The Pain of Coping When a Job Is Snatched Away

THREE years ago, Susan Sullivan, then 34, and her husband, Peter, 44, were thriving. The couple, both marketing professionals, worked hard and enjoyed a combined income of about $250,000 a year.

Then, within two weeks of each other in the spring of 2001, the Sullivans lost their jobs, right about the time that she became pregnant. Unable to find work, they moved from Newton, Mass., a pricey Boston suburb, to Worcester, to cut their living expenses. With job prospects slim, they began entrepreneurial ventures: she, a marketing consulting firm, and he, a computer network security firm. Their daughter is now almost two. With combined yearly earnings of about $20,000, they have cut their spending to the bone and make ends meet with food stamps and credit cards.

"We had about $40,000 in savings, but we spent that a long time ago," Ms. Sullivan said. "Now we owe more money in credit card bills than I ever would have believed possible. We don't spend money on anything at all that isn't a complete necessity. Your whole way of thinking changes. The other day I was so excited: I got a credit card offer for a new card that will give us a long period with zero percent financing."

The Sullivans are scarcely alone. There were, on average, 8.4 million unemployed Americans in 2002. By October, according to the most current statistics from the Bureau of Labor Statistics, their ranks had grown to 8.8 million. One out of every four had been looking for a job for 27 weeks or longer, up from one out of five a year earlier.

And many who are working do so only part time. In October, according to the Bureau of Labor Statistics, 4.8 million people were involuntarily working part time - either because they could not find full-time jobs or because their employers had put them on part-time schedules. That is up 11.6 percent, from 4.3 million a year earlier.

In recent years, the effect of widespread joblessness on consumption patterns in the United States has been tough to recognize, largely because so many people, employed as well as unemployed, have relied heavily upon credit cards, mortgage refinancings and other loans to sustain spending that might otherwise have been unaffordable.

That spending has helped cushion the economy through some rocky times. "But the big question, moving forward, is whether we'll see enough recovery in the labor market so that income growth will be able to replace all these one-time events, like tax cuts and refinancings," Jared Bernstein, senior economist with the Economic Policy Institute in Washington, said.

With recent rosy news about the economy's third quarter, it might be hoped that increased hiring will enable households to recover from the financial difficulties of unemployment. But interviews with men and women in a variety of careers, family situations and cities across the country suggest that even as jobs are filled, the personal economic pain for those who have long been unemployed will be long lasting.

Consider Quay Anderson, a 30-year-old father of three young children, who lost his job as a crane operator in February. His job, which paid $16 an hour, had been the sole source of income for his family in Carlisle, Pa. Now, after going through retraining at the Regional Manufacturing Workforce Transition Center in Steelton, Pa., Mr. Anderson is on the verge of being hired as a commercial driver. But he said that it could take as long as five years of steady employment to get his family back in the financial shape they enjoyed before he lost his job.

"We've completely maxed out on credit cards and any other credit lines we had," he said. "I had a gun collection that I sold in order to raise money for groceries." The family does not spend money on anything that is not necessary. It is upsetting "when your kids want to go to Wendy's or McDonald's and you've got to say no," he said.

"We can't take them to see 'Brother Bear' in the movies," he said, "because we can't afford four movie tickets.''

A close look at household spending suggests the multiplicity of ways, large and small, that the rise in unemployment in the past year or so has affected consumption patterns and the economy.

"We have a 6-year-old son, and, although it's not the end of the world, it would have been nice to give him music lessons, but we can't," said Ellen Ball, 44, of Brookline, Mass. "We don't eat out. We don't travel. I used to make charitable contributions in the past. Now I ask, when people call, 'Can I give you my time instead?' "

Before Ms. Ball and her 42-year-old husband, Bruce Haimowitz, lost their jobs as software engineers in 2002, they earned a combined income well into the six figures. He was out of work for about a year before landing two jobs - one part time, one full time - that between them pay him about $45,000 a year. After looking for more than a year herself, Ms. Ball expects to start work shortly at a part-time $12-an-hour job. "We can't save,'' she said. "We don't entertain at all. We're in a holding pattern."

The path out of long-term unemployment is often a part-time job or full-time work at a lower pay scale, but it is not a promising path.

"The problem is the overarching forces that have resulted in major job losses and downward income mobility are permanent," said Stephen Roach, chief economist of Morgan Stanley. "If anything, they'll intensify, as high-wage jobs in both production and the services continue to move to countries like China and India where costs are lower. That's going to keep consumers under a lot of pressure."

