WORKING YOUR WAY TO THE POORHOUSE

"In California, former auto worker Maria Gregg was out of work five months last year before landing a new job—at a nearly 20% pay cut.

In Massachusetts, Kevin Cronan, who lost his $150,000-a-year job as a money manager in early 2009, is now frothing cappuccinos at a Starbucks for $8.85 an hour.

In Wisconsin, Dale Szabo, a former manufacturing manager with two master's degrees, has been searching years for a job comparable to the one he lost in 2003. He's now a school janitor.

They are among the lucky. There are 14.5 million people on the unemployment rolls, including 6.4 million who have been jobless for more than six months.

But the decline in their fortunes points to a signature outcome of the long downturn in the labor market. Even at times of high unemployment in the past, wages have been very slow to fall; economists describe them as "sticky." To an extent rarely seen in recessions since the Great Depression, wages for a swath of the labor force this time have taken a sharp and swift fall."
Wall Street Journal

Welcome to the new normal.

It's great that we aren't giving up. It's laudable that many Americans will work at just about anything rather than go on the dole. I'm one of them. I'll take whatever comes along, as long as I can make some money at it, and I've never collected any kind of assistance.

The problem is, can I or a whole bunch of others make any money with low paying jobs? And if not, why work?

This is the ugly reality for me and many others. The cost of being employed is in many cases higher than the wages being paid. Most of us live the way we do because we built our lives around certain expectations, one of them being that we could find work at a certain rate of pay. I've been in the construction business most of my life, just as my dad was before me. I know the up and down nature of my chosen way of life and live accordingly. I've been fortunate to have the skills to always stay working, either as a carpenter or in management and also as a business owner. I've never gotten rich but I usually made a decent living.

Unfortunately, the business I've worked in all my life is pretty much destroyed here in the St. Louis area. Realistically, it ain't ever coming back, either. Not in my lifetime or probably even beyond. The math pretty much spells that out.

OK, so I'll move on. But to what?

Like most people my age (52) I'm married and I own a house. My wife has a good job with a great company so that's saved us so far. But still, my options for employment are limited. We live in a rural area, far from town. This wasn't a problem when things were good because in my business you're going to travel a fair distance to work no matter where you live so living out really didn't add much cost. But now, with wages collapsing it's an issue.

But what can I do? I can't sell my house now, at least for what I've got in it. And I sure don't want to walk away. Like most that own homes, the great American dream, I'm anchored in place by the house I live in.

So if I take a job at say $10 an hour and have to drive 20 miles to get there, what are the chances that I'll end up paying more to work than I earn?

Most retail jobs don't even pay $10 an hour, at least not around here, and manufacturing jobs don't pay much better. And the ones I've applied at are upfront about the fact that the hours are a bit scattered; a couple hours one day, maybe eight the next and four the following. So let's say I have to drive 40 miles round trip. I drive a 3/4 ton Dodge truck with a diesel engine. I'm a carpenter so I need a vehicle like this. On the positive side, I don't owe any money on it. And no, I can't afford to buy an economy vehicle. I'm not working, remember?

The IRS allows .50 cents a mile for business use. Is this accurate? I don't know but it's a benchmark anyway. As the cost of diesel climbs and if it gets back to the $4.50 a gallon it was in 2008 that .50 cents ain't even close.

So if I drive 40 miles round trip my cost is $20 just for transportation. This doesn't include clothing and the other little costs of having a job. So if I get called into work for a couple hours, after the government gets done and the work comp gets taken out I'll end up losing $4 or so for my efforts. Does it make sense to even take a job if this is the case?

And that's the problem with all these types of jobs. Most of us take what we can find because we need the work but we don't think about the cost of being employed for the employee. Most of the time, unless you're a kid in high school, you'll go broke working low wage jobs. It's the little stuff that kills you.

Let's say I'm driving to work at my low paying job and I drive over something in the road that destroys a tire. I've done it before. The tires on my truck cost about $250. I just had them replaced so I know this is the case. Because I have four wheel drive I can't just replace one, I have to replace both on the same axle. Suddenly I've got a $500 dollar repair in front of me. After taxes that wipes out a week and a half of working. Did it really make sense to take that job?

I've been down this road before so I know what I'm talking about. I've taken jobs that paid very little on the pretense that it's better to keep working, regardless of pay because it may open a door that wouldn't have been opened otherwise. And I've found this to be true. But what I've also found to be true is that while I was working that low paying job, looking for that door, I went so deeply into debt trying to pay the cost of working cheap that it sometimes took years of working at a decent job to dig myself out of the hole.

This is something that a bunch of people that haven't ever had to work cheap as adults are about to find out. And this portends terrible, terrible troubles for them and our country in the years ahead. Nothing will ever be as it was again, at least not in my lifetime.