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.?' "

I'm right there with ya my fellow 'eer fan. My husband lost his job, too. For 2 years he was out of work (everything he applied for, they said that he was OVER qualified for. They would not hire him thinking that they would have to pay him too much! We didn't care what the pay was, just give us a bone!) The only thing that I could find was part time. Times were VERY tough, but we pulled through and by Gods Grace (and the constant recite of the Prayer of Jabez), we are doing great!! :o)

Better question, where that person who write this place self? I bet at aristocracy level. What all free marketers not understand, without middle class, they themselves will die..and not in economic term but in butchered massacres...if lucky or turn into slave in some collective shahta...earth tunnel... They fools if they think that majority peoples, especially when educated, willing to live in poverty while they use nations for play grounds...they, free traders, are communist fifth column. This is all part of Communist Dialectic...with cycles of socialism and capitalism leading to their warped utopia...and idiot free trader help all way. One only look at Africa and S.America for "stability". Only stable of Latin America (except in Chile of genius Pinoche who create strong middle class) is revolution.

Free traders either active fifth columnist of communist/socialist revolution (Kennedies, Soros, Khodorkovsky, Berezovsky) or useful idiots (most free trader on FR). These last are worst. They walk through reality with shudders on to avoid sight of reality.

Is the world end...no. Is capitalism in danger...very much. Are they, free traders, the enemy...you bet. Only country that has fast INDUSTRIAL growth is Russia. Why? Because of ruble collapse, country become relient on self and no one else. Trade for industrial country only good if excess capacity and only "fair" if done with other nation of similar demographic and development. With poor country trade is in two way and always someone suffer: either industrial nation flood and indebt poor nation or poor nation use population demographic of poverty to flood industrial nation and then it peoples suffer.

Point of rant? If politicians did job of defending interests of peoples elected by, then all this not issue. But politicians of West in particular and world in general for most part either idiotic intelligencia and idolists or sleezy criminals who care only for selves.

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.

What do you mean by "standard wages"? Would that mean "union wages"? If so, that is price-fixing, pure, plain and simple. Let's face it, unions hate competition in the labor marketplace and they will get violent when protecting their price-fixed wages.

How can poverty be a human justice?

An argument can be made that poverty is negative reinforcement - the wages of sin, as it were. If there were no downside, no consequences to sloth, drug dependency, foolish living, then many more people would choose the easy or low path. I'm not saying that everyone who is poor deserves to be - probably not even the majority - but surely some are poor by their own choice. And that is one way poverty can be a human justice

How can we have so much and justly not share?

Personally? I don't know. But as a society? Who decides who has to give and how much? That's the problem. If it's not voluntary, it's tyranny. When you become enlightened, you give of yourself and your blessings. When you force others to give, at the point of a gun, you rob them, not only of their time and hard earned wealth, but also of their chance/decision to become enlightened for themselves.

There is a place for the Govt to help the poor, but IMO, the govt only steps in because we don't -- or not to the degree required.

Most people are selfish pigs. Churches are empty. Malls are packed. I don't know what to tell you, but more tyranny of the majority is not the answer.

I'll buy that, considering I was making close to 25K before taxes delivering pizza in the late 80's. These people must not be very imaginative in the job aquisition department.

Also, IMO, if you're hauling down 250K\year you should be smart enough to structure your lifestyle to sock away 40K per YEAR in savings AND not have any credit card debt. It's all in planning and living within ones means.

It would help if schools could take some time spent in "diversity awareness" training and switch it to common financial education... Then again, I've got to go slop the flying pigs...

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

Your screed was rather lengthy so I only quoted a small portion.

Why did you waste so much bandwidth just to inform us that you're just another steampile who believes that it is "fair" to lower the American standard of living to the global poverty level?

