News
Daughters of the Great Recession
By: Abby Grisez
Posted on:
A lot can happen in a decade. Two presidential elections. Six Olympic games. A solar eclipse. The crossover from childhood into adulthood. A recession.
In a little more than a year’s time between late 2007 and early 2009, the S&P 500 Index lost half its value, 10 million families lost homes to foreclosure and jobs decreased by more than 8 million. The financial crisis affected a majority of Americans in some way. Children saw their lives turned upside down, many without even realizing exactly what was going on. Their parents struggled financially and tension and stress invaded their homes. Now, a decade later, those children are entering adulthood. They have student loans and are looking for jobs and homes. Though the U.S. economy has largely gone back to normal, the effects of the crisis are still present — sometimes invisible, but always bubbling under the surface.
Childhood prior to the Recession
In the years leading up to 2008, Bailee Henderson’s family was financially stable. “It was a normal childhood,” Bailee says. “I got things that I wanted. I mean we didn’t have a fancy life or anything but you know it was comfortable.” They lived in Florida and owned two homes: one in which they lived, the other they rented out. Bailee’s dad got a good job in Pennsylvania, and the Hendersons moved to the Philadelphia area. They kept the two Florida houses to rent out.
Alex MacLeod’s family lived in Westerville, Ohio outside of Columbus in a nice neighborhood. Alex says many of the families in her school district and neighborhood were wealthier than her own, but the MacLeod’s were comfortable.
Katie Pittman’s parents taught at Ohio University in Athens, Ohio and she says she lived a normal, happy life. Her older brothers attended the university.
Liz Deeds lived in a wealthy North Canton, Ohio neighborhood in Northeast Ohio. She grew up going on numerous family vacations, and would often get new clothes and toys. She says her childhood was happy.
The crash
While these four families were experiencing the comfort of financial prosperity, so to were large banks and investors wanting to make quick cash. To put it in grossly simple terms, banks were engaging in predatory lending, in which they loaned people money to buy a house even if they weren’t necessarily qualified. The banks would then sell these subprime mortgages to investors, who would pool them together and sell the group to another investor. It was a game of hot potato. Investors were trying to get these bad investments off their hands as quickly as possible, while still making money. Because of such high demand, housing prices and interest rates skyrocketed.
And then, the market crashed.
The house of cards these banks and investors had built imploded. Because of all these bad loans, banks lost billions of dollars and had to file for bankruptcy. The federal government loaned banks money to make up for their losses and ordered banks to merge. Average Americans paid the price for these unethical lending practices with their taxes; their investments in the stock market; and even their homes.
The house of cards these banks and investors had built imploded.
Bailee’s father, who was the main source of income for the Hendersons, was laid off. Her parents drained their retirement accounts to refinance the mortgage and pay the large hospital bills from a work accident Bailee’s father had before he lost his job. The family’s homes in Florida were practically worthless and had to be short sold, which put a black mark on her parents’ credit.
Alex’s father was laid off from the small landscaping company he had worked at for 25 years. The company drained all the 401ks, so everything he had saved was gone. He was out of work for more than a year, and Alex’s mother became the primary breadwinner for the family.
Katie’s parents got divorced in 2008. Her mother faced legal costs from the separation, and was also trying to buy a house and going back to school for her PhD. “I’m closer with my mom so it was hard for me to kind of see her in that situation and working so hard to get another degree,” Katie says.
Liz’s father lost his job, and her mother — who worked part time — had to work full time as a nurse. The family’s income was cut by more than half. “[My parents] fought a lot. It was very tense in the house all the time, and you could definitely pick up on that,” Liz says. “So I think that’s how I learned mostly what was going on — was through their conversations.”
An isolating experience
These girls were all around middle school age during this time. They experienced increased tension in their homes and saw their parents struggle with finances. They knew their families had financial issues, but didn’t understand the severity or logistics. “It’s one of those things like when you’re 12, you can’t really help out that much,” Katie says. “You want to help as much as you can and be there for them, but you understand you just kind of wait things out until things get better.” To cut back financially, Liz’s parents made seemingly insignificant changes. The vacations stopped. They bought in bulk and went school shopping at a local consignment store. Those small changes added up to a large lifestyle shift that impacted the rest of Liz’s life. According to researchers at University of California, Berkeley, people whose families were affected by long periods of financial struggle spend less money and are more likely to buy sale items. They say young people’s spending was most affected by the crash.
