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.?' "

FWIW, the under-employment/compensation squeezes started during the Clinton years. You may remember "bracket creep," which was a compensation problem: newly-degreed engineers or BusAd grads were brought into firms and the managers of said newbies were paid only marginally more than the newbies. THAT was due to the 'shortage' of college grads...but it was the first symptom of a larger problem: overhead money was getting tight.

After about 10-12 years, the 'bracket creep' problem de-materialized, partly because middle management positions were cut, and partly because more college grads emerged. But as the 'college grad' problem went away, the underlying cause of 'bracket creep--decreasing margins/overhead costs--continued.

Now overhead cost is cut by moving operations overseas. No taxes, no enviro-regs, no OSHA, no FedLaborLaws, no EEO, and no labor costs.

This is NOT just a "labor-cost" issue, and anybody who thinks it is is blind. It's a cost-of-doing-business issue, and it's comprehensive.

According to BLS "THE EMPLOYMENT SITUATION: OCTOBER 2003" there were about 1.4 million Americans working part time because they could not find a full time job. This does not include those who normally work part-time, not full-time. Those employed part time for economic reasons are not included in the official unemployment rate.

ftp://ftp.bls.gov/pub/news.release/empsit.txt

The point is, Americans are trying just as some here have done in the past. Why is today's crop of long-term unemployed being trashed? It happens in everyone of these threads. What's the point? They are bearing the brunt of the changes in our economy due to globalization and other factors. Did they really "earn" that privilege?

BTW, now that jobs are being created watch for the official unemployment rate to rise, say some economists. Some of the unemployed not included in the offical rate will be out looking for full-time jobs again.

Yes, the Bubble and treaties like Gatt and NAFTA have obliterated many jobs. But Bush not only encourages illegal immigration but keeps trying to slip in back door amnesties for them to come here and take the jobs that are left...those infamous jobs "Americans won't do." (Like Restaurants, construction, landscaping, trucking, etc.) Less than 2% actually pick your lettuce.

All I can say is, I believe there's justice in the world. If you believe in kicking the crap out of others while they're down, well... we'll see. It may well be that your time is coming, someday, to understand what it's like.

Yeah...I can hardly wait for their turn. It will come if they keep their heads in the sand. I remember when the Techies were just like them..sneering, condescending AHs who put down the factory workers. Then it was their turn...They don't laugh anymore.

Embarassing,and totally futile attempt to sabotage the good news of the economic recovery

Truth should embarrass. No matter how much you deny it, the fact is that half of all working Americans are now paying into the lowest tax bracket...an IRS stat for 2001. Can you imagine how high that number is now? The only ones applauding the "good news" are the stockholders and fat cats. The rest continue to slide into the abyss.

Getting by on $20,000, Mr. Gill states, "By most people's standards, we're not hurting." Mr. Gill almost gets it. Not quite, but almost. As for the rest of them, there's virtually no hope. There has been unemployment since time began. The only thing that's changed is such a large percent are maxing out their credit as they try to live up to Tara's old glory chanting, "Tomorrow is another day."

Who is getting the building work?

Around here, non-English-speakers. In a year, I have not run across an English-speaking crew.

In fact, one of the sites in the tech villa here is being picketed because the construction company is paying 50% below standard wages. In fact, they are being investigated for paying below minimum wage.

The Union crews are out doing an investigation and they have a one word answer when you ask them what they are looking for.

I'll give you three guesses as to what group of people likely makes up the majority of those crews, and the first two don't count.

I'll give a hint: A normal law-abiding person cannot accept a job at sub-minimum wage.

Who will be doing maintenance on all the new homes?

See above answer.

Who will take care of the retired boomer's?

See above answer, along with H1-B nurses.

82 - " I have done some part time work here and there, but you would be surprised at the reasons why one gets turned down in a interview. Numerous times I have been told that since I would be taking pay cut, I would most likely leave at the first opportunity."

