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BALTIMORE
—
Richard Siegel
is not among the unemployed. Between running a charity,
writing songs and doing stand-up comedy, he's got gigs
aplenty.
He's just
making about half of what he once did.
Despite
the gradually improving job market, millions of
Americans are earning less. They are the jobless — but
also those who can only get part-time work, those who
have landed new jobs with lower salaries than what they
once earned and others simply getting smaller paychecks
in the jobs they've had all along.
It's a
problem that could affect their earning power for the
rest of their working lives, a study on the similarly
punishing 1982 recession suggests. And it packs a
financial wallop now.
The
downward pressure on wages caused by fierce job
competition ripples through the economy to grocery
stores, retailers and businesses getting less money from
reduced-income customers, and it's a hardship for
workers trying to figure out how to pay their bills.
In
Siegel's case, he brought in about
$60,000
a year before his primary job as promotions director for
a comedy club was eliminated. The 49-year-old
Parkville, Md.
, resident now relies on his remaining part-time work,
which cuts his annual earnings to less than
$30,000
.
"You
can't live on that," said Siegel, who has joint
custody of his 12-year-old son, Charlie. "I've been
getting some help from my family and a patient
landlord."
Unlike
the unemployed, now at 10 percent of the population or
15 million people, workers with diminished earning power
are a poorly measured part of the labor force. The
federal government doesn't track the entire group on a
regular basis, only the number of Americans working
part-time despite wanting full-time employment.
More than
9 million people were stuck in that situation in April,
including workers whose hours had been cut because of
slack business conditions. That's more than double the
number from three years ago, before the recession began.
And they
aren't the only workers feeling the income pinch.
Nationwide,
half of employers froze pay for at least some workers
last year and 13 percent made salary cuts, according to
a survey by WorldatWork. The human resources association
announced in January that more than one-third of the
pay-freezing companies didn't have plans for raises
again this year. Many of the firms that cut salaries
last year also didn't expect to reverse course soon —
15 percent said the reductions would be permanent.
In
Maryland, 70,000 state employees haven't had
cost-of-living raises since the 2007 fiscal year. This
fiscal year they're losing three to 10 days of pay
through furloughs, depending on how much they make. The
same number of furlough days are planned for the fiscal
year that begins
July 1
, though Maryland Gov.
Martin O'Malley
is hoping those will be the last required to help
balance the annual budget.
"It
was either that or lay off a couple thousand
people," said
Patrick Moran
, director of AFSCME Maryland, part of the American
Federation of State, County and Municipal Employees
union. "Our members came to the conclusion that it
was better to keep people employed."
Losing a
job during a rough economy can have a lifelong impact on
earnings.
Americans
who were part of mass layoffs during the 1982 recession
took 30 percent pay cuts on average in the short term
and never fully recovered, according to a 2009 study by
researchers at
Columbia University
, the
Social Security Administration
and
Congressional Budget Office
. Fifteen years to 20 years later, they were making 20
percent less on average than similar workers who weren't
laid off.
That
recession had been the worst since the Great Depression
— until the latest one began at the end of 2007.
"While
these earnings losses vary somewhat among demographic
groups or industries, no group in the labor market is
exempt from significant and long-lasting costs of job
loss," co-author
Till von Wachter
of
Columbia University
said in congressional testimony last month.
It's not
happening to everyone, but laid-off workers are
frequently accepting lower pay at new jobs or through
temporary consulting positions these days, said
Mitch Halbrich
, a senior managing director in the
Baltimore
office of the
Mergis Group
, a staffing agency.
"Any
money is better than no money," said Halbrich, who
focuses on white-collar fields such as accounting,
finance, information technology and human resources.
Andy Bauer
, a regional economist for the
Federal Reserve Bank of Richmond's
office in
Baltimore
, isn't expecting a quick return to rising salaries —
not with so many unemployed Americans looking for work.
Even Maryland's
better-than-average jobless rate of 7.5 percent is at a
27-year high.
"Once
we've removed this excess supply of labor from the labor
market, then you should start to see wages moving
forward again," Bauer said. "It's going to
take some time, unfortunately, just because we have such
a large part of the labor force that's unemployed or
underemployed."
Nottingham, Md.
, resident
Jan-Ryder Hilton
, 33, sees a long future of scrimping and saving ahead.
He lost a
$40,000
-a-year job in
May 2009
and landed a contractual position this year that will
pay him about half as much. Many of his friends are
struggling, too. It seems like the new normal to him,
not a temporary speed bump in the road to prosperity.
"My
perspective is that the economy is not going to get back
to what it was," he said. "It's just a matter
of living life this way, and trying to live within your
means."
Some
families are finding they can't make it, now that their
incomes have been reduced. Among the homeowners turning
to
Baltimore's
St. Ambrose Housing Aid Center
for help avoiding foreclosure are workers earning less
than they did a year or two ago. In some cases,
"considerably less," said
Anne Balcer Norton
, the nonprofit's director of foreclosure prevention.
"People
are making the difficult choices they need to make —
they're spending less, they're trying to budget — but
still ... it's a real challenge," Norton said.
Salary
cuts to a variety of workers weren't enough to
completely offset increases elsewhere in
Maryland
. The state was one of the few where net earnings rose
last year, a study by the
U.S. Bureau of Economic Analysis
found. The gains came from state residents working in
D.C.; wages paid by Maryland employers fell slightly.
The hit
was sizable in some sectors.
The
average weekly wage for finance jobs in
Baltimore
, for instance, dropped from
$1,720
in the summer of 2008 to
$1,540
last summer, according to the latest data from the state
Department of Labor, Licensing and Regulation
. That's a
$9,400
-a-year cut.
Hilton,
the
Nottingham
resident, can beat that.
"I
lost about
$20,000
a year," he said. "Pretty devastating."
He's
teaching computer and multimedia-technology courses at
the
Community College of Baltimore County
, which he enjoys much more than the insurance claims
adjuster job he was laid off from last year. The trouble
is that it's contractual work with no benefits, and it
could end any semester.
He feels
fortunate that he's not trying to make a go of it alone.
He rents an apartment with his girlfriend, a manager for
the
American Red Cross
. But his drastic drop in income has been stressful all
the same. And it's a strain on their relationship.
"Anytime
we want to do anything, get out of the house, you have
to constantly feel guilty about every dollar you
spend," Hilton said. "Buying each other gifts
for Christmas, it was horrible. She had a birthday (in
May), and I didn't have a dollar to my name, and I
couldn't afford to put anything on a credit card."
He's
thought about pursuing a master's degree so he could
land a full-time teaching job with better pay. That
would require three years of study "and probably
$10,000
more in debt," he said. Before he goes that
direction, he's trying to find an information-technology
job.
Siegel,
the
Parkville
resident, has been getting by on his main part-time job
— running the
Funniest Celebrity Charity Fund
, which raises money for nonprofits by persuading
politicians, athletes and other people with name
recognition to show off their stand-up comedy chops.
He spent
months looking for a job in promotions or public
relations to replace the position he lost in early 2009.
"I must have sent out 100 resumes without getting
any reply whatsoever," he said. "I hang out
with senators and congressmen, and yet I couldn't pay my
bills."
So
Siegel, like Hilton, is switching careers. He just
finished his first semester in a master's degree program
for counseling psychology at the
University of Baltimore
, financed with student loans.
In the
meantime, he's looking for another part-time job — one
in his new field. He's confident that the change of
specialties and additional education will position him
for better earnings than he had before the recession,
not worse.
"I
know I'm going to have a future that's going to be
financially rewarding, and I couldn't say that a year
ago," Siegel said.
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