COLUMN ONE : Stepping Down the Job Ladder : Layoffs have forced many professionals to accept lesser work, taking a psychic and financial toll. At some firms, it’s a chance to hire blue-chip executives on the cheap.

SAN FRANCISCO —  When the downturn in office leasing forced Grubb & Ellis to pare its staff in 1990, Jim Breen was making “somewhat under” six figures doing public relations for the commercial real estate firm in Orange County.

After more than six jobless months, Breen last July took the only position he could find, as news editor of the tiny San Clemente Sun-Post newspaper, where he often works 12-hour days starting as early as 4 a.m.--for 40% of his former salary.

Nevertheless, with all the grim economic news about layoffs and corporate downsizing, Breen, 52, considers himself lucky. “It’s the old story,” he said. “Half a loaf is better than nothing.”

On top of the millions of unemployed who are seeking jobs and the hundreds of thousands of frustrated individuals who have given up looking, there is an unknown but sizable number of people such as Breen whom the recession has shoved down a few rungs on the career ladder. For many of them, the recession has meant bruised egos along with drastically reduced financial means.

In extreme cases, there are one-time bankers pumping gas, real estate development executives waiting tables and engineers applying for baby-sitting jobs. Among laid-off executives looking for work in the Bay Area through Office Specialists, a company that provides temporary office help, are an investment banker, a senior human resources executive and a television producer.

Economists and workplace consultants note that the situation is expected to worsen as giant companies such as IBM and General Motors follow through on planned staff cuts, particularly in middle management.

“This is getting scary, what I’m seeing out there now,” said Dick Kaumeyer, executive vice president of Fuchs, Cuthrell & Co., a Los Angeles firm that assists out-of-work professionals looking for jobs.

The downward mobility is symptomatic of fundamental shifts that are likely to have widespread repercussions even after a recovery begins, economists say. “White-collar workers are facing the kinds of wage reductions that blue-collar and non-college-educated workers experienced in the 1980s,” said Lawrence Mishel, research director at the Economic Policy Institute in Washington. “This will have a profound effect on consumer confidence and . . . on voting behavior.”

Rudy Schubert of Palo Alto can attest to the psychological trauma involved with losing a job and having to accept a lower-paying one, especially as he was looking toward retirement.

At 56, Schubert is now a sales manager for Omniyig Inc., a small Santa Clara manufacturer of microwave components for the military. Previously, he was one of four regional marketing managers for a much larger company in the same field. The new job pays 30% less, and Schubert acknowledges that the decrease was tough to take, despite the fact that his two daughters are grown and that his car and house are paid off.

Schubert is making far less than his predecessor, who was laid off because of slow business. With the military electronics industry tailing off and with the recession making this an employer’s market, Schubert felt he had little room for negotiating a better deal--especially after four solid months of looking without another offer.

“The company president told me he had plenty of other applicants,” Schubert said. “It was a psychological thing. It was hurtful to think that what had been worth more than $60,000, this company didn’t think was worth $45,000.”

Schubert’s wife, Gail, said her husband got progressively more discouraged as he searched for a job. “It was distressing to watch,” she said.

The pay cut has meant that the two seldom go out to dinner or to a movie, and they have had to forgo buying books, a passion for both, in favor of checking them out from the public library. They’ve also slashed donations to zoos, art museums, public television and endangered-species causes.

Schubert feels far luckier than a friend who had to uproot his family and move to the East Coast. But he feels great concern for his future.

Many defense companies aren’t “going to last” if the industry is hit much harder, he said, adding that the whole experience has left him feeling that the country is heading into a depression. “The future doesn’t seem as rosy as it used to.”

During the four months he was unemployed, Phil Hayes, a single, 30-year-old lawyer who was let go a year ago by a prestigious Los Angeles firm, figures he might have compounded his employment problems by setting his sights on another troubled field.

After being laid off from the firm’s real estate practice in Newport Beach, he moved to the Bay Area and attended Stanford University’s broadcasting school.

Unfortunately, Hayes acknowledged ruefully, “broadcasting, like law . . . is another bleak horizon.”

Hayes also recently passed the foreign service test and hopes to work for the State Department someday. In the meantime, he gets by on the profit from the sale of his Southern California condominium and a number of odd jobs--bartending, delivering a humor magazine, playing in a rock band and free-lancing for a company that makes educational videos for lawyers.

Such patchwork employment profiles are becoming common, according to William K. Ellermeyer, Irvine-based senior vice president with Lee Hecht Harrison Inc., an outplacement firm that counsels laid-off executives looking for jobs.

In a typical scenario, he said, a former bank executive will get a job teaching at Pepperdine or USC, work at a small company two days a week, consult on the side and serve on the board of a nonprofit foundation.

A terrific resume can sometimes work against a job seeker, employment experts say. Employers will often balk at hiring an overqualified candidate, but in this market many have found it tough to resist the chance to hire blue-chip employees at bargain rates.

Headhunters and outplacement executives are divided in their views of the wisdom of taking a lesser job out of desperation.

“Don’t kid yourself,” said John Westwater, managing director of the Los Angeles office of Spencer Stuart Executive Search Consultants. “If you take that step backward, don’t expect to explain it later (to a potential employer) by saying the wolf was at the door.”

Westwater would advise executives to look closely at a lower-paying job, to make sure that it would hold their interest. Otherwise, he said, the time would be more wisely spent looking for a better position.

“It’s possible to take 10% to 15% less money and to do it thoughtfully and with dignity if the situation you’re going into is challenging and you can continue to . . . build your skills,” he said.

