TribLIVE

| Business


 
Larger text Larger text Smaller text Smaller text | Order Photo Reprints

Out of work, out of time

On the Grid

From the shale fields to the cooling towers, Trib Total Media covers the energy industry in Western Pennsylvania and beyond. For the latest news and views on gas, coal, electricity and more, check out On the Grid today.

By Star Tribune
Saturday, Jan. 25, 2014, 9:00 p.m.
 

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

Most-Read Business Headlines

  1. Natrona Bottling Co. keeps soda pop operation small, putting effort into craft, taste
  2. PPG Industries to buy Westmoreland Supply paint store chain
  3. Streaming won’t mean the end of cable
  4. IBM to pay $1.5B to shed chip division
  5. Fannie Mae might take 3% down
  6. Stocks on upswing
  7. Open enrollment puts varied impact of health care law back in focus
  8. Large-scale batteries are integral in shift to renewable energy
  9. Universal theme park swings into Beijing
  10. Energy Spotlight: Steve Anthos
  11. Natural gas industry tries to find uses for abundance of product from shale drilling
Subscribe today! Click here for our subscription offers.