John Henion is a freelance video producer in the San Francisco Bay Area. He was laid off from a staff position in 2008 (full disclosure: at Current) and entered into the freelance world. He blogs about unemployment at Unemploymentality. We spoke yesterday for The Real Recovery.
Life for a freelancer can be tough - especially at the beginning. John Henion moved out to California from Michigan where he'd already established himself with freelance work. In California he had none. He said the move made him "take a step back and do things I didn't want to do." For example, John was about 30 when he moved here, had already produced his own independent documentary, but found himself taking a production assistant role on "Wife Swap" just to be working. "I was beyond the point where I wanted to pick up trash on the set and being told to go get lunches," he said. "After that experience I realized I didn't need to lower the bar that much."
The goal as a freelancer is to have steady work. There are some great benefits - like being your own boss and scheduling your own time off - but there are somethings that are definitely not benefits - like not having benefits. John was lucky to have insurance through a domestic partnership with his girlfriend, but he said for many freelancers the decision about whether or not to get insurance is just whether or not you want to take your chances.
After being laid off, John said it took him about 6-8 months before he was getting steady work again. These days, he has about 5-6 return customers and pulls in a lot of one-off projects. He's been able to work himself back up to an income level comparable to having a full-time staff position. But that comes with a lot more work than just the actual time spent working. "The worst part is...I have to deal with chasing down money. Some people wait until the last minute to pay you or wait until you raise a stink. You know, they want to keep that money on their books as long as they can."
The most important thing John has found to remember freelancing is that no matter how much time he spends at an office, no matter how many new friends he makes in a workplace, being a freelancers puts him in a different position. "As a freelancer they can just stop calling. First time that happened I thought I did something wrong....When they stop calling it's not personal....They're not supposed to roll over and kiss you in the morning, just leave some money on the bedstand."
Are you a freelancer? Have a recession story to tell? Post it to The Real Recovery.
Here's a math problem for you: The national unemployment rate hits its highest point since the 80s in October: 10.2 percent. According to a report released this week last year 14.6% of Americans couldn't afford to buy enough food. How does that add up?
Well outside of the various nitpicks that can be done to both of those numbers, one big culprit is "underemployment". We've been talking about underemployment a lot in The Real Recovery because I think it's a more accurate measure of how many Americans have been affected by the recession. If you "get discouraged" and stop looking for a job, you no longer count as "unemployed". Or, as we're talking about this week: if you go freelance part time.
The official measure of underemployment is called the U-6 and the Bureau of Labor Statistics describes it in breathtaking terms:
Total unemployed, plus all marginally attached workers, plus total employed part time for economic reasons, as a percent of the civilian labor force plus all marginally attached workers
In October, when we saw that big 10.2% unemployment number, the U6 number was at 17.5% Nearly a fifth of the population!
You know what that does not include though? All the Americans who've taken pay cuts or reduced hours in the recession. (More digging through numbers to come).
Want to get involved with The Real Recovery? Here's two easy things you can do:
- Post your story to the group. How have you been affected? Are you underemployed? Have you taken a pay cut?
- Help me find some other numbers to look at. How many Americans have taken pay cuts?
Hey freelance workers, this week The Real Recovery is all about you. We want to hear from people who freelance successfully, people who have gone freelance after losing their job, and people who are barely scraping by with freelance work.
Did you know: If you're freelancing, even making far less money than you can survive on, you don't count as 'unemployed'? You fall under a different category called 'underemployment' - here's the applicable part of the definition from Wikipedia:
"Involuntary part-time" workers -- workers who could (and would like to) be working for a full work-week but can only find part-time work. By extension, the term is also used in regional planning to describe regions where economic activity rates are unusually low, due to a lack of job opportunities, training opportunities, or due to a lack of services such as childcare and public transportation.
The national unemployment rate is 10.2% as of October. That's according to the Bureau of Labor Statistics. The BLS doesn't seem to keep a national underemployment number, which is a lot harder to nail down. But we recently saw that in California underemployment was estimated to be about a fifth of the total population.
This is another topic we want to tackle. As we're trying to put together a picture of the Real Recovery, we want to try to get a handle on underemployment estimates. We'll be working on that for the next month or so. If you want to get involved in that effort, send me a message on Current.
And this week - if you freelance or ever have - tell us about your experience by posting your story on The Real Recovery.
