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The Great Recession: Five years later

From lost jobs to lost homes, downturn hit and hurt so many

POSTED: December 15, 2012 11:59 p.m.

You’ve probably heard the story before, perhaps from someone you know, a loved one or even a stranger. Or, like Janet and Mark Sills of Murrayville, you may have lived through it, every awful minute.

The Sills were living the American dream — both had jobs and they had a house. She had just bought a car.

Then, Janet was laid off from her sales assistant job of 11 years at a Gainesville company in February 2008. A year later, Mark lost his job at a Roswell architectural firm. Like so many, they tapped into their savings but couldn’t save their home.

“It totally changes your perspective on things. You think it never can happen to you, but it can,” said Janet, who is just starting to regain her footing with a job as activities coordinator for the Lumpkin County Senior Center in Dahlonega.

“It can happen tomorrow. You just don’t know. That’s how it happened for us — we had no clue we were about to lose our jobs.”

A historic downturn
In the Sills, the Great Recession had claimed another victim. They would be among millions struggling to find their way, affected by what economists have called the worst economic downturn since the Great Depression, which struck in October 1929.

The recession began five years ago in December 2007 and lasted 18 months, the longest of any downturn since World War II, according to the U.S. National Bureau of Economic Research, a private group of leading economists who determine recession time frames.

But the recovery has been grindingly slow, with the effects still being seen in all aspects of the economy, such as joblessness, foreclosures and mortgages exceeding property values.

“The causes were many, but fundamentally it was caused by imbalances in the private sector ... particularly in the property and financial markets ,” said Jeff Humphreys, director of the Selig Center for Economic Growth at the University Center of Georgia in Athens.

“I’m not blaming them. The blame goes to everyone, including individual households that took on too much debt. That is why this recession was so much worse than the garden-variety recessions we’ve had since World War II.”

John Scott, economics professor at North Georgia College & State University in Dahlonega, said the crisis stemmed from public policy that “said lenders need to make loans to people who probably can’t pay their mortgages.”

He cited the federal Community Reinvestment Act of 1977 and continuing in the 1990s with the U.S. Housing and Urban Development “telling Fannie Mae and Freddie Mac that they should buy these loans made to people who probably couldn’t pay them back.”

Fannie Mae is the common name for the Federal National Mortgage Association and Freddie Mac is officially the Federal Home Loan Mortgage Corp. Both have operated to buy mortgages from lenders and repackage them as securities for investors.

HUD “gave them targets to buy up those loans and kept increasing those targets, and by the time everything burst, their portfolio ... was over $5 trillion,” Scott said. By comparison, “our gross national product was maybe $13 trillion.”

Seeing that Fannie Mae and Freddie Mac were starting to corner the mortgage market, “private markets said they wanted to get in on this and they started making loans to poor people and insuring them,” he said.

“As long as housing prices are going up, that’s fine because when somebody who can’t pay defaults (on the mortgage), you sell the house for more than they bought it for,” Scott said.

“But if housing prices ever go down, when people start defaulting, you sell it for less than you bought it for. It’s expensive for (banks) to foreclose and sell.”

Humphreys said, “Recessions that are characterized by financial panic and by major asset value corrections are much more difficult to recover from.”

Both Humphreys and Scott believe federal government intervention deepened what could have been a shorter economic crisis.

The government “took on a lot of additional debt to ease the pain of (what) was going on in the private sector, but I think it was overdone,” Humphreys said. “And that’s (discouraging) the private sector, which wants to expand ... but there’s a lot of hesitancy to hire, deploy investments and spend money.”

The National Bureau of Economic Research actually announced in December 2008 that the recession had started a year earlier.

Scott remembers that well, telling students at the time that he expected the downturn to “play out in a couple of quarters.”

He said something like, “If the government just lets things be, maybe unemployment will be headed back in the right direction in 2010.”

“The government didn’t leave it alone, so in my view, the recession was prolonged by lots of government action that private business cannot evaluate,” Scott said. “They didn’t know what their taxes were going to be and they didn’t know what their health care costs were going to be.”

Economists and others say that uncertainty still reigns, as rules for the upcoming — and most likely delayed — Affordable Health Care Act changes in 2014 haven’t been released and because of the “fiscal cliff” facing the U.S. today. President Barack Obama and congressional leaders are debating tax cuts that expire Dec. 31, as well as entitlements and other financial programs.

One thing that is certain is that the downturn has wrecked many lives of hard-working Americans.

Struggling for work
Dennis K. Hruby spent 30 years in the transportation industry, including a relocation to Hall County several years ago. After his layoff this February, he has struggled to get back on his feet, and has spent retirement money to make ends meet.

He also believes his age, 61, and experience have worked against him.

“We’re the forgotten market,” Hruby said. “It’s like when you’re 18 and how do you get a job (without) experience? It’s kind of like going back to be a kid, but you’re not a kid.”

Sills recalled trying to find a job at the same time that other laid-off workers were looking and employers weren’t hiring.

“We couldn’t find any silver lining,” she said. “I found myself looking down a lot because you just don’t feel good about yourself. I’d see pennies on the ground and that was the good thing in my day. It’s hard just to roll out of bed and put your feet on the floor.

