Left Behind

Lost in the economic recovery

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Continued: Left behind: Job loss buries hopes, careers

  • Article by: ADAM BELZ , Star Tribune
  • Last update: February 2, 2014 - 8:35 AM

“In our culture, your job is pretty much your personality — if you don’t have one, you’re not a valuable person in the world,” Hanson said, describing what he believes is a widespread view.

He was IT director for Minnesota Wire and Cable in St. Paul. It was a good job, but the company restructured in 2011 and said he could either take a $40,000 per-year pay cut or a severance package. He took the severance and started applying for jobs. Nothing happened. He raided his 401(k) to make house payments.

“I was pretty well down to my last few dollars,” he said. “Had to take a job that paid about a quarter of what I’d been making before to just make ends meet.”

Then he made a tactical adjustment and offered to work a trial period for a company he liked, managing its data center. He proved himself, got hired full time and has been working there almost two years.

He still thinks and talks a lot about the job search, though. He’s been facilitating Twin Cities job transition groups since 1999 — through three of his own layoffs — and compiled a go-to comprehensive list of job transition groups around the metro.

Too often when people get a phone number to call or a contact to e-mail, they don’t follow up, Hanson said. They might be scared, afraid of rejection, or not ready to take lower-paid work.

“They say they’re going to call, but a lot of times they don’t,” he said.

Part-time jobs and wage cuts

This leads to more trouble because the longer people are out of work, the less they are likely to make when they find a job.

People lose earning power after a layoff because they can’t find full-time work, a problem that’s been especially pronounced in this recovery, said Farber, the economist at Princeton.

In every recession since 1980, 12 or 13 percent of people who lost full-time jobs ended up in part-time work. The Great Recession was different, with the share of people ending up in part-time jobs rising to 20 percent.

“The earnings losses are huge, but mostly because the people can’t find full-time work,” Farber said.

Meanwhile, many companies are still cutting wages. During and after recessions, employers try to cut costs without hurting employee morale too much, so they freeze wages, a phenomenon economists at the San Francisco Fed call “pent-up wage cuts.”

“The fraction of individuals receiving no change in their wage has been larger in this recession than in past recessions,” Daly said.

These wage freezes cut into people’s standard of living over time, have been especially severe in this recovery, and have held on longer because inflation is so low, she said.

“Employers traditionally let inflation erode the value of the real wage in downturns, but in a low-inflation environment that’s less possible,” said Mary Daly, an economist at the San Francisco Fed.

A harsh reality

Keith Cushman’s workload had been waning and a manager from Philadelphia was in the office, which he did not take as a good sign. She said hello as she whisked by his cubicle.

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