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Blog: The Business of Management
 

December 2nd, 2008

One (Sobering) View on How This Recession Is Different

Remember last May, when Warren Buffett declared that the U.S. economy was already in a recession by any “common sense definition,” even if it hadn’t met the technical definition of two consecutive quarters of negative growth?

Buffett took a lot of flak for saying that (one former colleague of mine seemed to make it his calling to pooh-pooh any recession talk, claiming it was simply because the media was “rooting for a recession”). But as it turns out, the Oracle of Omaha was right. The nonpartisan National Bureau of Economic Research now says that the U.S. went into a recession a year ago, in December 2007, a full six months before Buffet made his pronouncement.

What this means is that things have been bad for quite some time, especially for anyone looking for a job, and Cheryl Spaulding has a sobering, close-up view of that.

Spaulding is president of Joseph’s People, a support group for the unemployed based at St. Joseph’s Roman Catholic Church in Downingtown, Pennsylvania, just outside Philadelphia. And with her husband, Spaulding is co-founder of a technology company, Lenape Associates. This is the third recession she has dealt with while at Joseph’s People, and from her perspective, it’s the worst of the three. The Philadelphia Inquirer talked to her about this—the job market, the economy and what she’s seeing out there—and it is a very sobering look indeed. Here are three examples:

Technology has radically changed how people find work: Today “you’ve got people who are relying on search engines, and they’re not leaving their house,” Spaulding said. “You’ve got companies that now force you to apply online. You can’t drive up to the company and apply to get the job. … The other part is a larger percentage of people, particularly in the past year, have simply given up … because there’s no hope. They truly don’t believe they’re going to get a job in their field. We’ve always seen people move from unemployed to underemployed because these are middle-class people. They’re working at Home Depot or Wal-Mart and that’s not where they would normally work with their bachelor’s, master’s and [doctoral degrees].”

Offshoring is having a greater impact than people think: “It’s not just a cycle. Things changed dramatically. I don’t think people in this country have a real appreciation for how many of the jobs in this country have gone overseas,” Spaulding said. “I’ll use my own company [Lenape] as an example. Five years ago, six years ago, we had six or seven contracts with various companies. Big ones. A lot of those contracts have gone overseas. People who worked for our company made $70,000 to $120,000 a year. And we were able, with that, to provide them access to health insurance through our company. This past year, we’re down to zero contracts. All of that work went to India and China.”

Be worried if you are 40 or older: “The most vulnerable [worker] right now is anyone who’s 40 and over. It was 50. It’s now down to 40. They first get rid of the most expensive employees. Now add the fact that they are also the most expensive to insure,” she said. “Small businesses can’t hire people 40, 50 years old. Their [insurance is based on the age] of their people. So now they are unemployable. If you’re 50 or over right now, it’s a big problem. It’s a humongous problem.”

This is scary stuff, even for people who have good jobs. Although you can find some upbeat economic trends, as I pointed out here last week, each monthly job report seems to bring news that’s bleaker and more depressing than the last.

Cheryl Spaulding only has one view of the problem we’re facing, but I find her perspective not only sobering but indicative of how different this recession is from the others we’ve faced over the last 30 years. It’s a view all managers need to understand as they deal with the very real concerns of just about all workers. This is a recession like no other, as, sadly, too many people are now finding out.


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