Think Your Job is in Jeopardy? Here's How to Prepare Yourself

BOSTON – Middlebury, Vt., is one of those idyllic New England communities where the outside world seems a million miles away and time seems to stand still. But the rest of the world invaded the community in mid-January, when Specialty Filaments went bankrupt and agreed to a court-ordered liquidation, costing the community 175 jobs.

The town, which has about 8,500 residents, was still dealing with the shock of losing one of its biggest employers last week when Standard Register Co. announced that it will close its Middlebury plant in March, putting another 112 people out of work. It's the kind of news that no small community wants to get, but it's also a sign of the times.

"This is something that is happening across the country, because we now live in a global community and there is so much competition out there," says Linda Stearns, who retires this week after 25 years as executive director of the Addison County Chamber of Commerce, and whose time in Middlebury has never seen such rapid-fire pullouts from big companies. "There's no question in my mind that if it can happen here in Middlebury, it can happen anywhere. ... People may not want to admit it, but that's the world we live in now."

Small towns have not been immune to layoffs and big-picture economic problems over the years, but most workers don't want to acknowledge that they may someday face the same situation.

Yet a study called "Middle Class in Turmoil," released last year by the Center for American Progress, noted that just 18.3 percent of middle-class families (defined as those with annual household incomes ranging from $18,500 to $88,030) had accumulated wealth equal to three months' worth of income. Less than one-third of the middle-class families could sustain themselves through a period of joblessness, according to the study, and that was based on 2004 data; the researchers expected the trend to get worse.

And so anyone with a job that could be outsourced, downsized or simply vaporized needs to look at what happened in Middlebury and say "What would I do if my community — and my job — were next?" No one likes that kind of dire thinking, but financial experts say it's essential.

One door closes, another opens

Forced change can be an opportunity, but only to those who are prepared and calm rather than panicking when bad news hits home. The protocol that financial experts suggest workers follow is fairly simple:

Start by looking at your own skills, where else you can work in the community, what other jobs interest you, what kind of benefits you are eligible for and how you might extend them (in some states you can get extra weeks of unemployment compensation, for example, by taking training courses designed to help you find a new job).

At the same time you are looking for the next opportunity, advisers suggest tightening up at home. While financial planners frequently suggest that families have three months' of income set aside as an emergency fund, most households don't go that far, either because they aren't saving or because they have a lot of the money working in the market or paying off debt rather than earning almost nothing in a savings account waiting for a crisis.

When you are working for a big company, you really need to watch your 401(k) involvement in company stock ... if you have the option to buy more, you want to moderate.

"If you still have a job, even if it's for a few weeks, start negotiating with your credit-card issuers to see if you can get a lower rate, telling them you'll cancel their card and move to something better if they can't help," says Peg Eddy of Creative Capital Management in San Diego. "It may sound odd, but temporarily stopping your participation in the company's retirement plan may help you build up some emergency funds. ... Calculate your net worth and know what you own and what you owe, and total up your normal expenses for keeping a roof over your head, so that you know the nut you have to crack."

Family matters

If your plan on how to deal with job displacement includes moving and selling a house, don't overestimate the value of your home; in a small community devastated by big layoffs, the housing market could be in for a big new surge in supply.

If the job loss is big news around town, be sure to bring your older children into the discussions, before they stop skipping haircuts, turning down their allowance and generally freaking out about what the family will go through. Most experts suggest that family discussions should not just include talks of how to adjust and cut back but also how to best bring in new streams of income.

"There's no crying in your beer, even though what is happening to your family is terrible, says Bruce Spooner, a financial adviser in New Bedford, Mass. "This affects your entire family, so you should involve them all in deciding how to react to it."

In some cases, workers do get lucky and find that they can maintain their lives with little disruption, either because they find other jobs in the area or their employer is sold. In Middlebury, after losing their jobs and starting the search/training process on something new, workers at Specialty Filament learned this week that the plant is being sold and will reopen in short order.

"We got lucky, and we were able to replace those jobs by giving people their jobs back," says Jamie Stewart, executive director of the Addison County Economic Development Corp. "Had the factory not been sold, though, there's no denying that it would have been hard to replace those jobs. ... These kinds of closures do happen everywhere, and you will always get the best outcome when you are prepared and can act quickly when you get bad news."