It is only browser plugins that suffer from the security flaw, since desktop apps generally aren't required to be perfectly sandboxed. That said, there is no doubt that the name of Java will take a reputation hit.
While developers should be able to differentiate, I don't think it is humanly possible to be completely objective, at least not for the vast majority of people. So while there is no great aversion to Java, neither is there a lot of hype. Although it used to be the second coming of Jesus Christ, that is certainly not the case any more, and while a lot of that decay may be ascribed to the age of the news, Oracle takeover and general neglect certainly have their share of the blame.
Still, more serious to the future of Java is the mobile phone market -- Java doesn't look like the cross-platform solution that will prevail.
As for the job market, although I think Java will take a dive, it is not like it will die any time soon -- if nothing else there is plenty legacy code to keep a Java programmer occupied. If it is what you want you can most likely keep doing Java for the rest of your life, but depending on future developments you could find yourself to be the equivalent of present day COBOL programmers in 40 years.