This week on The Real Recovery we're looking at how the recession is affecting college grads. It's tough to graduate into such a tight job market. Especially if you've got loans. For many, going to college automatically comes with a big chunk of money that must be paid off. As finding a job gets harder - that amount of money can hang like an albatross from your neck.
The image featured here, posted on The Broke Grad Student, shows average student loan debt by state - and no matter where you live, that average is somewhere between $13K and $26K. That's a lot of money!
But despite the high costs the question for many American high schoolers is not whether to go but where to go. Are too many Americans going to college?
From the Chronicle of Higher Education:
"Marty Nemko: Increasing college-going rates may actually hurt our economy. We now send 70 percent of high-school graduates to college, up from 40 percent in 1970. At the same time, employers are accelerating their offshoring, part-timing, and temping of as many white-collar jobs as possible. That results in ever more unemployed and underemployed B.A.'s. Meanwhile, there's a shortage of tradespeople to take the Obama infrastructure-rebuilding jobs. And you and I have a hard time getting a reliable plumber even if we're willing to pay $80 an hour—more than many professors make."
It's estimated that on average college grads tend to make about 80% more per year in salary than those without a degree. That's a pretty significant and motivating number, especially when you take into consideration the higher unemployment numbers for those without a college degree that we looked at yesterday. But if you've got loans - some of that has to go to paying them off. And for grad students it's even worse.
Faced with a difficult job market and high student debts, many folks with a B.A. duck back into graduate school to forestall repayments they can't afford. But as you can imagine - that just leads to more debt. Forbes has a controversially titled article that tackles the high debts a law degree can come with: The Great College Hoax.
"Accepted into the California Western School of Law, a private San Diego institution, [John] Kellum couldn't swing the $36,000 in annual tuition with financial aid and part-time work. So he did what friends and professors said was the smart move and took out $60,000 in student loans. Kellum's law school sweetheart, Jennifer Coultas, did much the same. By the time they graduated in 1995, the couple was $194,000 in debt. They eventually married and each landed a six-figure job. Yet even with Kellum moonlighting, they had to scrounge to come up with $145,000 in loan payments. With interest accruing at up to 12% a year, that whittled away only $21,000 in principal. Their remaining bill: $173,000 and counting."
Should you go to grad school? Most experts agree it only makes sense if you have a specific goal in mind. Penelope Trunk's Brazen Careerist lists several points against enlisting in grad school to hide out from a recession:
"1. Grad school pointlessly delays adulthood....3. Business school is not going to help 90% of the people who go....5. The medical school model assumes that health care spending is not a mess."
So what's your experience? Did you go to college? Grad school? Did you have an albatross of loan debt? Tell us your story on The Real Recovery.
There is no independent auditor overseeing the federal agency responsible for some $6 trillion in home mortgages, because the Department of Justice's Office of Legal Counsel ruled that the agency's inspector general didn't have authority to operate, according to internal memos obtained by the Huffington Post.
The ruling came in response to a request from the Federal Housing Finance Agency itself -- which means that a federal agency essentially succeeded in getting rid of its own inspector general.
The FHFA is home to Fannie Mae, Freddie Mac, and the Federal Home Loan Banks, which are jointly responsible for purchasing or guaranteeing more than 80 percent of new mortgages issued since the middle of 2008, according to FHFA numbers.
Who is faring the worst in this recession? Everyone is doing poorly - but some groups have been more affected than others. The NY Times Economix blog broke down the numbers by huge swaths of demographics last week.
The graph that caught my eye was the very first one - apropos of our Real Recovery topic this week - how are recent college grads affected?
(That said, when you break it down by education, college grads have done comparatively well - those with less education have been more adversely affected.)
The worst affected group is young, African-American men who are less educated. This neat interactive graphic compares all the different demographic slices. Where do you fall on the graph? Has that been your experience?
This week, the Real Recovery is focusing on college graduates - recent, upcoming and all-time. I wanted to highlight a few stories shared in the comment thread on the initial college stories post. If you have one - go to the Real Recovery group, click Post a Story, and start typing!
From user trangster:
I graduated this past May and applied for part time and full time jobs. After months of being rejected by employers for not having work experience because I was earning a college education at the time, I started working as a part time host at a restaurant. I recently picked up another part time job so now I'm working two part time jobs to meet bills. Hopefully I get accepted into grad school next year.
