Panel discusses economic effects
Ashley Charnley | Friday, March 27, 2009
A panel of professors and community members discussed the social effects of the struggling economy in a lecture titled “Bringing About Change: Our Economy’s Effects on Education, Family Violence and Unemployment” at Saint Mary’s College in Vander Vennet Thursday.
Jerome McElroy, professor of economics at Saint Mary’s, said there are some differences between this recession and others the U.S. has gone through.
“What’s unique about our recession is that for the first time in about two decades, the world economy is going to shrink,” he said.
McElroy said as a result, the government is left as “the only game in town.”
He said there are three ways to know whether the programs and policies the government put into place are helping to improve the economy.
If we see building permits rise, average workweek hours rise and the new weekly jobless claims fall, then the economy should be “on the move,” he said.
Judith Fox, a professor of law at Notre Dame, addressed the issue of subprime loans and how they have negatively affected the economy.
“The original intent of subprime loans was wonderful. It allowed people who couldn’t otherwise afford a home, get a loan,” Fox said.
What happened, though, is loan brokers began giving loans to people who couldn’t afford them. Sometimes they were up to 70 or 80 percent of their income. This leads to high foreclosure rates, she said.
According to Fox, Indiana is 11th on the list of state’s foreclosure ratings, with a rating of 3.59 percent.
Thomas Kavanaugh, vice president for JobWorks, Inc., discussed his work at JobWorks in trying to train people and help them find new jobs in the community once they are unemployed.
“Elkhart County is pushing depression-like unemployment rates. Right now, at the end of January, they are at 18.3 percent,” Kavanaugh said.
The difficulty in finding new jobs for workers in manufacturing comes from their lack of training in the areas of work that still have openings available, he said.
“Most of the people that work at RV manufacturing companies have never needed a computer for work,” Kavanaugh said. “The skill base we are dealing with for these individuals who are not employed is completely under skilled with the people we are trying to employ.”
Finding jobs is still an issue, and according to Kavanaugh, word of mouth is currently one of the most common ways. It’s not the Internet or classifieds, but connections with people that are helping the currently unemployed find work, he said.
“That is how people are finding jobs these days. It’s through networking,” he said. “It’s not necessarily what you know, it’s who you know.”
Jessie Whitaker, director of the LEND Homeownership Center, said the housing market has been facing problems due to difficulties in homeowners securing loans.
“I tell the individual, you may need to start saving your money pack up and move because they are not going to work with you,” Whitaker said.
The government is working on providing incentives for servicers, who homeowners pay their loans to, to modify the loans to help them pay their loan, she said.
According to Whitaker, in the state of Indiana since January 2008, there have been 8,962 foreclosures.
Annie Envall, assistant director at S-O-S, a rape crisis center in South Bend, shifted away from the financial effects of this crisis into the emotional toll it takes on individuals and families.
She said people enter into an abusive cycle that rotates between tension, explosion and regret, or something she called the “honeymoon stage.”
Envall said even though they blame their poor behavior on the economy, the abusers have larger issues.
“The true driving force behind domestic violence is the need for power, the need for control,” Envall said.
She said she believes it is important to have resources available to help victims of abuse.
Even though Envall said she hasn’t seen a notable increase in domestic violence as a result of the economy, she also said abuse is one of the least reported of crimes.
Mark Geissier, a social worker with the South Bend Community Schools Corporation, addressed the effect of these stresses on children. He stressed the increase of children living at or below poverty level.
“I think what we are going to be seeing soon is kids slipping into poverty who were already living on the margin before,” Geissler said.
He also said the focus on children’s emotional needs is not being addressed because their basic needs have to be met.
“It’s a great time for these kids to get mental health treatment, but the problem is, mental health is no priority when there is an uncertainty about where food, shelter, and utilities is coming from,” Geissler said.
In order to address these issues, the panelists said they believe government regulation is necessary, but more importantly, there is a need for education.
Kavanaugh said education “is an important thing that our government, our leadership and really the businesses really need to take a look at and make sure they are educating people on financial literacy.”