According to an article in the Star-Telegram, the job losses being suffered in the current downturn is beginning to ravage white-collar, highly-paid educated workers.
The article said:
After ravaging blue-collar and lower-paid workers in the construction, manufacturing and retail sectors, job losses from the “Great Recession” are moving their way up the income ladder into areas such as management, financial and professional business services, where more college grads and higher-earning workers…are employed.
The number of unemployed workers with at least a bachelor’s degree has nearly doubled since January 2008 to 1.87 million last month. Their unemployment rate has likewise nearly doubled to 3.8 percent, which is nearing the 3.9 percent level last seen in early 1983.
The big difference between now and 1983 is that there are large numbers of American workers with massive home mortgages (often with no equity), car loans, personal loans, massive student loans and absolutely no savings.
This situation coupled with massive job losses, salary cuts, and foreclosures is set to drive up the number of bankruptcies in this country. Also, the amount of companies facing bankruptcy has increased because of uncontrolled spending and expansion that was solely dependent upon the patronage of consumers who had constant access to massive amounts of credit to fuel the sales.
As the credit markets have dried up, these consumers have ceased spending and several companies have gone bankrupt sending many workers to the unemployment line. What will these highly-paid jobless workers do once they experience a job loss? How will their massive debts be paid when they discover that their high-paying job can’t be replaced? This is why bankruptcy has to be part of laid off workers long-term financial plan. Bankruptcy gives debtors a fresh start which is what is needed when an economy goes through a major contraction such as the one we are experiencing now.