The view from the ground: Economy is still weak

Friday, August 17th, 2012 

Hundreds of letters poured into the offices of The Philadelphia Inquirer in response to the gripping story of economic woes told in the original “America: What Went Wrong?” series 20 years ago. While letters today are submitted electronically and conversations are had across cell phones, the feeling of economic despair sounds eerily familiar. Here is the first in an occasional series about people who submitted their story to us over the many months that we have embarked on “What Went Wrong: The Betrayal of the American Dream,” which is both a Workshop series and now a new book by Donald Barlett and James Steele.

John Rushton, 53, has a bachelor's degree in Business Information Systems and 27 years of IT experience.  After 13 years at a multinational conglomerate, he received two-months’ notice in November 2011 that his job was being eliminated. The company would provide Rushton with six months of severance pay, reduced by two-thirds after taxes. Around the same time as his layoff, 37 years of nursing had taken its toll on Rushton’s wife, and she sought disability payments after a back injury. 

Below is an edited transcript of a conversation Rushton had with Workshop Reporter Michael Lawson.

You were told your job loss was related to a “global initiative.” What happened there?

Rushton_8_17.jpg

Before last November, there were zero people from the Indian division of my company in our group. Talking to one of my fellow co-workers, who got his notice at the end of July, there are now seven people from India. 

The interesting thing was, in talking to my friend who got the notice, my former manager and his current manager were left out of the loop when the decisions for these four people, were passed down from HR. His manager did not know until it happened. If I’m the manager, now I start worrying about my job. 

I keep hearing how the current administration is trying to keep jobs in the country. I know the government doesn’t control the corporations but it seems that these companies get benefits from the taxpayers of America — corporate tax breaks, etc., and then they turn around, they ship jobs overseas. It’s very frustrating.

What were you thinking on your last day?

The timing of the thing was tough. They give me 60-days' notice, three weeks before Christmas. Who’s going to be hiring, even internally, over the Christmas holiday?

I filed for unemployment the weekend after being let go.

Pennsylvania is one of the higher paying unemployment states, but even still, I’m only getting about a third of what I was making while I was working.

To manage the family’s budget, Rushton dipped into his 401(k). Nearly two-thirds of the unemployed have relied on their 401(k) plans to help them through the most recent recession, according to a July report from the TransAmerican Center for Retirement Studies

How are you managing the family finances? How did your job loss affect budgeting?

I cashed in my 401(k) so I could pay off 19 credit cards and some loans to get us down to a lean and mean type of situation. I knew that we were applying for Social Security disability for my wife, but I knew she wouldn’t be getting paid for that until August.

I tried to get down to a level where I could handle the finances with the unemployment that was coming in with my six-months’ severance pay and whatever savings.

After six months, my company stopped paying the COBRA, so now I’m paying $1,600 a month for that. For that, I needed to cash out the money in my pension. Basically, I’m mortgaging my future to stay above water in the present.

The Rushtons also have two adult children at home. His 25-year-old son contributes to the household.

I understand you have two children at home. How is this affecting the family dynamic? Is your son working?

He’s working as a security guard, and he helps us out as he can. He probably nets about $760 every two weeks and gives us $150 of that to help us out, so that’s an extra $300 a month.

Since becoming unemployed, Rushton has been to four unsuccessful job interviews. He is in the process of reducing his mortgage payments. He was optimistic about a job working with an area school district although it would mean less money and a 40-mile commute, roundtrip. On Wednesday, he found out he didn’t get the job. Rushton hoped the job would aid him in his mortgage modification, which now hinges on acceptance of his wife’s disability payments as income.

What’s the status of your home? 

I've filed for a mortgage modification with Bank of America, but that process has been going on since May, and I still have not gotten any modification. Now I have to wait for my wife's first two SSD payments, so nothing will move forward until 9/19 — and two more mortgage payments later.

It’s highly frustrating that whatever job I get is going to be paying less what I was getting a year ago. Competition is just that great out there. You’ve got so many people going to work at a lower wage just to pay their bills, and it drives down what companies are willing to pay.

It’s $30,000 less than I was making before. But I look at it this way: The school district will be paying twice as much as I’m making on unemployment.

What is your view of the American Dream?

It’s probably changed a lot over my lifetime. I always thought that people that work hard would get rewarded for it and be able to have the lifestyle they wanted and the home they wanted. And when they retired, they wouldn’t have to scrounge around for money for prescription drugs or other medical costs or for food.  It seems that Americans will have to settle for less.

Our children have lower expectations than we do now primarily because they see what happened to their parents.

Anything else you would like to add?

I just see that the duly elected representatives aren’t doing right by the people who elected them. And they’re getting their own paychecks and their own benefits that people they represent aren’t getting.

They can’t get together as a coalition to move this country forward. Everybody seems to be blaming everyone else. Meanwhile, I see where the U.S. owes China billions of dollars. I see where this country is heading, and I don’t really care for it.

What Went Wrong

Donald Barlett and James Steele are revisiting America: What Went Wrong, their landmark 1991 newspaper series, in a new project with the Investigative Reporting Workshop. Over the next year, the project team will examine how four decades of public policy has shaped America's ongoing economic crisis.

Issues

Back Story

The authors talk about What Went Wrong

Donald Barlett and James Steele talk about the project, and why they decided to revisit a book they wrote two decades ago, in a series of video clips produced by the Workshop.

Nation's Story

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We feature charts, maps, photos and other visualizations that reflect the state of the economy as part of our What Went Wrong project. This column chart shows the growing disparity between what individuals and corporations pay in taxes. In the 1950s, the difference was 22 percent. Recent figures show the difference is 62 percent.

Rags to rags: Economic mobility hard to come by

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Florida, as a center of the housing boom, still struggles to recover from the Great Recession. Financial stresses and widespread foreclosures have placed families in precarious situations, resulting in a spike in child homelessness. Susannah Nesmith reports in the Broward Bulldog.

Older workers face challenges in Silicon Valley

An advanced degree and experience in the tech sector should be a ticket to a job in today's economy. But older workers in the heart of the new economy, Silicon Valley, are finding their resume is not the issue. Aaron Glantz reports in The Bay Citizen.

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Read an Excerpt

The Betrayal of the American Dream on Google Books

The Betrayal of the American Dream on Google Books

Check out the first chapter of Barlett and Steele's 2012 book here.