From user sugarlilly:
i am a recent college grad working in a job i love but that requires absolutely no education. sorry sallie mae, that 50 grand will have to wait.
From user Karolein:
The first term I learned on-the-job after college was "reduction in force". It was a rude awakening. I finished graduate school in a recession and it took 18 months to find a full-time, regular job. After 15 years in a nice office, I'm looking again, but instead of living at home I have a mortgage to pay. Life is cyclical.
It's been tumultuous for the economy in the half-week since we launched The Real Recovery: unemployment benefits were extended and then October's unemployment numbers hit over 10 percent. It seems like just the right time to get to the real stories behind the economic stats.
Each week on The Real Recovery we're going to ask a big question - and then spend the week figuring out the answer with your help. For next week - we're looking at those entering the job market for the very first time.
If a tenth of America is unemployed - how hard is it going to be for recent college graduates to get jobs? For college seniors who expect to graduate in 2010? From the National Bureau of Economic Research: "The Career Effects Of Graduating In A Recession":
Graduating in a recession leads to large initial earnings losses. These losses, which amount to about 9 percent of annual earnings in the initial stage, eventually recede, but slowly -- halving within five years but not disappearing until about ten years after graduation.
Starting Monday - we're going to focus on college graduates. Here's how you can get involved:
Are you a college senior?: Post a story on The Real Recovery about your job search. Do you have something lined up? Are you just trying not to think about it?
Did you graduate this year?: How's it been out there in the job market? Have you been able to find work?
Did you graduate years ago?: How was your experience in the economic climate you had? How does it compare to today's?
You can post your story to Current by clicking the "Post a Story" button on The Real Recovery group page and then just start typing!
And also, if you want to get involved as an investigator - send me a message on Current.
The Senate passed a bill yesterday to extend unemployment benefits for the jobless to 14 weeks, and up to 20 weeks for those who live in states with over 8.5 percent unemployment.
From the Washington Post:
"More than 1 million people would have had their benefits ended without the extension, according to the National Employment Law Project, a nonpartisan group that tracks the issue. More than 15 million Americans are now unemployed, more than a third of whom have been out of work for more than six months."
The House has passed the bill today - and it's expected to be signed into law by President Obama very quickly.
Also yesterday we launched The Real Recovery (here's the intro blog post) - our group investigation into how the recession's effects are still lingering despite its end. Are you unemployed - directly affected by this news? Let us know. Go join The Real Recovery group and post your personal story.
We’re launching a big project today on Current News. And we’re going to need your help.
Here’s the idea:
Everybody says we’re headed for an economic recovery, right? The economy grew in the third quarter of this year, the Dow is hovering around 10,000, even Ford managed to make a profit. But the other thing that everybody says is that it’ll be a “jobless” recovery. The economy might grow, but unemployment will stay the same. To say nothing of underemployment – people who have taken lesser positions, started freelancing or stopped looking for new work. While the financial folks celebrate the return of the bull market – what about the rest of us?
We want to paint a picture of what’s really going on out there. As the recession comes to an end – what does the recovery really look like? What is the real recovery?
Over the next few months – until the end of the first quarter of next year – we’re going to conduct a special new experimental project to look at the state of our nation. This is where you come in.
My office is in San Francisco. I can give local perspectives from here. But in order to tell this story from every corner of the country – we need your help. What do things look like where you live? Do you have a personal story about how you’ve been affected by the recession?
How you can get involved:
- The big thing is that you can write your own posts in the group “The Real Recovery”. What are we looking for? Local perspectives and personal perspectives. Just a few paragraphs: How are you or your community affected? Every week we’ll have different questions we’re asking – and we want you to post your answers.
- Now, do you want to get really involved? You can become a part of our Current Investigation Network. That means we’ll put you on an email list where sometimes we’ll reach out digging for info or to ask you to help out with collaborative assignments. If you want to be a part of the project by doing a little real journalism – this is the way to do it.
- And as always, you can clip stories and you can weigh in on the comments of posts. We’ll be highlighting stories people post over on the Blog – and that could be yours.
This is a big new step for Current News, and I’m personally very excited about it. I worked on Collective Journalism for two years, our citizen journalism program, and I think this is an even bigger opportunity to get even more people involved in the journalism we make.
So, what’s the next step?
- Join the group: “The Real Recovery”
- Tell us your story – just a few paragraphs. Either post in the comments here – or post your own story to the group. This Friday we’ll feature some of your contributions.
