Causalities of Recession

Pick up any newspaper or scan any news website and you’ll frequently see articles on the causalities of the recession. Usually such stories focus on the effects of long-term unemployment on individuals and their families as well as society as a whole. Particularly hard hit are those jobless workers over 50, who, apparently, are on the “do not hire” list of nearly all companies.

There are really too many articles to cite. Saddest of all are the ones that tell the story of individuals who have been out of work for over two years: how they are struggling financially and the devastating impact their joblessness is having on their families. These heartbreaking stories indicate how the living standards of the middle class in this country are slowly eroding over time.

It’s not hard to imagine the long-term consequences the Great Recession of 2009-10 is going to have on this country. From what I can gather, there are three:

An Overburdened Social Welfare System. If Congress, now controlled by the GOP in the House, decides it cannot extend unemployment benefits a second time (it did so in July), then jobless people out of work for more than six months (like me) are going to be in deep trouble. What will we do if employers still refuse to increase hiring? Well, it’s pretty obvious we will have to seek financial aid elsewhere, such as food stamps or possibly welfare payments. So by not extending unemployment benefits, Congress will just be passing the buck to another social safety net.

Volunteer groups can pick up some of the slack. But such groups are already overwhelmed by the number of people in need and dwindling donations from formerly employed people.

And what happens if we get sick and are no longer eligible for COBRA benefits? We go to emergency rooms and taxpayers will foot the bill for our treatment. Hospitals will hike charges, pass them along to insurance plans that in turn increase premiums to still employed workers. It’s a vicious cycle.

Unemployment benefits may be the most cost- effective way to preserve the social welfare system now and in the future. Try to get the birdbrains in Congress to understand that.

Impoverished Retirees. Numerous articles highlight the growing ranks of jobless workers who have raided their 401Ks and retirement savings just to survive. It’s not difficult to see how this is going to overwhelm the Social Security program, if not bankrupt it, in the not so distant future. Some politicians talk about doling out Social Security payments on a need-based system, meaning, well-off seniors would not get their Social Security checks. Nothing wrong with that in theory. I have an aunt who collects and Social Security and she has millions in the bank. No lie. Fortunately for her, she does not depend on Social Security, but she gets it anyway.

However, over the next 20 years, very few seniors are going to fit in that category. The vast majority of baby boomers are going to need those Social Security checks because they will have little else to live on. And those checks will barely keep them above the poverty line. Where will they live? How will they pay for their healthcare?

Yes, their children can pitch in. But that means those people—theoretically in their prime earning years—will have less to spend on goods and services. And what if they lose their jobs?

Not a pretty picture of the USA in 2030.

The Loss of Creativity. Productivity may be high now, because still-employed workers are frantically working overtime to make up for the loss of their colleagues. They will do anything to keep their steady paychecks. But while they are working overtime to please their bosses, workers will not take any chances. And only by taking chances can true creativity thrive.

Creativity is also facilitated in a workplace where bosses and workers collaborate to devise new products and services. But when everyone fears the loss of a job, no one is going to rock the boat.

Further, in a workplace where managers are more concerned with protecting their own jobs and power bases, any subordinate who dares question their ideas or authority is sure to be the first to go when layoffs must be undertaken. When you mix the big egos of supervisors and middle managers with job insecurity, it’s look out below! Their underlings will take the fall before they ever do.

The bottom line is this: Workers afraid of losing their jobs are not going to take any risks. But risk-taking is necessary for creativity to flourish in the workplace.

Much has been said about unemployed workers striking out on their own and becoming entrepreneurs. Again, that is a big risk that requires a lot of cash needed more for home mortgages and children’s education. And will those ventures succeed? Will people spend money in a recession on fancy breads?

This recession is a great time for micro-managers for sure. They have their pick of acquiescent worker drones. But not so good for an American business culture that needs innovation to survive in a global marketplace.

Economists say the recession has officially ended. I’m not so sure, but what do I know? I’m not an economist, just an unemployed worker. But I do know this: The impact of this recession is going to be felt for decades.