OVER the past two years Moira McKamey has had to adjust to a very different way of life. She lost her job in November 2008, one of 8,000 workers fired from an air-freight hub in Wilmington, Ohio. The departure of DHL, a delivery company, was quick and devastating; as if a tornado had ripped through Main Street. A few weeks after Mrs McKamey was sacked she and her husband, Randy, spoke to The Economist in their small farmhouse. Perched on a chair near her Christmas tree, Mrs McKamey could not help but cry.
Since then, despite a burst of fame that has seen them featured on wire-service reports, in newspapers and on television, not much has changed for the McKameys. The Christmas tree is decorated, but Mrs McKamey is trying to prepare for Christmas without spending money. “I’m the clearance-sale queen,” she jokes. Her husband is scraping together money to pay for his combine, seed and fertiliser. Mrs McKamey is still without a job. “If it hadn’t been for his crops,” she says, “we wouldn’t have made it.”
Hardship has spread to neighbours, too. In January 2010 Kevin Eakins, who lives down the road, lost his job as a fork-lift operator at an animal-pharmaceuticals firm. A few months earlier Jacki, his wife, had been sacked from her job at a trucking company. “It’s been a struggle,” Mrs Eakins sighs. Both of them have searched for jobs for months, to no avail.
Fifteen million Americans are now unemployed, according to the most recent jobs report. The unemployment rate for November inched up to 9.8%. The grimmest numbers, however, are for the long-term unemployed (see chart 1): 6.3m people, 42% of those unemployed, have been jobless for more than 26 weeks. That number does not include 2.5m people who want a job but who have not looked for a month or more, or the 9m who want full-time work but can only find part-time openings.
America, unlike some European countries, is not used to such high numbers. No recent recession has seen so many Americans out of a job for so long. Now, with millions fallen from the ranks of the employed, the federal government has deployed its imperfect safety net to catch them.
The unemployment rate in Clinton County, which contains Wilmington, is 15.8%, the highest in Ohio, itself one of the hardest-hit states. Wilmington has had some successes. The county won control of the air-freight park and may be able to reuse it. A “Buy Local” campaign is keeping some businesses afloat. But without a lot of federal aid, the town would be desolate.
The first and most generous form of help is unemployment insurance. It is usually paid from a state trust fund and lasts only 26 weeks, as long as recipients meet criteria such as continuing to look for work. But Ohio is one of many states whose unemployment fund is empty. Since 2008 the federal government has paid for an extension of benefits, now to 99 weeks in battered states. Last year this helped keep 3.3m Americans out of poverty, according to the Centre on Budget and Policy Priorities, a think-tank. If Congress passes Barack Obama’s recent deal with Republicans, workers will go on being eligible for the 99-week maximum payment until the end of next year. But even so, 99 weeks is all anyone can get, and many workers have already reached that limit.
The federal government also provides money for retraining, through grants and programmes such as the 12-year-old Workforce Investment Act. A national emergency grant from the Labour Department is funnelling about $4.5m to Clinton County. This has helped some displaced workers find new jobs as welders, for example, or dental assistants. But training does not always yield a job, and even extended unemployment benefits expire eventually. Mrs McKamey, 51 when she was sacked, decided to retrain for a career in health care. After months of schooling and hard work (“She studied her flash cards constantly,” Mr McKamey says proudly), she became a certified medical assistant. She even got a job, sort of. She had a 90-day trial, but was not hired at the end of it.
These days Mrs McKamey is trying not to be discouraged. But her husband is already raiding his farm account to pay for household expenses. They had health insurance through the COBRA law, which lets a fired worker continue in his or her former health plan for up to 18 months. The federal stimulus subsidised part of the premium. But the McKameys met COBRA’s 18-month limit in May. Now they are without insurance. “We hardly get sick at all,” Mrs McKamey says hopefully. “I’m one of those people, I bring hand sanitiser with me everywhere.”
The Eakinses are trying to stay cheerful as well. They trawl the internet for jobs. Some days they drive to nearby towns; if they see a loading dock, they pull in to see whether Mr Eakins might lend a hand. But Mrs Eakins is frustrated that companies seem to have only part-time work. “Drive an hour away, for a minimum-wage job for four or six hours?” she asks. “All you’d be doing is paying for gas.” For now, the Eakinses’ unemployment insurance ($224 a week for her, $349 a week for him), is just enough for them to meet their refinanced house and car payments; but in another year at most it will be gone.
Judy Eschmann, director of Clinton County’s Department of Job and Family Services, is getting more and more calls from anxious workers. Close to exhausting their unemployment benefits, they worry about what comes next. Ms Eschmann administers the federal programmes supposed to help, including food stamps, Medicaid and cash assistance. Enrolment has already surged (see chart 2). In addition to fielding calls and visitors, Ms Eschmann’s staff are venturing outdoors to tell residents about the aid available. Many are too proud to visit the office itself.
The programmes available for the poor are at once limited and helpful, meagre and costly. Food stamps, delivered these days in the form of debit cards for groceries, are available for any household whose gross income does not exceed 130% of federal poverty guidelines—for example, $28,668 for a family of four. In normal circumstances an unemployed, able-bodied worker below that level gets food stamps for no more than three months in a three-year period. Thanks to Ohio’s high unemployment rate, that limit has been waived until October 2011. In September the average recipient in Ohio got $141 a month for groceries, or $4.70 per day—not much, but more than usual thanks to the stimulus package.
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Health care is another big problem. Medicaid provides health insurance for the poor. To qualify, a family of four would have to have a monthly income of no more than $1,654. And Medicaid is available only to specific groups of poor people, such as families with young children and pregnant women. In Ohio, children ineligible for Medicaid may qualify for a state programme. Others, however, are simply seeking care where they can. In Wilmington volunteers staff a free health clinic on Thursday evenings. Patients often begin to queue at 3pm. Denise Kleinhenz, a nurse who helps run the clinic, says that many come after months of neglect. Some have first tried treating themselves with cheap veterinary drugs.
Once a worker has exhausted unemployment benefit, the only form of cash assistance is through Temporary Assistance for Needy Families (TANF), the federal programme that replaced welfare in 1996. The recession, however, has been a strain. First, states receive TANF money as block grants from Washington, DC, so the funding does not rise with demand. The stimulus included an emergency boost, but this expired in September and is not being renewed. Second, states have long spent the bulk of their TANF money on programmes that encourage people into work, such as child care. This continued even as work was nowhere to be found. Last year Ohio spent only 25% of its TANF money on cash assistance.
Whereas unemployment benefits are based on a worker’s previous wages, TANF payments are much more modest. A family of four in Ohio, for example, gets a mere $536 in cash assistance each month. When Ms Eschmann explains this to applicants, a torrent of questions follows. “Suddenly they start to panic,” she says. “ ‘Who will make up the difference of my rent?’ How do I pay my car insurance in order to look for work?’ ”
Community groups provide some extra support. In Wilmington a non-profit organisation offers help with heating bills. The homeless shelter has extended its maximum stay to 90 days. Sugartree Ministries, a soup kitchen downtown, got a lovely renovation thanks to a television show that featured Mrs McKamey.
But such services are designed to sustain families through a tough spell, not to support them in the long term. Over time, unemployment begins to breed its own problems. Workers may be discouraged or their skills may decay. Employers may be wary of someone who has been out of the labour force for more than a year. The most desperate may try to qualify for disability payments, an expensive federal programme for those physically unable to work. When the economy recovers at last, many will be left behind.
from PRINT EDITION | United States
*From The Economist Magazine