Long-term jobless face harsher label: 'downwardly mobile'

HACKENSACK, N.J. -- For months after she lost her job as a customer-service representative at a Wayne paper tube manufacturer, Kathy Canova was convinced she would soon find another.

Tony Grzymkowski
Tony Grzymkowski, of North Haledon, New Jersey, has been unemployed for almost two years. He has now sold his home and is waiting for the closing date and is slowly packing up his belongings. Here, Grzymkowski packs up his home office, October 22, 2010.

HACKENSACK, N.J. -- For months after she lost her job as a customer-service representative at a Wayne paper tube manufacturer, Kathy Canova was convinced she would soon find another.

Lately, says the 61-year-old Totowa, N.J., resident, she's not so sure.

"I have kind of lost hope about ever finding a job," said Canova, who had planned to retire from the $42,000-a-year job at the age of 66.

"I could take early Social Security at 62" and accept a payment smaller than at full retirement, she added. "But I couldn't live on that."

It's the kind of wrenching calculation that the nation's long-term jobless -- especially those in their 50s and early 60s -- increasingly face as it has become clear that high levels of unemployment will likely continue for years to come.


Forced to retire early or accept lower-paying jobs if they can get back into the job market at all, depleting their savings or retirement nest eggs years earlier than planned, they face a decline in earning power that will likely follow them for years, job experts and economists say. Some will end up in poverty; others face declining health and even early death brought on by factors associated with job loss.

"A percentage of them will not ever work again," said Carl Van Horn, director of the John J. Heldrich Center for Workforce Development at Rutgers University. "And they will be downwardly mobile, especially if they don't have a spouse who is earning."

Canova, for instance, gets by on her unemployment check of $490 a week to help pay $600 a month toward the mortgage she shares with her sister, and by dipping into her savings -- which she estimates have fallen by 40 percent.

The grim outlook is a dramatic shift from just a few years ago, when analysts predicted a worker shortage as the nation's 76 million baby boomers retired in comfort.

Instead, boomers worried about the decline in the value of their nest eggs, and spooked by the poor economy, are expected to keep working -- adding to the difficulty that long-term unemployed workers have in finding jobs.

The number of long-term unemployed workers, which the government defines as people out of work for 27 weeks or more, grew sevenfold during the recession. Nearly one in three unemployed people have now been out of work for a year or more.

A report at an International Monetary Fund conference in September showed that a U.S. worker jobless for four weeks was three times as likely to find a job as one unemployed for six months.

Those tough odds have already prompted Tony Grzymkowski to take steps to protect his future.


Several weeks ago, Grzymkowski, 58, who lost his six-figure-salaried sales job for global chemical manufacturer in February 2009, sold the five-bedroom North Haledon, N.J., house he bought in 2004 as an investment with his wife, Carol -- at a loss of $70,000 on the purchase price. They intend to "downsize" to a town house or condo.

"The thought process was this: If I wasn't going to get a job, and my unemployment was going to run out, I couldn't afford to stay in this house," said Grzymkowski, whose wife is a public school teacher.

He said he is still looking for jobs similar to his old one. But he knows that at some point he may either have to seek a commission-only sales job outside the chemical industry, meaning a likely 20 percent salary cut -- or take a low-skilled job that pays even less.

"When you spend 23 years in an industry, it's hard to go back and say, 'OK, I'm going to go and work in Walmart,' " he said. "It's a big psychological change to say, "OK, I'm out to pasture. I just have to go out and get something menial." I'm not there yet, but I am along that path."

Behind the statistics is a debate about the cause of the nation's unemployment rate, which stands at 9.6 percent 16 months after the recession officially ended. Some economists argue that the causes are cyclical, related mainly to the recession, and that the economy will eventually bounce back.

Others argue that the job drought is partly due to structural forces, and so is harder to tackle -- stemming from factors such as the loss of jobs to lower-cost countries, increased U.S. productivity and a mismatch between what employers want to hire and what's available in the workforce, either due to geography or because workers don't have the needed skills. Those factors, if true, could mean high rates of unemployment will last much longer.

Whatever the cause, the fallout is punishing for long-term unemployed workers.

Till von Wachter, a professor of economics at Columbia University, told a House subcommittee in June that the earnings of a laid-off worker, once rehired, lag those of peers who were not laid off by 20 percent or more for up to 15 to 20 years.


Long-term unemployed people "experience larger declines in earnings, are more likely to drop out of the workforce and are more likely to end up in poverty," he said.

A 2008 study by von Wachter found that mortality rates go up after a job loss: Older male workers up to twice as likely to die in the year after a job loss, and are 10 to 15 percent more likely to die 20 years later.

Eddie Farentino, 59, is doing his best to stay fit, working out more since he lost his job as a $90,000-a-year supervisor in the IT department of UPS in August 2009.

His job hunting has mainly focused on IT, a field he worked in for 19 years at UPS and 22 for IBM. But he knows that, after 14 months of unemployment, time is against him.

"The longer I am unemployed, the harder it's going to be to go back to the IT environment," he said. As a result, he's also looking for jobs that might use the experience built up during his nearly three decades as a volunteer firefighter and EMT in Mahwah, N.J.

He figures he is stuck between two worlds - work and retirement. His unemployment benefits, about $500 a month, ended a month ago, and he and his girlfriend, who lost her job as a receptionist in a gym two months ago, live on his $4,000-a-month UPS pension. Out of this, he pays a $1,500-a-month mortgage and $500 a month for health benefits.

His goal is to find a job that will get him to age 65, when he can retire on his pension from IBM. If he can wait until he is 66 to get Social Security, he would get a bigger payment than if he took it earlier.

"It's the timing that really is the problem for me and a lot of guys that were laid off in their 50s," Farentino said. "We're not young enough to start new careers. But we are too young to get the benefits of Social Security, and Medicare."

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