When workers lose their jobs and move on, more than their
livelihood is at stake. Their dreams, family businesses and way of life also are threatened, creating a ...

Jobless ripple effect

Jan Dehner, Russ Gifford and Thomas Ritchie contributed
to this story.
(Originally published in The Weekender, 07/31/03)

Stop by the Workforce Development Center in Sioux City any weekday before 9 a.m. and it quickly becomes evident that the jobless picture isn't getting any better.

A queue of unemployed workers stands, some perusing help wanted ads as others ponder their next interview - or perhaps where next month's health insurance will come from. And while the line is long in the morning, there are scores more people who will never stop here for help.  

First in a series
Next week we talk with economic development officials and businesses in the community, who say things are good. Also, we touch base with former Gateway employees laid off at the North Sioux City manufacturer. Some have moved on while others have started their own businesses.

Their companies or departments - closed, downsized or disappeared - are gone, and with them went not just jobs, but families, dreams, neighborhoods and a way of life. It's a ripple effect that has hit the local economy, an effect that is being repeated in economies across the nation as unemployment and worker development offices field more requests for assistance. That assistance includes help both in finding jobs and in building salable skills. Others, though, have simply left town.

"I know many people - friends, long time customers, clients - that were affected by IBP's corporate move," said Jim Dvorak of Knoepfler Chevrolet. "These people have had to move, too." With them went their incomes, their family businesses, their taxes and the dedication to a town that is struggling to maintain the status quo in a time of great economic uncertainty.

Rusty Wright, who worked for IBP, is one of those who left town. The ripple effect, Wright said, is that "trickle down" economic growth takes time to achieve. But the impact of the loss of jobs at the level of IBP is almost instantaneous.  "These changes have a gravity all their own, and they immediately crash through to the bottom line like a rock," says Wright, who now works in Arkansas City, Kan. "We would have liked to have stayed. We like the community, we liked the area. But there were no comparable jobs."

Finding help
If you or someone you know is out of work or looking for a better job, these resources may help.

Resource centers
nCareer Resource Center
WITCC, Bldg. A, Room 412
Sioux City
nIowa One-Stop
Job Placement Center
2508 4th St.
Sioux City
nSouth Dakota One-Stop
Job Service of South Dakota
1205 Streeter Dr.
North Sioux City

n www.iowaworkforce.org
n www.careeronestop.org/

Is the outlook all grim? Of course not. Many local businesses say they're doing better than they were a year ago, and many say sales of cars and durable goods are up. In addition, city development officials say new and existing companies are continuously expressing interest in moving or expanding here. The reality, however, is that closings or layoffs at Gateway, Sioux Tools and others over the past 18 months have put more workers on the streets looking for fewer jobs, many of them paying minimum wage.

In addition, layoffs of as many as 400 people are predicted in August at Gateway's North Sioux City location, and will only  weaken the local job picture, forcing more workers into lower paid or multiple jobs.

So while local officials hunt for new business and industry to bring jobs to town and local residents argue about whether our government cares about workers, it seems that many people are getting by on less.

"The first thing to go was the premium channels on the cable TV, and we stopped eating out as often," said Randy Gaul, a former Gateway associate, before landing a new job as a Primerica representative in Sioux City. "We didn't go on vacations," said another. Their points were repeated by numerous unemployed and underemployed workers across Siouxland.

Not just Gateway
In the past decade, mergers and moves have more than decimated Sioux City's upper income jobs. Gateway gets the most notice, but the loss of IBP's home office also took a bite out of jobs in Siouxland.

Tyson's takeover of IBP may seem almost invisible from the outside, but in the past 18 months, at least 60 jobs have been relocated to Springdale, Ark. - or have been terminated. The lowest end job on that scale is in the $70,000 to $80,000 range. The overall economic cost? Estimates run from $10 million to $13 million dollars in lost income buying goods and services in Siouxland.

