Gretchen Ertl / for NBC News
VeraMae Volk and her husband Eric Vaughn use their dining room table as an ebay center.
There
was little merry or bright this holiday season for millions of
unemployed Americans who are losing their extended unemployment
benefits.
Many depend on these meager payments, a federal
extension of state unemployment programs that expired as of the last
Saturday of 2013, to stay afloat. After tapping out their savings,
downsizing their living space, and draining their retirement funds,
one-time managers and MBA grads bought Christmas gifts secondhand and
worry over what the new year will bring.
“I shopped at the dollar
store because I really didn’t have any expendable income,” said Nancy
Shields, who said she also picked through the toys at thrift stores to
find gifts for her three grandchildren— which she was only able to
afford because her sister sent her money before Christmas.
Earlier
this year, Shields lost her townhouse and now rents a single room in
her Southern California town. At one point, the 59-year-old managed a
team of 60 people for a large retailer. She lost that job in 2011 but
took another one — and a 20 percent pay cut — some months later. When
that store closed in 2012, her luck ran out, and she has been looking
for work ever since.
“My federal [unemployment] benefits are about
$1,200 a month, and that’s all I get… I have been very dependent on the
generosity of my family members,” Shields said. Her retirement savings
exhausted, Shields said she didn’t know what she would do if Congress
doesn’t authorize an extension.
Gretchen Ertl / for NBC News
VeraMae Volk and her husband Eric Vaughn use their dining room table as an ebay center.
The
National Employment Law Project estimates that more than a million
Americans are in the same situation. "For a lot of people and a lot of
families, this is their only income source," said NELP federal advocacy
coordinator Judy Conti. "This could pull the rug out from under 1.3
million families," she said. Without an extension, an additional 2
million will fall off the rolls in the first half of the year.
"Job
opportunities are, by most measure, really no better than they were a
year ago," said Heidi Shierholz, labor market economist at the Economic
Policy Institute. The improving unemployment rate is largely due to
people dropping out of the labor force, and hiring hasn’t budged from a
year ago, she said. "The reason they extended it last year, that reason
is still almost exactly the same right now."
Despite more than 25
years in the retail industry, Shields said the fact that she doesn't
have a college degree makes landing a management level job challenging.
"It’s such an employers’ market at this point. They seem to be more
interested now in your education, if you’ve got a bachelor’s degree,
than they used to be," she said.
Higher education is no silver
bullet, though. Abe Gorelick’s Ivy League undergrad degree and MBA from
the University of Chicago weren’t enough to keep the 57-year-old
Massachusetts resident off the unemployment rolls.
Gorelick said
his family recently borrowed around $12,000 from his wife’s sister, and
that his parents as well as his brother had given them money over the
duration of his unemployment. With three kids, two in college and one in
high school, Gorelick said just covering their health insurance through
COBRA cost around $1,200 a month, and January would bring with it new
deductibles that would have to be met before coverage kicks in.
"I
feel responsible for juggling every month and figuring out how the
bills are going to get paid," he said. "There’s just so many things to
juggle and address… and spending as many hours as I can trying to find
work."
Gorelick echoed a common refrain among the better-educated
jobless: He's turned away from entry level positions because he’s
overqualified, but he can't find a job that matches his level of
experience.
"Their education does not help them get out of
long-term unemployment,” said Ofer Sharone, a professor at the
Massachusetts Institute of Technology’s Sloan School of Management.
Sharone founded the Institute for Career Transitions to help older,
white-collar workers get back into the workforce with mixture of career
and emotional support. The longer people stay out of work, the harder it
gets to find a new job, Sharone said.
"Once you become unemployed
for more than six months, you pretty much fall into a trap," said Rand
Ghayad, a visiting scholar with the Boston Federal Reserve and research
associate at MIT.
Massachusetts resident Vera Volk also has a
master’s degree, but the 53-year-old biotech researcher lost her job at
the end of May and has been selling prized possessions in order to stay
afloat.
Gretchen Ertl / for NBC News
VeraMae Volk and her husband Eric Vaughn pose for a portrait at their home in Lynn, Mass., Tuesday, Dec. 31, 2013.
“We’ve
had to cash in everything that we could potentially cash in,” Volk
said. “We’ve got our water heater down to the lowest we could
potentially tolerate.” Volk’s extended unemployment benefits of $480 a
week are the couple’s sole source of income. They’re four months behind
on their mortgage, and although she and her husband both have chronic
health conditions, they couldn’t afford to keep paying for health
insurance.
The families receiving extended unemployment benefits
are generally in dire financial straits, so helping them helps the
economy overall, economists say. “Emergency UI has one of the largest
economic bangs for the buck,” Mark Zandi, chief economist at Moody’s
Analytics, said via email. According to Zandi’s calculation, these
payments have a multiplier of 1.49: For every dollar in extended
unemployment benefits jobless Americans get, $1.49 goes back into the
economy.
"Nobody wins when we leave people looking for work out in
the cold," said Amy Traub, a senior policy analyst at advocacy group
Demos. "It hurts the economy when local businesses can’t rely on basic
spending… It strains the private safety net when food banks and
charities have to serve more people,” she said. “It slows down our
recovery."
“In the next couple months, if I don’t have that extra
income coming in, there will have to be drastic cutting,” said Chris
Nitso, a 46-year-old Massachusetts retail manager who has been out of
work since February.
“Ultimately, I need a job. I would have to
resort to ...applying for jobs I wouldn’t normally apply for or
part-time jobs,” Nitso said. “I’m going to have to be a sales clerk
somewhere… It definitely feels like a step back, for sure.”
Increasingly,
those are the only jobs out there. A NELP study says nearly 60 percent
of jobs created in the post-recession recovery pay $13.83 or less an
hour. CEPR
found that the number of low-wage workers with a four-year college degree nearly doubled between 1979 and 2011.
“There
seems to be more job seekers who are willing to take any job,”
Alexandria Vasquez, a lead researcher with the Institute for Career
Transitions and Brandeis University sociology professor, said via email.
Writing
in the National Review Online in December, Michael R. Strain, a
resident scholar at the right-leaning American Enterprise Institute
argued that extended unemployment benefits should be continued, writing
that without them, “it’s likelier that these workers will need other
kinds of government assistance.”
“We see people who run out of unemployment benefits get absorbed into other parts of the safety net program,” Conti said.
This
is the case for San Francisco resident Thadd Evans. He also holds a
master’s degree, but the 63-year-old has been unable to find a job since
being let go from a market research position in March. With
unemployment insurance his sole source of income, Evans said he had no
choice but to apply for Social Security this fall, when he saw the
writing on the wall and suspected that his extended payments might be
terminated.
"My hope was at the last minute something would pop up and I’d be saved,” he said. “But it didn’t happen.”
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