Having a job, or more, is far from enough - The Boston Globe
Tom Davos
Having a job, or more, is far from enough - The Boston Globe
After getting laid off early this year, David Fagerstrom Sr. managed
to find not one but three jobs. Yet he still has a big problem: The
combined pay of the part-time positions is less than a third of his
old salary at Kronos Inc. in Chelmsford.
As a result, Fagerstrom, who worked nearly a decade as a business
operations analyst at the software maker, has cut spending everywhere
he can, including restaurant meals, vacations, and nights out with
friends. Hebs falling behind on car and mortgage payments, and
foreclosure no longer seems unthinkable.
bItbs really forcing us to live life on the edge,bb said Fagerstrom,
63, of Salem, N.H. bThere just ainbt enough coming in.bb
Fagerstrombs predicament helps explain why the economy has been so
slow to rebound from the recent recession, and why many economists
expect a long, difficult recovery ahead. As fast as jobs have
disappeared over the past year, wage and salary income has fallen
even faster, as many workers have had their pay cut, hours reduced,
or like Fagerstrom, had to take part-time or low-paying jobs because
they canbt find other work.
Wage and salary income drives consumer spending, which in turn
drives the US economy, according to analysts. And with credit tight
and many consumers unable to borrow against rising home values,
many people have little extra money to spend. Wages and salaries
are expected to play an even bigger role in supporting economic
activity in coming years.
Nationally, the number of people working part time because they
canbt find full-time work has doubled since the recession began at
the end of 2007, to about 9.2 million, according to the US Labor
Department.
In Massachusetts, the number has nearly tripled, to about 175,000,
according to Northeastern Universitybs Center for Labor Market
Studies.
bA lot of people are underemployed, and that magnifies the impact
of the recession,bb said Northeastern economics professor Alan
Clayton-Matthews. bThey work less, they have less money, and they
spend less. Thatbs the vicious cycle of recessions.bb
While wage and salary income has ticked up a bit recently, it is
coming off a devastating slide over the past year. Wages and salaries
paid by private employers nationally have fallen from the previous
year for four consecutive quarters, the most prolonged decline in
60 years, according to the US Commerce Department.
In Massachusetts, which entered the recession later than the nation,
wage and salary income has fallen for three consecutive quarters,
according to estimates by Clayton-Matthews. In the third quarter,
which ended Sept. 30, wages and salaries paid by Massachusetts
employers plunged 5 percent from a year earlier, compared with an
employment decline of about 3 percent. Meanwhile, spending fell
about 8 percent during the same period.Continued...
As the income decline shows, the official unemployment rate, as
high as it is, fails to capture completely the weakness of the
economy.
Fagerstrom, for example, is counted as employed by the US Labor
Department because he teaches an economics class at Northern Essex
Community College in Haverhill, another economics class at Southern
New Hampshire University in Salem, N.H., and does occasional contract
work for a Maryland firm. Together, the three jobs pay him about
$30,000 a year.
But it still feels like unemployment to Fagerstrom.
bFinancially, itbs really touch and go,bb he said. bI would still
like to believe I have the talents to earn the same salary I earned
at Kronos,bb where he earned about $100,000 a year.
More than 24 million, or 16 percent, of US workers, including more
than 400,000, or 13 percent, in Massachusetts, are counted as
unemployed or working part time because they canbt find full-time
employment. The official unemployment rate is 10 percent nationally,
8.8 percent in Massachusetts.
The large number of people competing for jobs means that peoplebs
earnings are likely to increase only slowly, analysts said. Mark
Zandi, chief economist at Moodybs Economy.com, said the national
jobless rate would have to slip below 9 percent before workers begin
to see modest gains in their paychecks, although it wouldnbt be
enough to keep up with inflation. The unemployment rate is not
expected to fall below 9 percent until the second half of 2011,
according to Moodybs Economy.combs forecast.
The unemployment rate would have to fall to about 6 percent - which
most economists say is several years away - before workers experience
real, inflation-adjusted gains, Zandi said.
bThat doesnbt mean the economy canbt come back. It just canbt come
roaring back,bb Zandi said. bWages and salaries are the fuel that
powers consumer spending, which is the key to economic recovery.
If theybre falling, consumers donbt have the fuel or fire power to
spend.bb
With so many workers looking for jobs, itbs a buyerbs market for
employers. Cindy-jo Gross was a vice president for a senior health
care management firm when she was laid off more than a year ago.
She decided to leave the executive suite to work closer to patient
care, expecting to take a pay cut to change her career focus - but
not as big a cut as some companies wanted.
Some offered salaries that were just over half of what she had
earned before, saying that they could find people who would work
for a lot less. bThe competition was up, and the demand was down,bb
said Gross, 46, who recently started a job managing a primary care
practice in Foxborough for Partners HealthCare System Inc., at about
25 percent less than her old salary.
Evens Auguste, 50, of Brockton, is earning less than half of his
old salary. After getting laid off from an information technology
job, he spent more than a year looking for a similar position. In
January, he took a job driving a Cambridge cab.
Married, with a grown daughter, Auguste said therebs just enough
money to pay the bills. bGoing out for dinner is out of the question,bb
he said.
He still hopes to find a new technology job. Hebs studying computer
security to add another certification to his two associatebs degrees.
In the meantime, hebs driving 12-hour shifts, six days a week,
typically earning $50 to $80 a day, although he has made as much
as $150 in a shift.
bSometimes,bb he said, byou have a good day. But it doesnbt happen
that much.bb