The Washington economic experts – or so they call themselves – have stated in the news that the recession ended in 2009 according to their fancy financial formulas, but I beg to differ. That year may have been when the recovery began, but this recession is still hanging around and causing grief to some of us. Any recovery goes through different stages, each stage affecting only certain types of businesses in various fields of the economy, and can take years to unfold. Sadly, one of the last lagging indicators of recovery is the jobs market.
I suspect that a large portion of the American population still think that the popular sitcom, “Bewitched” was a reality show. Time and time again, I have heard and read assumptions that all the Chairman of the Federal Reserve, the President and Congress need to do to fix the economy is wiggle their noses like Samantha did and everything would go back to normal again. Well, I have news for them. Economic recovery does not work that way and they could wait forever, especially in this recession which is lasting so very long.
I think our economy is more like a giant amoeba with a life of its own. No matter what the authorities decide, this living economy will take its own time to recover from its chronic recessionary cancer. Some areas recover sooner and other areas of the economy may never recover. The authorities can influence economic direction, but they cannot change it overnight and the healing process could take a decade like it did with the Great Depression. Our recession started in 2007, so that would mean we are going to be forced to tolerate ill effects until 2017. The thought gives me chills.
Even though the two economic cycles from different eras share certain common aspects, they are not entirely the same. In the 1930’s, people did not have access to safety nets like social security, Medicare, unemployment, disability, welfare, pensions, health care coverage and COBRA … as well as credit cards. If we had not had those social safety nets plus access to short term loans during this recession, it would have become the Second Great Depression. I am convinced of it.
I don’t think the unemployment figures made public are that accurate either, because so many unemployed people have fallen off the end of their benefits and are not counted anymore. Neither are those who are self-employed contract workers, doctors, lawyers, dentists, business owners, marketing and sales professionals, or anyone that does not qualify for unemployment benefits.
Additionally, the formula that determines whether a person qualifies for benefits is based on a good economy with the assumption that the employee has access to a consistent, dependable job. The way they figure it discounts the last three months immediately prior to the filing of a claim and uses the wage/salary rates for the nine months prior to that period as the ‘plug in’ to determine not only if a person qualifies, but how much in benefits they would receive.
Let’s say a person worked a temporary job or a short term contract job or a job that was supposed to be long term and permanent, but the company ran out of money and had to lay them off. If they had been unemployed for a long period prior to that job, they may not qualify for any benefits at all. Because their term as an employed worker fell within that discounted three month period, it would be ignored, and, because they did not work for the nine months prior to that job, there would be no contribution funds for that period and they would be disqualified for benefits, leaving them further unemployed and running out of resources.
Those people are not counted in the unemployment figures. Neither are those who have become so discouraged with looking for work but not finding a job that they have dropped out entirely. They, too, are not counted. The true unemployment rates are probably much higher than they have been stated to be…and I think could have been 20% or more in some regions of the nation. Discriminations abound in the interview and hiring process as well, further adding insult to injury for many.
As far as new job creation, well, that’s another story. A business cannot be started by a wiggle of the nose either. The truth is that, for every business that has gone out of business, it will take a minimum of three to five years after they start operations again under another name to break even. During that time, they will probably operate with as few workers as possible to make the money stretch farther, and only at the three year mark will they have the revenue to expand and add jobs. That’s a long time before extra jobs are created.
Generally speaking, the larger the business is or the more complicated the product or service is, the longer the startup time will be…and I think of all those empty buildings out near the Ontario airport with “For Lease” signs on them. Those buildings housed manufacturing companies and distribution companies with full employment ten years ago – maybe tens of thousands of jobs. Not any more. One humongous building that took up at least three or four city blocks had a sign on the side that read “Free Three Month Lease” I almost drove off the road when I saw that sign.
Unlike other shorter recessions where people were laid off but their job positions were held open and filled with temporary workers at a lower wage, the employers in this recession have eradicated the job position entirely. As a result, the temporary market has suffered tremendously. Those companies with a temporary worker need will advertise and hire someone directly without going through an employment agency because they do not want to pay the fees involved.
The same holds true for a company wanting to hire a permanent employee. They will list the ad and do the interviews themselves because they will not or cannot afford the agency fees involved. The result has been that many employment agencies have had to close local offices and some smaller ones have gone out of business for lack of business. Many headhunters, like mortgage and real estate professionals, have had to leave their chosen field to find work elsewhere. I have friends in the field, but I would not want to be a staffing agent during this recession because working conditions have been extremely hard for them.
According to my job research online, it looks to me like there are more jobs listed in the bigger cities and fewer, if any, available positions in the smaller towns. News reports about areas that are expanding are deceptive, too. Expanding with population only? The cause could be relocating retirees and they do not create jobs. The expansion has to be in business growth for jobs to be created. And some jobs demand physical labor like the positions in oil and gas, wind turbines and solar, trucking and transportation, which are largely limited to younger males and strong females willing to do the labor involved.
Another point is that usually rents and housing prices are lower where there are fewer jobs or the pay for the available jobs is low. Rents and housing prices are higher where there is a good solid job market mainly because there is the employed customer base for both products. So relocating to where rents and housing prices are lower may not be such a good thing for a job seeker to do because they could find themselves in a place that sadly lacks job opportunities when they need the income.
The housing market is another lagging indicator for economic recovery. I mean, you need a qualified, working buyer base for those foreclosed homes and a median salary scale that qualifies for the listed market prices to have a solid housing recovery. And those requirements demand a stable, recovered job market which has shown slight improvement over the last year, but it still has a long way to go. You also need a banking system that will lay aside its fear of risk and start lending again.
I know that housing sales and prices are rising right now, but my suspicion is that foreign investors are scooping up extremely attractive deals on foreclosed properties in the hopes of flipping them at a higher price later…or renting them out to tourists. From what I have heard, private lenders are doing well; but the banks expect a loan applicant to walk on water before they will sign them up. I truly think we are having another mini- housing bubble that will burst eventually. God knows when.
This recession is lasting so long that people are running out of resources to hang on until the next job comes along. Those who have been blessed with steady paychecks or pensions during the years following 2007 know there is a recession out there, but they have no idea how devastating it has been…and they won’t know until they start walking the cyber pavement looking for a job. Hearing about the hardships through an unemployed friend or family member gives the job holder only the tip of the iceberg.
And many of these employed people suffer under the illusion that the unemployed are out of work because they made some bad decisions which led to their demise … and the former takes great pains to educate the latter about what they did wrong which does little for that unemployed person’s self esteem and attitude. It’s a control thing. Those with paychecks and pensions still have a semblance of control over their lives and expect the same from others while those at the mercy of this recession largely do not.
The unemployed are but leaves in the wind of recessionary downsizing, foreclosure, and bankruptcy without safety nets like wages, salaries, pensions, or just plain bucks in the bank to cushion the financial blows. Their paths have been determined by factors out of their control including the decisions of other people, companies, legal authorities, the banking system, and the bad economy. Everyone makes mistakes in their lives, but those with a money cushion of some kind can buy their way out of bad results. Others cannot. It’s as simple as that…and as complicated as that. I, for one, would wish this Great Recession would end. Enough is enough.