Generation X: They’re coping with a financial dilemma
After losing his job as a manager at JPMorgan two years ago, Wayne Ewart spent the next several months looking for another job. He didn’t get one, and, with the financial sector in crisis, he’s almost given up on ever getting back into the industry. Now the 40-year-old Brooklyn, N.Y., resident is thinking of starting a business.
Ewart is among thousands of African-Americans who have lost their jobs and are struggling to get by amid tumbling economic indicators. The latest snapshot of the job market, released by the U.S. Labor Department on April 4, underscores the damage that a trio of crises — in the housing, credit and financial sectors — has inflicted on businesses, jobseekers and the economy as a whole. The impact has fallen disproportionately on African-Americans, who are losing their jobs at twice the rate as whites and their homes at almost the same rate due to foreclosures, according to William Rodgers III, a labor economist and professor at Rutgers University.
Amid talk of recession, U.S. employers slashed 80,000 jobs in March, the most in five years and the third straight month of losses. In the past three months, the national unemployment rate rose from 4.8 percent to 5.1 percent, the clearest signal yet that the economy is shrinking. The unemployment rate for African-Americans was up nearly a percentage point to 9 percent.
The 5.1 percent rate was the highest in two and a half years and prompted Federal Reserve Chairman Ben Bernanke to acknowledge for the first time the growing prospects of a recession, which is defined as two consecutive drops in quarterly gross domestic product. Many other economists believe the recession already has arrived and that’s causing people and businesses to hunker down, crimping spending, capital investment and hiring. All that, in turn, further weakens the economy.
The latest unemployment rate was the highest since September 2005, when significant job losses followed the devastation of hurricanes Katrina and Rita. In the March job report, construction, manufacturing, retailing — the three sectors dominated by African-American workers — racked up heavy losses.
To understand the severity of the situation, consider that 50 percent of Black workers who lost their jobs during the previous tech-inspired recession of 2001 did not get back into the labor market during the last seven years of economic recovery, says Rodgers. That’s because the economy created only about 90, 000 jobs per month, while the labor market added 130,000 workers per month. The current economic crisis has only exacerbated the damage to African-American families who were trying to join the ranks of the middle class.
“Our crisis counseling for families going through foreclosure has gone up forty percent from last year statewide,” says Phyllis Salowe-Kaye, executive director of the New Jersey Citizen Action, a community group that works with homeowners in distress. Similar stories have been reported nationwide. The majority of the victims are minorities who bought homes at high adjustable mortgage interest rates that have just reset even higher. Losing your home to foreclosure negatively affects your credit record, further limiting your ability to borrow.
According to Rodgers, the share of African-Americans employed in various sectors of the economy has fallen from 60.5 percent in March 2001 to 58.4 percent in March 2008. Black teenagers are most at risk because only 21 percent of them are employed today, down from about 26.5 percent seven years ago. “The sociological implications of this situation are enormous in communities where they live,” Rodgers says.
Rodgers is calling for fiscal policy responses beyond President George W. Bush’s $150-billion stimulus package. Part of that money will be sent back to taxpayers this summer in the form of rebate checks, but Rodgers argues there’s need for long-term unemployment insurance and health-insurance coverage for those who lose their jobs, especially parents with young children.