The experience was also isolating. “It felt like this horrible secret,” Liz says. She never talked about her financial situation with her friends, whose families were better off than her own. She says she sometimes even lied about weekend activities that never happened or new clothes she didn’t actually receive.
People at school would sometimes tease Alex. They made fun of her car breaking down, her TV not working and the fact that she didn’t have a phone. She says the teasing was never malicious, but it did get to her. “It just makes you feel a little bad,” she says. “No one wants to be the poor kid.” She noticed other people were going through the same thing, but no one explicitly talked about it.
In their mid-teens, the girls got jobs to help out their families financially or start paying for their own things such as clothes or social activities. Alex worked at the accessory store Charming Charlie, Magic Mountain Fun Center and refereed soccer. Liz worked at the girl’s clothing store Justice. Katie worked at a Chinese restaurant. Bailee also worked at a Chinese restaurant, as well as several other second jobs throughout high school. For Bailee, the “pull yourself up by the bootstraps” attitude was a necessity. “That’s the kind of attitude I’ve had to have my whole life, so that’s the kind of attitude I have now,” she says. “Just shut up and get it over with and do your job.”
“That’s the kind of attitude I have now. Just shut up and get it over with and do your job.” – Bailee
Though tensions were high in homes across the country, the experiences brought many families closer together. Katie’s older brothers were adults living their own lives, so it was just her and her mother. Katie would sit and watch her mother, who was open about their finances, look over bills at their dining room table. Liz and her older sister Emily tried to keep their youngest sister Vanessa as innocent as possible. They would talk amongst themselves so as not to add to their parents’ stress. Bailee also acted as somewhat of a buffer between her parents and her younger siblings, supplementing Christmas gifts and helping them with college applications when they reached that age. She was the first in her family to go to college, so she gives her younger siblings valuable perspective on loans and debt.
The experiences stayed with them
Now as these young women are graduating college, entering the workforce and planning their futures, their experiences as young teens have shaped them. Both Alex and Liz are unsure if they want to have kids, and cite the financial crash as a possible reason. “I’ve always felt like it’s nice to be able to know that I can depend on myself and I don’t have other people depending on me,” Alex says.
“I can depend on myself and I don’t have other people depending on me.” – Alex
Katie is cautious about how she spends money and hates the idea of using her credit card because of interest rates. Bailee is also hesitant to do anything involving debt. “I just got my first credit card and I was really recalcitrant to because I was afraid of them and afraid of what they could do,” Bailee says. “You know, give you debt.”
But it’s not all negative. The things Liz, Bailee, Alex and Katie went through gave them a strong work ethic and motivation to succeed. They save money and work on creating a nest egg in case things fall to pieces again. According to the Russell Sage Foundation, young people during the Recession were less focused on material wealth. “I wish I wouldn’t have cared about it so much in high school. Comparing myself to others, what others have,” Liz says. “It felt like a sore spot.”
Where are they now?
Liz attends Ohio State University and is majoring in human resources. She hopes to be in a position one day to give someone like her dad — jobless, qualified, sending application after application — a chance.
Katie and her mother largely recovered from their financial struggles. She will graduate from Ohio University in May with a degree in journalism and hopes to move to a large city.
Alex is a writer at Wyse Advertising in Cleveland. Her mother’s drive and strength when taking on the role as breadwinner inspired her.
Bailee is the assistant director of an animal welfare nonprofit in Pennsylvania called AAVS Animalearn. Her family is still trying to build their savings back up. “It’s not like we’re in the poorhouse or we’re gonna be out on the street, but we’re definitely living paycheck to paycheck,” she says.
A lot can happen in a decade. In the last ten years, the U.S. economy has added millions of jobs, resulting in an unemployment rate of less than four percent. People are earning more money and the workforce has grown. In the last ten years, millions of families endured some of the worst situations of their lives. Many are still impacted financially to this day. In the last ten years, four girls grew up into women. They went to college and started their lives. These daughters of the Great Recession won’t forget what happened to their families, because in many ways, it made them stronger.