Out of work, out of time
Liz and Bob McLean are on the wrong side of an economic divide.
Not so long ago, they would roar out on a motorcycle trip to Yellowstone, or ride a helicopter down the Colorado River. In 2007, Bob put half the money down on a new pickup and paid cash for a new motorcycle.
Losing their jobs changed everything for the couple from Prior Lake, Minn. Bob now drives a school bus for $13 an hour, one-third what he earned when he designed tools to test hard drives for Seagate Technology. Liz, who works in IT, has found new jobs, but she makes less than she did in 2008.
“We don't go out. We don't travel,” she said. “We're figuring out if I can even retire.”
Millions of Americans have moved on from the recession with careers and finances mostly intact, but large groups have fallen behind, perhaps for good. The difference is whether they were able to hang on to their jobs.
Those who remained employed through the downturn endured anxious moments, lost value in their homes and may have forgone pay raises. But people who were laid off gave up months or years of earnings, lost homes, raided 401(k)s, went into debt, and now more often than not must take jobs for significantly less pay.
Even as the economy has added jobs and unemployment has fallen below 7 percent, today's unemployed are more likely than at any time since the Great Depression to stay that way for a prolonged period and far more likely to end up in part-time jobs. At last check, more than 4 million people across the country had been out of work for more than six months, not counting the millions who have given up looking.
“Many of them are still paying the price by having a job that's not as good, or only a part-time job, or maybe not a job at all,” said Henry Farber, a Princeton economist who studies displaced workers. “The labor market never really recovered from the Great Recession.”
If and when job-seekers do find work, a majority make less money. A third suffer a 20 percent pay cut or worse, according to research by the Federal Reserve Bank of Cleveland.
They are ushered into a new life with lesser prospects and no clear path to reclaim what they lost.
“When you run out of unemployment, you're desperate,” said Liz McLean, 60, who grew up just north of Duluth, Minn. “If someone hasn't been laid off, they don't really understand this whole thing.”
About a quarter of American workers say they lost a job during the recession, according to a 2013 survey by researchers at Rutgers University.
The number of workers unemployed long-term — six months or longer — shot up during the downturn from 1.4 million in early 2008 to 6.7 million in early 2010, and remains historically very high at 4.1 million.
More than half of those who were laid off and eventually found a new job are earning less, the analysis at Rutgers showed.
“For the unemployed, especially the long-term unemployed, they get caught in that vicious downward spiral of wage and salary,” said Carl Van Horn, director of the Heldrich Center for Workforce Development at Rutgers.
A worker's value to a new company will almost always be less than at one where they've worked for several years, Van Horn said. They may not have up-to-date skills, and companies have the freedom to bid down wages.
“This is a buyer's market, and that buyer's market has been going on for almost five years now,” he said.
Newly unemployed workers usually come out swinging, expecting to equal the wages they lost and shunning lower-paid work. Six months later, he said, that impulse is beaten out of most folks.
“It completely evaporates after they exhaust their unemployment insurance,” he said.
There's a good reason people who lose their jobs take lower-paid positions: That's what's available.
The median hourly wage in the United States fell 2.8 percent from 2009 to 2012 after factoring in inflation, according to analysis by the National Employment Law Project. Some 43 percent of all U.S. job growth in the recovery years of 2011 and 2012 was in the generally low-wage categories of food services, retail and temp agencies.
This is not unusual after a recession, according to research by the Federal Reserve Bank of Atlanta, but it's also a long-term trend.
The economy has for decades been disproportionately shedding middle-skill jobs that command middle-income wages, researchers at Duke University and the University of British Columbia have shown. The most recent decade was the worst of three bad ones in a row for the middle class. Between 2000 and 2011, the economy shed 11 percent of its middle-skill jobs, according to the researchers' analysis, while low-level employment increased 16 percent.
“We're just seeing more of what we've been seeing over the last 20 years, but it accelerated over the recovery,” said Mike Evangelist, an analyst for the National Employment Law Project. “The real net job growth has been in these lower-wage occupations, in retail and food services, so I think those jobs are indicative of what's available.”
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- S&P 500 logs 47th record high close for year
- Lower gasoline prices fail to spur consumer spending
- Retailers that won’t open on Thanksgiving hope move pays off
- Federal agency checking whether Highmark has enough doctors in Medicare plan
- Household debt on the rise after 5-year decline
- Westinghouse to construct colossal nuke plant in Turkey
- Google applies tech to medical device
- Oil, gas industry tries to keep talent in pipeline
- Butler County firm Deep Well Services tackles tough gas wells
- Housing prices nudge upward as more homes on market
- Oil prices continue descent, dragging market indexes lower