If a dollar rolls over six times in the economy, then Siouxland is losing at least $60 million a year from this one corporate move. That translates to one less customer at numerous area businesses. One less contributor to the local United Way campaign. A loss of income for the city and the state, the newspaper or the cable company. And beyond the financial impact, there is one less set of helping hands at the local schools, or the Scouts, or any number of volunteer organizations that improve the quality of life in our community.

That reduced quality of life means that job placement and career counseling sites are seeing unemployed workers in record numbers, and there are no signs of things letting up in the near future, says Chris Jensen, director of Job Training Partners (JTP) at Western Iowa Tech.

"We all hear about the large layoffs, but what we don't often hear about are the little layoffs that happen as the result of the economy slowing down. That's a hidden loss that doesn't get reported on," said Jensen.

He and others say that many companies are simply not filling vacant positions as workers leave, while others are replacing full-time employees with part timers, who don't have health benefits.  For many job seekers, the biggest concern is health insurance.

"The lack of health insurance is a big scare for everyone because of the potential cost. Even though they may be eligible to get COBRA (a federal health insurance provision), often times the cost is more than they feel they can afford on their own," said Jensen. "A family health insurance policy could run $700-$800 a month, and it could be higher. If you're the sole breadwinner, and now you have unemployment of $250 a week and you have house payments, food to put on the table and a car payment, there's just no money, even if you have a bunch saved."

The sobering reality is that many unemployed go without health insurance. William Puetz of LeMars is an example. After recently losing his job at Wells Fargo, Puetz had to make some difficult choices on how to divide up his $230/week in unemployment benefits. After car payments, child support, rent, student loans, gas and food, there isn't enough money to purchase individual health insurance.

"That's pretty low on the totem pole," said Puetz.

The rise of underemployment
Underemployment, that is, working fewer hours at a lower wage or in a position that doesn't match a person's skill level, can be just as devastating as unemployment itself, experts say. According to a 2002 study by Iowa Workforce Development, an estimated nine percent of the Siouxland labor shed is underemployed.

"It's getting more difficult for people to find comparable jobs from what they had before that can replace the wages they lost," said Jensen. "Unfortunately, a lot of the types of jobs that we've been losing are in the manufacturing sector, which traditionally pays considerably better than those in the service sector and has better benefits."

The difference is significant. Jensen gives the example of someone in the manufacturing sector earning $15 to $17 an hour with a full benefit package having to take a job in the service sector that pays just $6 to $7 an hour. And often, part-time work and jobs without benefits are all that's available.

Even if the unemployed do secure a full-time position, it can create a double bind, said Larry Joines, also with JTP. "A number of workers (from plant closings) went out and got jobs that they didn't want because they needed the health benefits," said Joines. "But if they get full-time work, they can't be classified as a dislocated worker and can't use the federal monies to help them."

Even when unemployment benefits are accessed, in more than two-thirds of the cases, benefits won't last long enough, according to information released by the Center on Budget and Policy Priorities. Sixty-eight percent of those accessing the Temporary Emergency Unemployment Compensation (TEUC) program, which provides additional weeks of federally-funded unemployment benefits to those who have exhausted their regular, state benefits before they were able to find a job, used up all of the benefits before they were able to secure employment.

Dr. Gloria Jones-Johnson, a professor of sociology at Iowa State University has been conducting national research on underemployment distress since 1986. Through her research, Jones-Johnson said underemployment appears to be a much bigger problem than unemployment, and she has seen a dramatic increase in the number of multiple job holders - one person holding down two, three or even four jobs at the same time, just to make ends meet.

"Underemployment is hidden, it's masked by a lot of different things," she said. "The economy has created a lot more bad jobs than good jobs. There is almost a bifurcation in the economy. You have privilege and access to a good job, or like the majority of people, you can only get one of the bad, service level jobs that provide no benefits and it's just a dead-end. The worrisome problem is that a lot of people with college degrees are fighting to not fall into that category."

