For so many Americans, life will be completely different, even when the economy recovers. On the downside, they probably won’t be making as much money as they used to — maybe never again. But some people will be happier because they’ll be doing something they actually want to do.
I got to thinking about this after talking to a friend of mine and reading a couple of articles. The first one is in the New York Times. The Times talked to members of a job search support group that met during the recession of 2001. Most of the people aren’t making near what they made before they got laid off during the recession:
Taken together, their struggles are stark illustration that it can take years for a worker’s earnings to bounce back after a layoff, and that it can take even longer for a layoff during a recession. Economists, in fact, say income losses for workers who are let go in a recession can persist for as long as two decades, a depressing prognosis for the several-million people who have lost their jobs in the current recession.
“On average, most workers do not recover their old annual earnings,” said Till von Wachter, an economics professor at Columbia University, who recently completed a working paper with two other economists that examined the long-term earnings of workers who lost their jobs in the recession of the early 1980s.
One example from the support group:
Bill Sankey, 62, a computer programmer, earned about $55,000 a year for a company that owned Pizza Hut franchises, before being laid off in 2001 when the company was sold. Since then, Mr. Sankey has been hired and laid off twice. At one point, he was making more than he did before his 2001 layoff. At his latest job, he is back to making about the same, though with inflation factored in, he is probably making less.
“I really haven’t progressed anywhere financially in eight years,” he said.
On the other hand, there are opportunities for people to completely switch gears (and careers). USA Today looks at some who are making dramatic career changes:
Wages will shrink more sharply for Mary Kunka, a 24-year Wall Street executive who will soon teach high school math.
Formerly a senior vice president for Lehman Bros., Kunka, 45, was at the center of last year’s financial storm, bundling hotel and office loans into commercial mortgage-backed securities as she sat at a tiny cubicle on a vast trading floor.
“I liked using my math skills to make things as profitable as you can,” she says. “It was fast-paced. There was a lot of pressure.”
But mortgage-backed securities are now deemed “toxic assets” amid a commercial real estate slump. When Lehman went bankrupt last fall, Kunka lost her job. She turned down an offer to dispose of troubled assets for a fraction of her former mid-six-figure salary, at longer hours.
In May, she saw a newspaper article about a federally funded New Jersey Labor Department program called Traders to Teachers, which trains financial workers to be high school math teachers in three months. She starts in September and is guaranteed a teaching job in January. Normally, aspiring math teachers must have majored in math or have two years of college courses.
For Kunka, the opportunity fulfills a 25-year-old dream that fell by the wayside when she got a summer job at a small brokerage. “It’s challenging to get up every day in front of a bunch of kids and see if you can make them enjoy and understand math. It takes me out of my comfort zone.”
My friend got his MBA during the boom times, but he’s been unable to find a job with it, going on a couple years now. Instead, he’s doing some government work, making far less than he would at an accounting firm, but he actually seems to enjoy what he’s doing. He’s had to adjust his lifestyle expectations, of course, but he’s making do and seems at peace with it.
It’s depressing to think you might never recover your income. It’s depressing to think you might not get a job doing what you set out to do. But I suppose that’s only if you decide to think about it. Maybe there’s something else out there, waiting for you to start thinking about that.
There’s a lot happening in the world. Through it all, Marketplace is here for you.
You rely on Marketplace to break down the world’s events and tell you how it affects you in a fact-based, approachable way. We rely on your financial support to keep making that possible.
Your donation today powers the independent journalism that you rely on. For just $5/month, you can help sustain Marketplace so we can keep reporting on the things that matter to you.