Lehman Bankruptcy Trickle Down
The news about the demise of Lehman Brothers reminds me of watching the telecom meltdown of 2001, from my ring-side seat as a recruiter in the Dallas Telecom Corridor.
On Monday, shocked Lehman Brothers staff were told to "move on":
The mantra of Lehman Brothers was to pay its staff in stock – some 30 per cent of the bank’s equity was held by employees and many bonuses were paid in shares. Now those holdings are all but worthless.
Some staff were also told not to expect a paycheck at the end of the month and that they might even be liable for expenses on their corporate credit cards.
No one ever sees this kind of financial decimation coming. Almost no one is prepared for it.
They expected the money to last forever, not unrealistically, in the same way we all generally expect our paychecks to be there next month, and the month after that.
They have made major financial commitments on the basis of their "stable" jobs.
They have kids in college, multiple cars, mortgages on homes, and balances on their credit cards.
Their money wasn't income. Like too many fellow Americans, it was throughput.
What happens on October 1 when the mortgage payments, credit card bills, accounts, and household expenses all come due, based on a 6-figure salary lifestyle, and there's nothing in the bank at all? Except those Lehman Brothers stocks they got for their Christmas bonus and socked away for a rainy day that aren't worth a dime.
How many people do you know who would be "just fine" if their paychecks didn't come through at the end of the month?
Think this isn't a women's issue? As Christy Hardin Smith puts it in Women and the Economy : "What do you fry up in the pan when you have no money for the bacon?"
In 2001, I was dealing as a recruiter with telecomm middle managers who were shell shocked. They didn't know how to "look" for a job; they'd been at Nortel or Baby Bells for decades. They didn't know how to do anything else. They didn't know how to cope.
Like the former employees of Lehman Brothers, these were people without real world skills. What were they going to do, get a job at McDonalds? I did't know where they are supposed to go--and neither did they.
They had never tightened their belts or cut corners. They had never reduced, reused, and recycled. They've never clipped coupons or shopped from the clearance rack.
They never dreamed that one day they'd have to apply for unemployment benefits, let alone welfare, or that they might have to rely on food banks and soup kitchens to feed their children.
They had followed the rules all their lives, lived the American dream, and now they were totally screwed.
And the women? The women that had been told that if they just managed elder care, child care, and full time household management on top of their telecom careers, if they just worked longer and harder to prove they were just as good, maybe they'd get a shot at the corner office, too. So much for the corner office, ladies.
Quite often the job candidates I spoke with were from households with two full-time working adults, where one spouse's income wouldn't support the family alone, but there were no local job prospects for the partner who had just lot a job. Catch 22: can't afford to stay, can't afford to go.
Reading about Lehman bankruptcy gives me a terrible feeling of déjà vu.
When the same kind of sudden, massive job losses happened in the telecom sector in 2001, people were losing their homes and their cars, fast. Plano, Texas (the affluent Dallas suburb that housed a lot of the major telecomm earners) had the country's highest home foreclosure rate.
I now expect that honour to pass to whichever neighbourhoods house the workers of Wall Street.
Oops. There goes the property values.
This conflagration is going to hammer New York.
Let be be clear: I am not suggesting a hierarchy of victims here. I'm not saying: "Oh those poor rich people can't cope with adversity, that makes them so much more important."
What I am saying is it that while it is easy to indulge in schadenfreude and enjoy the misery of the poster boys of the entitlement class, these are human beings who are shocked and suffering right now.
And they are the canaries in the coal mine: their shock and suffering is about to trickle down to everbody.
And we all know that when the bad stuff comes rolling down the slope, women are on the front lines of economy adversity.
You might be wondering, what happened to that "boutique telecom search firm" I was working at in Dallas in 2001? We didn't work "in telecom" but in the tidepools of the industry. We got sucked down, too.
A month after I joined the company, 2/3 of the staff were laid off, in an incredibly stressful group meeting, which concluded with the president announcing we could take home the meeting bagels if we wanted. When I read about the Lehman employees using up their non-refundable, pre-paid cash cards to buy non-perishable items from the staff cafeteria, I was reminded of those bagels. Not exactly the severance package everyone was expecting.
I watched my colleagues disintegrate: one lost her home, one's marriage broke up under the strain. I watched a colleague move in with a very new boyfriend because she couldn't pay her rent, and I hope it isn't a choice that either regret. I watched friends move across the country because the draconian non-compete clause in our contracts wouldn't let them stay in Dallas and work in the same field.
Those of us that were still left limped along for a few months. Then the owner told us she wouldn't pay the company contribution to our medical insurance anymore: we could cough it all up ourselves or go off the plan. Then she just stopped paying us altogether. When I objected, I was told that as an immigrant she would allow me the pleasure of working for free or else she'd cancel my work visa--and I would have to leave the country. I still objected: I received a letter by registered mail acknowledging my "verbal resignation" the next day.
I didn't work "inside telecom," but we still got sucked down by the currents caused by the collapse of bigger companies anyway.
My husband and I tightened our belts and cut corners. We moved into a cheaper apartment, we rationed gas for the motorcycle my husband used to get to work, we lived on rice and beans. We were already paying off a debt at the time, so there weren't a lot of corners left to cut. We pulled through it, and our marriage survived, too. On the other hand, the stress exacerbated long-running health problems that I struggle with to this day.
Today, my husband works in the tech support department of a financial services company. (I'm an unemployable convaslescent dependent on his income.) We're not high fliers, we live within our means. But we could still be next. Again.
We read the financial news with terror.
If you work in a service industry in New York that relies on a six-figure income clientele: housekeepers, restaurant workers, dry cleaners, child carers--you could be next, too. A lot of those workers are women and a large proportion are women of colour.
You know: the workers who don't get stock options. The people who don't make headlines.
But they will be invisible casualties of the Lehman Brothers bankruptcy nonetheless.
Put aside your schadenfreude at the thought of all those paper-rich brokers being brought low, and think about what the Lehman bankruptcy means for those people, their families, and all the families around them.
Here's some trickle down economics for you: the panic and terror from the Lehman bankruptcy is going to trickle down into increased rates of violence against women: more alcoholism/drug abuse, domestic violence, and child abuse.
The Republican Party: putting the "trick" into "trickle down" since the election of Ronald Reagan.
And it's just going to keep trickling down.