Agreed. Furthermore, I've never been convinced about the business acumen/savvy of a high-priced exec who is unable to see handwritting on the wall. I've changed jobs myself while still 'making nice' with the new boss, knowing full well that it would only be a matter of a year before he & I would come to loggerheads. I've also changed jobs once knowing my excellent superior was close to retirement, and I could see who his likely successor would be. Not willing to hitch my wagon to a loser after such a long streak of being with a winner, I opted out. In situations like this, an exec must always be in control of his/her career - leaving under the guise of suitable "reasons" and burning no bridges. Got to stay at least 12 months ahead of the organization AND the industry. That takes homework and lots of networking.

Comprehension skills lacking? I criticized politicians, union bosses and steel industry management, not my neighbors. By and large, they are the hapless dupes of the aforementioned.

Here you are, in reply #20, whining about your "hapless dupe" neigbors:

Keep in mind that these guys - with barely a high school education - are making around $80K per year for manual labor jobs.

Frankly, if you're dumb enough to favor massive reduction of wages and benefits paid in your region, then you deserve the boarded up stores, crappy roads, eroding tax base and declining property values that surround you.

Furthermore, you've also clearly expressed your total ignorance of the technical expertise required to operate modern steelmaking equipment.

>>I'm not saying that everyone who is poor deserves to be...but surely some are poor by their own choice.

Agreed.

>>And that is one way poverty can be a human justice

I would say that it's a consequence of actions rather than a human justice.

>>But as a society? Who decides who has to give and how much? That's the problem.

Society decides by participating (or not) in the electorial process.

>>If it's not voluntary, it's tyranny.

No, it's not tyranny. It's democracy -- a majority of people voted for people who implemented social program. Understand that democracy isn't perfect, and that many decisions made by the majority can be negative in nature. Blame your neighbors, if you will, for who they elected.

>>When you force others to give, at the point of a gun

It's not quite at the point of a gun. But it's also not robbery. What is robbery is the lack of true fiscal discretion when spending tax dollars. There is a difference.

Say the Government reduced all non-life threatening or non-urgent social programs. Say then one's tax share would be reduced to $100 annually. Would you still call it robery? I think most people would find this figure tolerable, if not welcome.

I think the real issue centers around the question "are the tax levels just and fair." I believe that you and I would be much more comfortable with government sponsored charity if the government was disciplined in the first place. An annual tax of $100 to keep people from dying in the streets is worth it to me -- it improves my quality of life.

>> I don't know what to tell you, but more tyranny of the majority is not the answer.

Well, sometimes I think God's plan was for Kingdoms. The only problem with Kingdoms are, well, tyrants!!

However, seeing how that model is practically dead, democracy seems to be the next best thing. But we should not wear rose colored glasses. Someone said democracy is a horrible system, but 10x better than any other system out there!

What do you mean by "standard wages"? Would that mean "union wages"?

The Union Observer I talked to this morning (on my way into work, its on the corner) said "Regional prevailing wage" and that they calculated it by simply averaging the hourly rates the various construction companies in the area offer.

It is interesting and I will continue asking for more information. One good thing about these guys - they like to talk.

From talking to the Union folks, they are simply paying sub-minimum-wage.

I'm simply reporting my observations and results of chatting with the Union pickets. I haven't spoken to the foreman or any of the folks from the construction company yet. That is the next task. I don't know a lot about union rules; this part of my education in that.

If the union charge of paying sub-minimum-wage is *true* then the construction company is engaging in illegal activity just with that.

We may not agree with the law, but the law is the law. Until it is changed, well....we're stuck with it.

I absolutely agree with you that unions are screwing things up for their own membership. If a construction company is forced to start violating the law in order to work around such things, a deeper investigation is needed, and not just into activity by the construction company.

These people need to get their hands dirty. I would work 2 low paying jobs to make ends meet for my family. It appears that they don't want to subject themselves to work that is below their standard.

A big "hear-hear" to that. When my wife and I first got married (back in '97) a week after we got back from our honeymoon (and before I got the job I'm presently in), the place were she worked went out of business. I worked at UPS in the evening and did a 250 paper paperroute (which had me working 2am to 6am) for a year and a half. I think I made 35k that year. It can be done.

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