The trickle down effect
Bankers, investment brokers and credit bureaus all agree that unemployment creates a ripple effect. Bankruptcies for Siouxland and the nation have been steadily on the increase for the past 10 years, with the exception of 1999-2000. Already in 2003, the Sioux City district is on track to set a 10-year record of bankruptcies.  Nationwide, delinquencies are on the rise, too.

But Dave Holub, vice president of retail banking at Security National Bank in Sioux City, said there are steps that can be taken to preserve good credit, even when faced with temporary unemployment. Taking advantage of low interest rates by refinancing home mortgages, rolling credit card debt into a home equity loan, extending car payments or getting rid of unnecessary expenditures such as boats, RVs or vacation homes are just a few examples.

"Good people sometimes get caught up in downsizing. But they need to be conscious about their credit," said Holub.

Unemployment goes hand in hand with a sluggish economy and personal investing is not immune to the effects of both.

"We've seen some changes. It's such a trickle down effect. It hurts housing prices, retail, restaurants. It hurts everything," said Jim Augustine, vice president at RBC Dain Rauscher.

One displaced Gateway employee, who asked not to be identified, said his family vowed to stay in Sioux City. "We did fine, but I worked more hours. We didn't go on vacations. It took a toll on the family." After nearly two years of job hopping, he left town this week for a job out of state.

Self-esteem takes a hit
Self-esteem takes a hit when an out-of-work employee is faced with mounting financial concerns on top of an uncertain job market.

"There are issues about your sense of self and well-being. There can be a sense that I've lost my job because I've done something wrong or there is something wrong with me," said Jensen, of JTP. "Although we all know rationally that is not the case, when you're in that situation, it's easy for you to begin thinking that way."

Gloria Jones-Johnson of Iowa State agrees. As unemployment increases, so does the rate of alcohol and drug abuse, depression, marital problems and domestic violence.

Jones-Johnson said that Caucasians are more likely to internalize the effects of underemployment, believing that their situation is related to personal performance, which can lead more quickly to depression and low self-esteem. African-Americans, Hispanics and other minorities, on the other hand, are more likely to externalize things, attributing the situation to racism, environment or the economy. Over time, said Jones-Johnson, African-Americans and other minorities suffer more consequences, because those populations are more likely to be unemployed or underemployed for longer periods of time.

"A big problem is discouraged workers, where people just give up looking for work," said Jones-Johnson. "There is this learned helplessness."

What can be done?

Garnering support from friends, family and peers, networking, looking ahead and staying involved will be important tools to coping with under- and unemployment. Getting involved in support groups and volunteering also will help ward off the professional and social isolation that can come from job loss, say experts.

"A critical thing is that people (need to) feel that they are empowering themselves, that they aren't at the mercy of the system," said Jones-Johnson.

We're not alone
As local workers struggle for good jobs, they join a growing number of people nationwide who are grappling with unemployment or underemployment, much of which isn't represented in the Labor Department's official numbers.

National unemployment is at a nine-year high of 6.4 percent, and on Tuesday, the Conference Board, which tracks consumer spending statistics, reported that its consumer confidence index slid to 76.6 in July from 83.5 in the previous month, citing consumer jitters about rising unemployment.

Sioux City recently hit a 10-year high of 4.5 percent unemployment. Will that number shrink anytime soon? With the planned opening in the next year of several new businesses- including Barnes and Noble, Lowe's Home Improvement and a 14-screen cineplex downtown - local officials hope so. But those retail jobs will be mostly low-wage positions. Economic development requires a much bigger boost.

Even with growth improving, it will still take time to make much of a dent in the unemployment rate. Mark Zandi, chief economist at Economy.com, said the country isn't likely to see a significant rebound in employment until next year.

Jones-Johnson agrees. "I don't really see a turnaround for about 3 more years. In the meantime, there will be a lot of social upheaval and a lot of people will fall through the social net."

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