Lehman, Merril to pound already bloody job market

Lehman filed for bankruptcy protection after frantic attempts to find a rescuer failed on Sunday, while Merrill Lynch agreed to be taken over by Bank of America.

Headhunters and consultants said the U.S. financial services sector, already suffering from a glut of unemployed talent after shedding more than 100,000 jobs this year, must now brace for up to 50,000 more.

"The resume flow will start on Monday like there's no tomorrow," said Michael Karp, chief executive at executive search and consulting firm Options Group in New York.

"This is seriously going to impact compensation this year, across the Street and all over the world as well," he said.

"The golden years of compensation in the financial services industry are over, and it doesn't help with the Bear Stearns people still looking for work."

Bank of America, the second-largest U.S. bank, agreed to buy Merrill in an all-stock deal worth $50 billion, as the world's largest retail brokerage sought refuge from fears it could be the next victim.

The takeover would make Bank of America the top U.S. bank, and was likely to put 40 percent, or about 24,000 of Merrill's 60,000 non-broker employees, out of work, said Gustavo Dolfino, president at New York-based recruiting firm WhiteRock.

'BEGGARS, NOT CHOOSERS'
That, combined with Lehman's approximately 26,000 workers, will send shockwaves through the job market.

The two firms' disappearance will also squeeze New York City, which relies heavily on the financial services industry.

"Some of these professionals are not going to get what they usually get because they're beggars, not choosers, and they're competing with others," Dolfino said, adding there will be "a lot less money for the state and the federal government."

"We're going to ride it out, but what it truly means for the tax base is that the government will have no option than to raise taxes," he said.

Although Wall Street is not New York's biggest employer, it is the city's economic anchor. Each financial-sector worker is believed to create as many as four other New York jobs, due to their high salaries.

The year-long credit crunch has led to deficits in both the city and state budgets.

Democratic City Comptroller William Thompson said last week he was "very concerned" about the resolution of the Lehman saga, and warned it would impact New York's economy and tax revenues.

Lehman staff in Europe, where the bank employs around 6,000 people, also feared for their jobs.

Global stock markets fell sharply on Monday, sparking concerns other financial companies with exposure to subprime-related assets could be pushed to the brink.

The recruiters said the job losses would drive even more talent to the buy-side and abroad, despite the global economic slowdown, which was spawned by the breakdown in the U.S. subprime mortgage market last year.

Karp said "hedge funds, money managers and family offices" should benefit from the job losses at Lehman and Merrill.

Dolfino pointed to the Middle East and Russia as regions hungry for U.S. financial professionals: "The demand is on the buy-side and it's international and it's opportunistic," he said.