Not surprisingly, families with nest eggs and other savings have been best able to cope with prolonged joblessness and declining household earnings. As soon as Mr. Haimowitz found work, he and Ms. Ball, lifelong savers, were able to refinance their mortgage, which helped lower their monthly expenses.

Andrea, 45, and Will Gill, 50, actually traded up to a $450,000 home in Smithtown, N.Y., even after Mr. Gill, a computer network consultant, had been out of work for two years. Mrs. Gill, an online manager for a travel agency, has had three years of pay cuts. Their household income is now about a third of what it used to be.

"We had built up equity in our old house, have always been savers, and we didn't have any credit card debt," Mr. Gill said. "Since buying the house, we can manage just by taking about $20,000 out of our savings each year. By most people's standards, we're not hurting."

But even the Gills have cut their spending. "When our bedroom set was falling apart, we fixed it rather than buying a new one," Mrs. Gill said. During this holiday season, they expect to cut their gift-buying budget by about two-thirds.

The question for many is whether the national economy will be able to shrug off the impact of the prolonged joblessness of families like these without skipping a beat. Their spending patterns and savings cushions, after all, have remained relatively strong. But the impact on the economy may be more pronounced when it comes to those households that experienced job losses when they had little or no savings, high levels of debt, or both. For those families, financial problems have escalated, and they may pose some collective risks to the economy.

One risk arises from households that have cashed in part or all of their retirement savings to meet day-to-day expenses. "Out here, where home prices are really high, there are a lot of couples with mortgages that only can be supported on two incomes," said Dan Rink, a career coach in Alameda, Calif. "When one spouse loses a job, it's a catastrophe. I see a lot of unemployed people who are drawing down their retirement funds just in order to make their mortgage payments."

A more immediate high-risk decision among the unemployed is whether to give up health insurance. "It's more important for us to stay current with our mortgage payments," said Robert Love, 60, of Houston, who lost his job as a manager of safety and quality control about two years ago. Neither he nor his wife, Ann, 56, who works as a receptionist at a beauty salon, has health insurance. "Quite honestly, you try not to think about it," he said. "Just hope everyone stays healthy."

The need for such survival strategies raises the prospect that large numbers of tapped-out baby boomers will reach retirement unprepared. Jonathan Greentree, 51, of Columbus, Ohio, lost his public relations job in 2001. He is now working in a part-time $8-an-hour retailing job that will last only through the holiday season.

Mr. Greentree has pared his budget to essentials but says he has been unable to make more than a year's worth of child-support payments for his 15-year-old son. He owes real estate taxes on his home, has depleted his savings, spent the proceeds raised from a mortgage refinancing, tapped out a line of credit and accumulated large credit card debts.

"To be real honest, college savings have fallen by the wayside," he said. "I have very little retirement savings. It's scary. If I ever do get a job, I've got to get credit counseling because I don't know how to solve these problems."

Some people do manage to re-enter the work force and regain financial stability, but still feel anxieties. Ian Boardman, 44, of Arlington, Mass., who has a doctorate in cognitive science and experience at some dot-com start-ups, has had two different bouts of unemployment since the spring of 2001. Recently, he was hired by a research laboratory, weeks before his unemployment insurance would have run out.

"My wife is a financial whiz who has renegotiated our mortgage twice to save money," he said. "We've been able to make do on unemployment, with a little help from our parents. We're not big on consumption anyway."

But Mr. Boardman emphasized that he and his family lost their sense of security. "We are middle class," he said. "We're good people. And what does the system say to us? 'Sink or swim.' "

The biggest question for many people is: What will happen if new job opportunities are indeed created during the recovery but do not provide enough pay and benefits to repair the financial damage caused by prolonged unemployment?

That is a question facing Richie Calladio-Nuzzo; his wife, Jenni; and their 13-year-old daughter, Michelle, of Newton, Conn. Mr. Calladio-Nuzzo, 34, an electrician, used to earn at least $30 an hour, with benefits, in union-covered jobs. But he spent nine months during 2002 unemployed and still could not find work in the winter and spring of 2003.

"It was really bad," he recalled. "All last winter, we kept our house heated at 58 degrees. Early on, we maxed out on our credit cards, and we couldn't keep up with the payments we owed. I don't go to the doctor at all. But when it comes to a choice between buying medicine for my wife, who has asthma, and eyeglasses for my daughter, who needs them to see, or paying the electric bill, well, we did what we could. Fortunately, the electric company can't cut you off during the winter."

