(FORTUNE Magazine) – Whenever a big company announces a work force reduction, you can count on seeing it on the evening news and reading about it in the morning papers the next day. Layoff stories have become a sobering staple of business journalism over the past decade. But curiously, there's little follow-up: What happens, exactly, to those hundreds of thousands of ex-employees? Do they head to the post office and start mailing rasumas, hoping to land a job just like their old one? Or do they swallow hard and apply for jobs peddling denim at the local mall? Do they ever make as much money as they used to? Or are they consigned to forever chase behind their former salaries?

One reason there's little information about the laid off is that the government doesn't keep detailed statistics on them. In the widely followed monthly employment reports there's a breakdown of "permanent job losers," but no separate accounting of where these people go after they are cut loose. The U.S. job market is so vast that even the biggest corporate downsizings simply disappear into the nation's statistics. Announced layoffs so far this year, for example, total over 300,000, according to outplacement experts Challenger Gray & Christmas; at the same time, the economy has created one million net new jobs.

ONE WAY to gain insight into what goes on after the outplacement counselors have done their worst is to take a look at the worker diaspora from the point of view of a single industry. Take the banking business. Few industries have experienced as intense a spasm of consolidation and corporate restructuring as has banking in the past decade. New mergers--and job cuts--are announced practically every week, and the industry is under attack from all sides by new competitors like mutual fund companies and brokerage firms. And when was the last time you actually talked to a bank teller rather than punched the keypad at an ATM? Add it all up and you get this: Total industry employment (including commercial banks, thrifts, and other depository institutions) has declined from 2.3 million workers in 1990 to 2.1 million in August 1995--a drop of nearly 9%. And the business is still in mid-maelstrom: Some industry experts expect head count in financial services to halve over the next decade.

Surprisingly, a big share of the cuts in low-level bank jobs has come through attrition rather than layoffs, says Chip Hunter, a banking expert and a management professor at the Wharton School of Business. How can that be, given the sheer size of layoffs in recent mergers like the Chemical-Chase Manhattan deal, which will zap 12,000 jobs overall? Hunter points out that turnover is high to begin with in a lower-level job category like tellers, so banks can often hit their head count targets with a simple hiring freeze. At Banc One, the "superregional" based in Columbus, Ohio, for example, the turnover rate for tellers can reach 30% a year at some branches, says chief communication officer John Russell.

It's at the higher levels that staffing reductions bite, says Hunter. Among senior loan officers and branch managers, the rate of turnover is lower, meaning significant staff reductions are less likely to rely on attrition and more likely to mean layoffs. IT'S TOO EARLY to tell where the streams of people draining out of banking will end up, since the flow hasn't stopped yet. But early estimates indicate that roughly half the outgoing bank workers still find new jobs in the banking industry. In one survey of downsized bank executives, conducted by Manchester Partners International, an outplacement firm, 60% found jobs in other banks or related financial services companies.

But as the whole industry contracts, it will become less and less likely that someone thrown out of one bank will find a new job at another. Says Ken Rich, a financial services specialist at Paul Ray Berndtson, an executive search firm: "It's difficult if not impossible to find comparable opportunities in commercial banking unless people are willing to consider relocating or accepting positions in a different banking specialty."

The remaining 40% in the Manchester survey who left banking gravitated toward fields like consulting, insurance, and information services. Consulting seems to be the favorite. Says Bud Ward, national director of financial services at Ernst & Young: "Our financial services consulting business is very strong because banks have downsized so much that they don't have the human resources to do the things they need to compete."

Fortunately for many former bankers, their skills and experience are in demand in other lines of work. Says Joelyn Cecere, a senior vice president at Drake Beam Morin: "Coming from the banking industry is not a stumbling block in the marketplace. People don't say, 'These guys are out of date.' " After all, bankers do know something about a practical subject--money and finance--and their particular skills are often transferable to other industries. James Challenger, president of Challenger Gray & Christmas, tells his banking clients to try looking farther afield: "What you're selling in the marketplace is your function, not your industry." Says Frank Woosley, financial services director at Deloitte Touche Consulting Group: "Commercial lenders know a lot about the industries they've been lending to and may emerge as advisers to companies in those industries."

Whatever industry banking refugees wind up in, most stay at roughly the same place on the organization chart, according to Manchester's survey. But getting a new job with your old job title does not necessarily mean you will earn the same salary you used to, much less get a raise--especially if you switch industries. If anything, you'll probably earn less. Says Bruce Fallick, an economist at the Federal Reserve Board: "It's one thing if you lose a bank job when business is booming--just get another job. It's another if the industry is consolidating and you have to move out of banking." In other words, if you leave banking, you leave behind your banking salary too. This makes sense, Fallick says, because anytime you move to a completely new line of work, you abandon the skills and network of contacts specific to your old industry. According to research by the Bureau of Labor Statistics, financial services workers (including workers in insurance and real estate) who were laid off from positions they had held for three or more years took an average pay cut of 8% once they found new jobs.

Financial services workers still come out ahead: That 8% earnings hit compares favorably with average salary declines experienced by job shifters in construction (16%) and manufacturing (11%).

Typically, in corporate downsizings the people likeliest to be let go are the ones who either can't or won't adapt to change. In banking, for instance, new competition from mutual fund companies is putting a premium on customer service. "There was almost a public-utility mentality in banking," says Wharton's Hunter. "The more entrenched someone is in the old ways of banking, the harder it's going to be for them."

Hidebound bankers probably don't find work easy at Banc One. Like every other bank in the country, this one too is trying to emphasize sales and customer service and remove the cultural preeminence of what Banc One's Russell calls the "manufacturing side" (i.e., nuts-and-bolts check clearing, loan processing, and other back-office operations). To effect this transformation, the bank plans to hold head count at about 50,000 over the next few years while cutting thousands of old jobs and creating thousands of new ones. "We have to constantly retrain our people to sell to and deal with customers," says Russell. "Some don't want to do that."

WHEN WILL BANK employment finally stabilize? Judging from the chart on the first page of this story, it looks as if the downsizing may have bottomed out, but don't be fooled by appearances: It's hard to find anyone who thinks job opportunities in banking won't get worse. Chip Hunter points out that bank profits are relatively strong, temporarily masking the underlying trend toward smaller payrolls. "If the industry hits a couple of years with lower earnings, it won't be pretty," he says. John Russell thinks the number of banks and bank jobs in the U.S. will fall by 50% over the next ten years. "Everybody in this industry ought to be planning for career changes," he says.

That, of course, is a message career counselors have been preaching to all who'll listen in recent years. It will probably continue to be good advice as the not-so-nice Nineties roll on toward the millennium, no matter what industry you're in.

Reporter Associate Tricia Welsh