Left Behind

Lost in the economic recovery

Left behind: Job loss buries hopes, careers

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

In Great Recession’s wake, most who managed to find new work took a pay cut.

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. 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. 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, 38,400 Minnesotans and 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. “If someone hasn’t been laid off, they don’t really understand this whole thing.”

A downward spiral of wages

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.

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