Others actually see some benefits in the presence of so many overqualified people in the workplace. “They bring to the workplace a vibrancy,” said Peta G. Penson, managing partner of the San Francisco office of EnterChange Inc., an outplacement and consulting firm. “You hope they’ll recast and expand the job.”

She acknowledged, however, that it can work the other way, with permanent damage to workers’ self-esteem.

“The downside would be if you get stuck . . . if you let the job define you,” Penson added. “The dark side is, what happens when people’s self-expectations recalibrate permanently?”

Adobe Systems, a Mountain View, Calif., developer and marketer of software, has occasionally hired an overqualified candidate because “we’re always looking for the best qualified person,” said Anne Brown, employment manager. “In several cases, we have hired someone who on the surface might seem to be bored with (a particular) job, but usually there’s enough of a challenge (and enough) mobility.”

Jim Wiggett, senior vice president of human resources at Charles Schwab Corp., said it’s “very dangerous” for a company that is not growing and offers few advancement opportunities to hire someone who is clearly too good for the job.

“We would be more willing to take that kind of risk--and we have,” Wiggett said of Schwab, a fast-growing discount securities brokerage firm based in San Francisco.

In one case, Schwab hired a laid-off bank vice president of human resources who trained to become a broker and worked for significantly less pay for a time. He was eventually promoted to direct human resources at some new facilities.

Similarly, a former president of a financial services company was hired as a consultant at a 40% drop in pay but, after 18 months, was named a senior executive at his previous salary level.

“The cold reality is that the market’s atrocious (for job seekers),” Wiggett said. “We get 2,000 unsolicited resumes a month, double the historical level.”

Being laid off need not be all bad, some employees have found. Many times, being away from a stressful, high-powered job makes them realize how much they disliked it. And getting into a new field can energize burned-out employees or help them learn new skills.

In 1990, Thomas Verna lost his job as advertising director at Chaparral Communications, a consumer electronics manufacturing company in San Jose. He is now an account executive at a Santa Clara advertising agency, working strictly on commission and earning about 20% less.

He puts in shorter hours, and that “has been good for my family life,” Verna said, noting, for example, that he has more time to play basketball with his son, Jonathan. “I’ve had more time to enjoy my kids. I realize that’s probably much more important than working 12 to 14 hours a day.”

The experience has also given him an idea for a book about a child’s perspective on a parent’s career transition.

Although Verna said he would prefer doing creative work, his new job--which entails taking care of clients and developing business--has helped him hone new skills.

“I think I have grown in a lot of areas,” said Verna, who tended to stick close to his drafting table at Chaparral. “This has forced me to get out and deal with people in the real world. (It has) improved my ability to deal with difficult personalities and to meet strangers.”

On the other hand, he’s discouraged about not getting more creative experience and fears he is losing ground by not keeping up with computer technology. “It’s quite a change and not exactly the direction I had hoped to go,” said Verna, who recently turned 40. “But it’s quite a bit better than $190 a week for unemployment.”

Verna’s wife, Donna, who describes herself as an “incurable optimist,” said she has to keep reminding him when he gets discouraged that he is getting valuable agency experience. For her part, she is pleased to have him around more and doesn’t miss his frequent traveling to trade shows.

Initially, Donna said, Verna blamed himself for being laid off and “wondered what he could have done differently” to avoid it. His employer provided no help in his job search, and the family wiped out its savings to pay for the services of an outplacement firm.

The tighter money has forced the Vernas to postpone some maintenance at their Los Altos house and to keep Donna working full-time as an administrative assistant and office manager rather than stay home with the kids.

Verna continues to devote time to job hunting, and his employer is aware of that. Sometimes, Verna thinks he’d be better off to quit and search full-time for a better spot. “But not in today’s economy,” he quickly added.

Sean Keepers, 27, who was laid off from his $80,000-a-year associate’s position at the big Manhattan law firm of Proskauer Rose Goetz & Mendelsohn, is now happily earning less than $30,000 doing marketing for the Brooklyn Academy of Music. Pursuing work at a nonprofit organization was an idea suggested by Celia Paul, a New York outplacement executive hired by Keepers’ law firm. In between, he also thought about apprenticing himself to a woodworker and took an illustration course.

Long before he was dismissed, Keepers realized that he was not enjoying his legal work and that he felt uncomfortable with expensive suits and other trappings of “success.”

“It’s nice easing up on the ostentatious signs of wealth,” he said. “I feel much better about my lifestyle.”

Single and with no car, Keepers said the drastic change “really hasn’t affected my life much. I wasn’t taking any trips really, and I’ve been lucky on apartments. I wasn’t somebody who grew up with parents making lawyer salaries.”

Frankly, he added, “the day I got laid off was one of the happiest days of my life.” As for the future, he said: “I don’t see this as the end stop. At the same time, I don’t place a whole lot of importance on money.”

And then there are those laid-off employees who not only end up happier but also manage to improve their lots in life.

Heading into financial crisis last March, the Los Angeles-based owner of The Broadway, Carter Hawley Hale Stores, fired a number of employees, including Karen Stout, manager of human resources planning.

She now makes substantially more in salary and bonus at Nestle U.S.A. in Glendale as manager of college relations and recruitment. Although the job responsibilities are narrower, the company is far larger and the office atmosphere is more pleasant, she said.

“It was very uncomfortable and depressing to be forced out during a recession,” Stout said. “You’ve got to be flexible.”

Even Breen, the news editor in San Clemente, can find a silver lining or two.

“On a small paper you do a lot of different things,” he said. “I feel really useful.”

Of his job-hunting experience, Breen said: “It toughens you up in a way. It makes you not take anything for granted. For now I just have to concentrate on what I have.”