- If you want to be a part of the investigation team – send me a direct message.
"WASHINGTON -- Goldman Sachs Group Inc. is in talks to buy millions of dollars of tax credits from government-controlled mortgage giant Fannie Mae, but the potential deal is running into opposition from the U.S. Treasury, which could block the deal.
A sale would bring some needed financial respite to Fannie Mae. But the administration is leery about approving a deal that would help Goldman reduce its tax bill, given the animus held by many lawmakers toward big Wall Street firms in general and Goldman in particular.
The Obama administration is looking at the deal with a critical eye and could ..."
You have to be a subscriber to see the rest of the article, but let me try to finish it:
The Obama administration is looking at the deal with a critical eye and could ...continue to do business as usual and sell out the American public in favor of global, corporate elite, who own this country."WASHINGTON -- Goldman Sachs Group Inc. is in talks to buy millions of dollars of tax... more
The Beckers fell months behind on their mortgage and finally found it was Goldman after their houseThe Beckers fell months behind on their mortgage and finally found it was Goldman... more
will introduce legislation to steer funds repaid by U.S. banks to enemployed, mortgage aid.will introduce legislation to steer funds repaid by U.S. banks to enemployed, mortgage... more
As the foreclosure rate continues to set new highs, a little-noticed legal provision that requires bankers, if challenged, to prove they hold the original mortgage documents before getting possession has spawned a minor homeowner rebellion, alternately called "produce the note" or "show me the note". For homeowners trying desperately to keep their homes, the tactic is one way to buy some time -- and maybe even get the upper hand on the lender.
Click the link for the article in it's entirety.Remember those playground words "prove it!"?
As the foreclosure rate continues to... more
Thousands of Bay Area homes have a ticking time bomb embedded in their mortgage. The homes were purchased with loans known as option ARMs, short for adjustable rate mortgages.
Next year, many option ARM payments will begin to readjust, slamming borrowers with dramatically higher monthly mortgage bills. Analysts say that could unleash the next big wave of foreclosures - and home-loan data show that the risky loans were heavily used in the Bay Area.
From 2004 to 2008, "one in five people who took out a mortgage loan (for both purchases and refinancing) in the San Francisco metropolitan region (San Francisco, Alameda, Contra Costa, Marin and San Mateo counties) got an option ARM," said Bob Visini, senior director of marketing in San Francisco at First American CoreLogic, a mortgage research firm. "That's more than twice the national average.
Taylor, Bean and Whitaker Mortgage Company filed for bankruptcy earlier this August, and problems for the customers continue. The latest news comes from the Director of Mortgage Supervision at the Georgia Department of Banking and Finance: Bank of America is going to take over the servicing rights for FHA loans and Ginnie Mae loans previously held by Taylor Bean and Whitaker Mortgage Company.Taylor, Bean and Whitaker Mortgage Company filed for bankruptcy earlier this August,... more
By Renae Merle
Washington Post Staff Writer
Tuesday, August 18, 2009
The country's growing unemployment is overtaking subprime mortgages as the main driver of foreclosures, according to bankers and economists, threatening to send even higher the number of borrowers who will lose their homes and making the foreclosure crisis far more complicated to unwind.
Economists estimate that 1.8 million borrowers will lose their homes this year, up from 1.4 million last year, according to Moody's Economy.com. And the government, which has already committed billions of dollars to foreclosure-prevention efforts, has found it far more difficult to help people who have lost their paychecks than those whose mortgage payments became unaffordable because of an interest-rate increase.
"It's a much harder nut to crack, unemployment," said Mark A. Calabria, director of financial regulation studies at the Cato Institute. "It's much easier to bash lenders than to create jobs."
During the first three months of this year, the largest share of foreclosures shifted from subprime loans to prime loans, according to the Mortgage Bankers Association. The change to prime loans -- traditionally considered safer -- reflects the growing numbers of unemployed who are being caught up in the foreclosure process, economists say.
Rep. Barney Frank (D-Mass.), chairman of the House Financial Services Committee, has proposed using $2 billion in government rescue funding to provide emergency loans to these borrowers. "We are going to be seeing more foreclosures because of prolonged unemployment," he said. "These are people who weren't in trouble and wouldn't be in trouble if they hadn't lost their job."