“It’s just devastating.”

Lory Healy, 64, of Cleveland, was a homemaker for 30 years. After her separation from her husband, she ventured back into the workplace.

She went from job to job during the recession and ended up getting a medical front office certificate at Lanier Technical College.

“By that time, the recession had really taken hold and doctor’s offices were laying off that position and having the nurses cover it,” Healy said.

She now is trying to start a business, Healy Freelance Office Services, where she hopes to help companies with a “front-office image that would develop their business.”

Silva Wilson of Buford said that after she was laid off from her job in production/assembly, she also went back to school in South Carolina to get training for another career.

That hasn’t worked out so far for her, either.

“I’ve been looking for a job and everybody wants experience, and when you’re first getting out of school, you don’t have experience,” she said during an interview with The Times at the Georgia Department of Labor office at 2756 Atlanta Highway, Gainesville.

The state labor department had to adjust for the recession, as well.

“The biggest problem was the massive influx of people, especially during 2009, when Georgia’s initial claims more than doubled in a year,” said Labor Commissioner Mark Butler. “The workload doubled across the state and also put tremendous stress on a lot of our outdated technology.

“When I came on board (in 2011), we were still a paper-intensive agency. Definitely, the staff was put to the test.”

Because of the glut of jobless claims, the department got away from “our previous philosophy of concentrating on getting our customers employed,” Butler said. “The concentration has shifted almost solely into getting someone signed up for benefits.”

Diversity a saving grace
Many of those who have kept a job during the downturn have been affected in other ways, such as hours and benefits being cut.

Furlough days have been common for public employees, including sheriff’s deputies and teachers, and are still ongoing as governments battle dropping property tax digests.

Hall County’s digest — a list of taxable properties — has dropped steadily over the years because of falling home values. The ever-shrinking digest, as of Tuesday, was at $5.95 billion, down from $6.5 billion in 2007.

“There’s so much inconsistency in the sales of real estate, (especially) when banks sell (property) as opposed to when individuals buy and sell them to each other,” Hall County Chief Appraiser Steve Watson said. “In some cases, there’s no rhyme or reason for what they sell them for ... and it’s influenced by some of the things that are going on with the lending institution.

“In some cases, we have seen extremely low sales prices, especially when you have a bank that has foreclosed on somebody and then the bank fails and get purchased by another bank, and that bank sells the property at a greatly reduced price.”

At one time, new housing was a huge business in Hall County, as the population grew steadily over the past couple of decades and subdivisions — some very large — began springing up.

As the recession went into full swing, so did the brakes on residential development, leaving some communities with unfinished homes and amenities.

“We were building houses based on anticipated growth rates and an expanding economy,” said Frank Norton Jr., a Gainesville real estate executive who tracks housing and construction trends.

“In late 2006, we started seeing cracks in the real estate foundation in California and it slowly spread throughout the country in 2007,” he said. “(Housing) permits started falling off in February 2007, locally. Builders started pulling back and then got caught with too much inventory of raw land, developed lots and standing houses.”

But the county didn’t have the same rate of growth as other counties in metro Atlanta, and that turned out to be a blessing in a down economy.

Also, Hall doesn’t rely on one or two main industries for its economic base.

“What’s really helped us in the last few years is we have such a diverse (economy),” said Tim Evans, vice president of economic development for the Greater Hall Chamber of Commerce. “We’re not overdependent on one sector.”

Over the past few years, the manufacturing sector in Hall defied national trends, with plant expansions and new construction — such as ZF Wind Power in the Gainesville Business Park and King’s Hawaiian in Oakwood.

Russell Vandiver, president of Lanier Tech, which is based in Oakwood, said the school has seen “a lot of students attain skills and go out and get jobs based on those skills, and that’s because we’ve been so fortunate to see jobs grow locally, so they didn’t have to go somewhere else.”

He said Lanier Tech’s placement rate has been about 92 to 93 percent in the past year.

“That’s a great number during a bad recession,” Vandiver said.

Other organizations have helped stem the jobless flow.

Picking up the pieces
Three years ago, Anne Dittman had the idea of helping people learn the skills they need to find a job. At about the same time, Carl Liggett had the same idea. The two teamed up to create Career Connection at Gainesville First United Methodist Church.

Healy and Sills both said they found a new direction through Career Connection.

“It was the most fabulous move I’ve ever made in my life,” she said. “The people there were inspirational, knew what they were doing. The retired managers who shared their time were extraordinarily encouraging and had the technical skills to teach us to get out and network.”

Sills recalled giving her resume to Dittman, who said she had a job in mind for her. Dittman referred Sills to a human resources employee in Lumpkin County.

“I sent my information to her and went through the interview process and got (the job in October),” she said. “I couldn’t believe it. I don’t make a lot of money doing what I do, but I realize it’s not all about the money anymore. It’s being happy about what you do.”

An architectural firm hired her husband early this year as a temporary worker.

“He’s hourly and doesn’t get benefits, but it’s just great to have a job that seems fairly stable and close to home,” Sills said.

“It feels like things are turning around for the better. I hate to say all this was meant to be, but it was a chance for us to re-evaluate and do something we enjoyed doing.”


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