Severance Gets Skimpier

May 21, 2002 ( - The economy may be struggling to find its footing, but displaced managers couldn't see many turnaround signs with a sharp decline in severance payments and longer search times for a new job, according to a new survey.

The quarterly Job Market Index by Challenger, Gray & Christmas, an outplacement firm, found that discharged managers and executives averaged two months severance in the January to March 2002 period.

That was down a third from the same period a year ago and down two-thirds from 1999 – a boom period.

That comes as the average length of job searches for the manager or executive has increased to 3.4 months, according to Challenger. 

The implication of the shorter severance coverage is that the unemployed workers will likely slash their spending in order to make the funds last until they find a new job, Challenger researchers said.

Skimpier severance packages could also drive people to more aggressive and intense job search – even to the point of taking a position paying less than the old one or outside the applicant’s chosen field, Challenger said.

The Challenger Job Market Index is based on a quarterly survey of 3,000 discharged US managers and executives.