than there are bodies.
Jon C. Ogg
September 12, 2008
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