In May, Mr. Calladio-Nuzzo received permission from his union to take a nonunion job, which pays $20 an hour, and offers no benefits.

"I'm glad to be working, but let's be real," he said. "The only impact this job has had is that I no longer have to call the phone company and electric company to make special payment arrangements. Our heater is broken upstairs, and I can't afford to bring in a plumber to fix it. We still have to screen our phone calls. A collection agency will call and say, 'Make a one-time payment of $800.' And I tell them, 'Are you kidding? If I could pay you $800, wouldn't I have just paid the $100 minimum that's due?' "

From Mr. Calladio-Nuzzo's perspective, it is difficult to see any light at the end of the tunnel. "You think you'd enjoy it to know that you're not going through this alone," he said. "But when I see the guys that I've worked with, it's awful. We look at each other and say, 'It's never going to end.' "

That is just what Pam Shira Fleetman, 55, a technical writer in Acton, Mass., fears. She has been out of work since July 2002, and recently cashed in her retirement account so she could pay enough of her overdue mortgage and property tax bills to avoid losing her house. She has "huge" credit card bills. Her car is nearly nine years old. A divorced parent, she worries that next year, when her son turns 13, she will not have any money to spend on a bar mitzvah.

"When I think about all this," Ms. Fleetman said, "there's just one question I'd like to ask all those titans of industry who are laying people off and outsourcing all those jobs overseas: 'Who do you think you're going to be able to sell your products and services to here in the U.S.?' "

The only thing that's going to save this region is an influx of diverse industries. I don't see it happening,

Well I sure as heck can't imagine what "diverse industries" you have in mind either. So you better start thinking in terms of trying to preserve what industry and tax base you already have.

Sheeeeeesh, I'd have that having been a beaten down "rust belt" for 25+ years would've taught you something. The Ohio Valley is NOT going to become another Silicon Valley. And the Mon Valley's attempt to become a telemarketing center didn't pan-out very well either. Yeah, you have that government-subsidized center of socialized medicine "creating" jobs in the Oakland section of the 'Burgh, but that's not gonna prop up the entire region. And while I may also be a big advocate of western Pa. culture and tourism, I don't think that and casino gambling is gonna be your salvation either.

Your other insults do not merit response.

Frankly, I have deliberately refrained from responding in true Pittsburgher fashion. But you certainly need to come up with something better than bashing and blaming your blue collar neighbors.

It may well be that your time is coming, someday, to understand what it's like.

I understand your comment and I agree with you. It is going to happen to me in the not so distant future, either by my employer's hands or my own. My only regret is not expanding my horizons but rather learning my company specific task better than any college educated individual could ever hope to achieve in school.....

I for one can not stand in judgment of anyone who loses their job for anything other than misconduct....

When I observe what is now happening with my company, a tier one supplier to the Big 3 and owned by a German Steel conglomerate, I have to question where the economic recovery is actually occuring......

But you certainly need to come up with something better than bashing and blaming your blue collar neighbors.

------------------------

What you need to understand about this place is that it has become inhabited by a group of people who believe they should be the only one's paid a decent salary while others should work for low wages so that they can otain cheap goods. They also believe that they should be able to sell the people they put out of work expensive automobiles and appliances, at high sales commissions, after they put those people out of good jobs.

Upon anatomical examination you will notice they have extremely widened navels which accept and play prepared tapes criticizing unions and the working class for everything while denying anything else. The soundtrack from these tapes is broadcast from their behinds and their mouths in stereo. The playing of these tapes has a debilitating effect upon their brains.

the source of this is not only the times but the doom and gloom crowd of the free republic. 922 BILLON in construction starts this month and everyone is crying because there are no jobs left in America. Who is getting the building work? Who will be doing maintenance on all the new homes?

Who will take care of the retired boomer's? Boomers who are changing careers and foreign workers who don't think service is such a bad job.

Factories have been adding people and shoppers spent 12 billion dollars the first week of the Christmas season. Life is coming to an end. / sarcasm off

Let me get this straight. The union couldn't provide him with a job for over a year and he actually had to ask permission from the union to get a non-union job? WOW!

It's a shame he got involved with a union in the first place. The homebuilders have been doing very well these past years. The industry is going gangbusters. Or, should I say "unionbusters"! I'm sure that those homebuilders use a lot of electricians to build their houses!