So many on this thread just haven't got a clue. I was stuck in Houston in the oil crash in the 80's, and couldn't get a job, for love nor money. No good job, everybody was laying off, and a cheap job - couldn't get that eaither - I was 'over qualified' and would leave as soon as a decent job came along. We had 3500 foreclosures a month, while Regasn and company was shouting how great the economy was.

It took me about 2 years without any kind of a job, and hundreds and thousands of resumes and job inquiries, losing my house, and everything I had worked for to finally figure out a sort of an answer - LIE - by omission.

So, I took my resume', tore it up, 'forgot' my college education, my professional experience, and my talents, took a pencil, and scrawled out and poorly filled out an application form for a minimum wage job, which I had been unable to secure before.

I'm very sorry for your troubles, and understand.

Most of those respondents on this thread are fools, who have never experienced jobless time periods - and don't seem to understand that even in cheap jobs, employers often limit the number of hours per week working, so you are only a part time employee and they don't have to pay any benefits, or how they turned many salaried jobs into commission jobs or 'contract' jobs, once again so they don't have to pay benefits.

Please FReepmail me if I can give you some more direct hints to help you.

gee do you suppose that years of rules by unions that kept minorities from getting training in construction has been the invisible hand that lead to your comments of who is getting the jobs?

I was a hod carrier and have worked loading trucks in union shops, do you think all the silly rules about who could touch what or who gets trained lead to non union companies being created and work moving form union states to non union states.

The crying of grocery workers over paying a small portion of health care is another example of how unions have screwed up their workers and the system. The headquarters makes their employees cough up the money, but go on a strike that few will recover from lost wages. When back at work they leave empty shelves and stock missing because it is too much work. The cost of their work rules makes it harder to make a profit but who care the union leaders get a strike and workers are reminded of why they pay out those dues. /sarcasm off

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.

Beautiful summary of free market fundamentalism. Most people might opt for socialism if this is the the only other option available. Hopefuly it is not true.

Wow, that's a "let them eat cake" summary if ever I heard one. I believe you can lose your head with talk like that.

I agree with letting the market set prices but not in an artificial fashion. As long as the fed refuses to enforce the law and allows illegal entry into our country market prices will be artifically set.

So eliminate the minimum wage and deport ALL illegals and refuse entry for new illegals and I'm all game. The wage pressure created would cause wages to increase not decrease. As long as there are people used to living in squalor in their home countries, as they move here, wages will continue to be below the amount neccessary to live according to American standards here at home.

We don't need price controls on wages we need supply controls on cheap laborers (illegals). Businesses are being oversupplied cheap labor at the expense of individual taxpayers thereby driving down wages. The minimum wage is a price control that needs to be in place until we get rid of our oversupply problem.

An interesting question which didn't get asked would be what this couple's politics were. Most likely smug liberals who religiously voted RAT and sent big fat campaign contributions to Kennedy...who could care LESS about American jobs. He gets all his biggest contributions from the CEOs who are out-sourcing. What a filthy pig. Same with McCain, and all the RINOs of course.

Those numbers --- especially recent years -- ain't worth a thimbleful of warm spit.

Dear Ompa Dave, please take a sledgehammer and whack to splinters that cheerleader soapbox you carry around like Linus's blanket. Instead of posting claptrap that's even worse analysis than the original article (as if that's possible), go out and look into those numbers your cheers are about. I mean go and be a truth-seeker and not just a dim-bulb's booster cable.

You can find solid employment numbers, income numbers. Every state that has a income tax reports them. You can even correlationly "improve" the numbers by reference to sales tax erevenue figures.

That's just one suggestion. If you want the truth, go and find it, the truth has many roads into it. But for gosh sakes stop spreading calumny. For that's what your truth-irrelevant boosterism is. The "good" news you boost, unfortunately, is veneer-level true if that, and a cover for a severe infestation of fraud and mortal danger to our nation.

everyone who got laid off at our plant deserved it and the company is better without them.

SEASON'S GREETINGS!

"If they would rather die," said Scrooge, "they had better do it, and decrease the surplus population."

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