Unlike the borrowers with subprime mortgages who helped ignite the housing downturn more than two years ago, Deepak Malla, 42, fell behind on his payments when his information technology job was shipped overseas late last year. He does not have a subprime loan, and he made a 20 percent down payment when he bought his five-bedroom house in Ashburn in 2005. The payments were affordable -- until he lost his job.
Last year, about 40 percent of borrowers who sought help at NeighborWorks, a large housing counseling group, cited unemployment or a pay cut as a primary reason for their delinquency. Now it is about 65 percent. The number citing a subprime loan fell significantly.
"Rising unemployment, for the sake of this downturn, has magnified things considerably," said John Snyder, manager of foreclosure programs for NeighborWorks. "It's less about the payment adjustment."
When a subprime borrower becomes delinquent because of a hefty payment increase, the fix often involves lowering the interest rate to its original level. Unemployment poses a more difficult challenge, industry officials and consumer advocates said. During extended periods of joblessness, the borrower accrues large late fees that drive up monthly payments. And a new job often comes with lower pay, making it more difficult to catch up.Unemployment Spike Compounds Foreclosure Crisis
By Renae Merle
Washington Post... more
China's $200 billion sovereign wealth fund, which lost big on its ill-timed 2007 Morgan Stanley and Blackstone bets, plans to invest up to $2 billion in U.S. mortgages as it eyes a property market rebound, two people with direct knowledge of the matter said Monday.
China Investment Corp plans to soon invest in U.S. taxpayer-subsidized investment funds that will acquire "toxic" mortgage-backed securities from the nation's banks. CIC believes these assets are a safer bet than buying into the U.S. Federal Reserve's Term Asset-Backed Securities Loan Facility (TALF), the people with direct knowledge said.
CIC is in talks with nine U.S. Treasury-designated Public-Private Investment Plan managers, the sources said.
They include: AllianceBernstein Holding, with sub-advisers Greenfield Partners LLC and Rialto Capital Management LLC; Angelo, Gordon & Co LP with GE Capital Real Estate, a unit of General Electric Co; BlackRock Inc; Invesco Ltd; Marathon Asset Management LP; Oaktree Capital Management LP; Trust Company of the West, a unit of Legg Mason; RLJ Western Asset Management LP, a venture formed by Legg's Western Asset Management unit; and Wellington Management Co LLP.
CIC is expected to decide this month which of the nine PPIP managers will handle its investments in mortgage-backed securities under the PPIP plan, the sources said.
The fund is likely to select several, not all, of the firms, said the sources, who have direct knowledge of the matter, but asked not to be identified as the talks are confidential. CIC cannot invest directly in the PPIP.
CIC, BlackRock, Legg Mason and AllianceBernstein declined to comment. Officials from the other investment managers were not immediately available.
U.S. TREASURY APPROVES
Under the Public-Private Investment Plan launched earlier this year, the U.S. government plans to seed a number of investment funds with taxpayer money.
When combined with money from other investors, these private sector-managed funds are expected to soak up as much as $40 billion in soured, hard-to-sell securities clogging the balance sheets of banks.
CIC's move comes after the United States and China ended their first annual Strategic and Economic Dialogue late last month. The two countries agreed to lead the global economy out of recession, with China seeking safer investments in the world's leading economy.
"The Chinese government is always trying to seek a more ideal way to invest in U.S. assets rather than purely buying U.S. government bonds all the time," said the source.
"Some might think $2 billion for a $200 billion sovereign fund is not big money, but it can be regarded as an innovative and positive option for Chinese investment," the source added.
The U.S. Treasury has been informed the nine designated PPIP managers are in talks to receive CIC money, and supports bringing foreign investors such as CIC into the PPIP program, the sources said.
Early this year, some U.S. asset managers approached CIC to invest in their funds focused on mortgage securities sold into the market under the TALF, the sources said, but the Chinese declined given the uncertain outlook at the time for U.S. economic recovery.
Click link to continue...China's $200 billion sovereign wealth fund, which lost big on its ill-timed 2007... more
Taylor Bean & Whitaker was raided by FBI, First Guaranteed Mortgage is under investigation, Also Advanced Mortgage Solutions in Florida has a few bad apples. For more on the mortgage meltdown please visit www.hotchicksstockpicks.comTaylor Bean & Whitaker was raided by FBI, First Guaranteed Mortgage is under... more