Maybe it's because they don't have to adhere to the same stringent environmental regulations that are imposed on our domestic industry.

. At my steel mill, we have a huge waste treatment plant which has to send samples to a local testing firm regularly. The EPA also has monitor stations along the river to detect any violations. They have a trailer which monitors air quality from any stack or vent they wish to monitor. The company makes us wear Kevlar gloves and arm guards, metatarsal shoes, hard hats and safety glasses. All added expenses the Chinese do not have to conform to or even have a choice to wear.

We are of like mind. For some, the sky is always falling, and if you say otherwise, you are either a dupe or one of those making it fall. I daresay most of us here have lost jobs at one point or another (unless you are a university professor or network news anchor.) I have. Most people I know have. Without exception, everyone bounced back. It's life. Within two blocks from where I live in Manhattan, there are four major construction projects going on involving hundreds, if not thousands, of workers. Within those same two blocks I could walk out and find two or three street people. If you are a reporter for the Times, which of these facts represents a news story?

I don't see a conflict between the experiences of the long-term unemployed and the outstanding numbers we're getting from the economy today. I don't see the nyt article "trashing" the President or attempting to downplay the really good news..

If there is one word used over and over in these threads it's, lag. The classic recovery expects job creation when growth exceed three percent and is expected to continue. That's happening.

But, there's an aspect that is not in the classic recovery. I think Mr. Roach calls it job leakage. It's due to offshoring and productivity increases. Something has caused a glut of workers in some fields. (ILLEGAL immigrants aside.) Whatever, there are phrases that are also often used in these threads. To wit, make a career change, relocate, get prepared for those great new jobs that are just around the corner, for example.

It seems to me that the people described in the nyt article represent those many Americans whose task it is is to adjust to the new era. It seems to me that they are trying. Why is there so much enmity against them? It seems to go beyond my favorite analogy, gawkers at traffic accidents -- schadenfreude, if you will.

As much as I empathize with them, they are buggy-whip makers in the age of the Model T. I blame teacher's unions for blocking a full voucher system that would enable us to leap into the 21st century economy. Ever wonder why all these computer certification courses and tests are given by MS and Cisco? Because the average undergraduate in computer science isn't able to handle the work. We're also obsessed with making sure every child graduates highschool when it would be better to send low performers to trade school. College should be restricted to law, medicine or the sciences instead of Binge Drinking 101. Only a few with enough mental agility are able to make it.

Why do people need to make at least 30 to 50k to make ends meet? Look at the taxes taken out. Look at the cost of medicine skyrocketing from federally protected medical and pharmaceutical oligopolies. Look at the cost of real estate in zoning-restricted or rent controlled markets.

And people have to drop their taboos and do what it takes to put food on the table. When my company closed its NY office and I lost my management job, I temped for a year, making photocopies and moving furniture for $7 an hour. I patrolled housing projects in the dead of night in a security guard uniform for $10 an hour. It wasn't much but it paid the bills until I found something else. What's sorely lacking in our education system is discussion of personal finance and how make your own way in the world. Welcome to the post-modern economy. If you can't adapt to new technology, you're left behind. The US steel industry can't compete anymore because foreign steel uses more modern technology to make it cheaper. US steel companies didn't bother innovating because it knew the govt protected its market. IT jobs are going overseas because the market is correcting itself by seeking the lowest possible labor costs. On the other hand, some IT companies stopped outsourcing because we can't get the same quality, so the market is correcting itself again. If a Mexican illegal is making $1 an hour at a maquilladora on the border, that's the MARKET RATE of the job. I think we would eliminate unemployment overnight if we got rid of the minimum wage. Poverty is unfair but its NOT a human injustice that should be addressed by the government. In all societies, there will always be a bell curve of non-motivated under-acheivers at one end and a natural aristocracy of technical and financial elite at the other. We can't be a nation entirely of yeoman as some anti-federalists envisioned.

An economy of the future is almost impossible to contemplate. Look at how many people make a living through ebay. Look at how many non-existent weapons and equipment are sold for the Everquest online game in exchange for real cash. Holding a job is NOT the only way to get an income.

I understand your comment and I agree with you. It is going to happen to me in the not so distant future, either by my employer's hands or my own.

Sorry to hear that. I hope you're better prepared for difficult times than we were.

In the long run, we'll get through. I'm still not sure it's worth the experience for me to be able to understand and relate to others who've gone through similar, but when this is all over, that'll be a benefit that I'll take with me for the rest of my life.

Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.