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Empty Savings, Damaged Health: For Pandemic Unemployed, Recovery Can Be a Long Road

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A man and a woman, a baby boy in the crook of the man's arm, sit on a couch beyond a kitchen. An adult woman and a child stand behind them.
Rey Garnica (bottom right) with his girlfriend, Anna Deutsch, and their son, Rey Jr. Deutsch's older son and her mother stand behind them. (Courtesy Rey Garnica)

When Rey Garnica got laid off from his job as a financial data analyst at the beginning of the pandemic, the Riverside County resident, who's a homeowner with an advanced degree, assumed he'd be in a better position than most to weather a stretch of unemployment.

“I have a bachelor's in engineering and a master's in business, so that makes it seem like, ‘Well, you have great value, Rey. Like people should be chomping at the bit to hire you,’” Garnica said. “But it doesn't, unfortunately."

Garnica has already paid two different consultants to rework his résumé, and said he would gladly take a lower-paying job. But despite all the applications he’s submitted, he’s only gotten two interviews since the start of the pandemic, neither of which has resulted in a job offer.

Garnica is one of as many as 2 million Californians whose federal unemployment benefits expired over Labor Day weekend. People who still haven’t found work are now trying to move forward with less support, but research from previous recessions suggests many may never fully recover.

Making it work 

While out of work, Garnica has tried to modify his life to stay afloat. He’s pulled money out of his 401(k) account to pay bills, borrowed from friends to cover his mortgage, and rented out rooms in his house, where he lives with his girlfriend and her older son, and the couple's newborn baby boy.

The most stressful time is the end of the month, he said.

A clean-cut man in a suit and tie.
Reynaldo "Rey" Garnica worked as a financial data analyst before he was laid off in April 2020. (Courtesy Rey Garnica)

“All the bills start coming due and you're like, ‘OK, am I going to default on this bill?’ Is it more advantageous for me to pull money out of my 401(k)? If I pull money out of my bank, how does that affect my unemployment … if I am going to get unemployment?”

Because he initially felt confident he’d find another job quickly, Garnica didn’t immediately sign up for health insurance when his work coverage expired. In June 2020, after a little over a month without any coverage, he signed up for Covered California, the state’s health insurance marketplace, with his plan set to go into effect the following month.

Then, at the end of the month, Garnica had a heart attack — the day before his plan began.

“I didn't go to the hospital right away because my insurance didn't kick in until midnight. That was kind of like a crappy situation to be in, right?” said Garnica.

Health issues 'tightly linked' to unemployment

Garnica is only 42 years old and, fortunately, recovered. It’s impossible to know the root cause of his heart attack, but there is long-standing research linking unemployment to major health issues, including heart attacks.

“The population health issues that arise over the next years could very well be tightly linked to the unemployment that we've seen that's been spurred by the pandemic,” said Jennie Brand, a sociologist at UCLA and director of the California Center for Population Research.

Brand said unemployment can prompt stress and depression and even lead to alcohol or drug use disorder. It also often leads to people putting off getting health care, like Garnica did.

What’s more, in February, researchers from UCSF estimated that more than 30,000 Americans would die within the first year of the pandemic from unemployment-related health issues.

In light of the well-documented links between unemployment and diminished health, and the sheer number of Americans still looking for jobs, Brand and other researchers are now warning of a potential new pending health crisis.

Struggling to start from scratch again

On top of health struggles, economic woes will hit harder those who already are more marginalized, especially workers of color, said Rebecca Dixon, executive director of the National Employment Law Project.

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“You have this inequity that is inherent in the labor market in terms of who gets hired first or who has an easier time finding a job,” Dixon said. “And then you also have these same groups of folks who tend to work, you know, disproportionately in low-paid jobs and so don't have savings, say, to fall back on in these kinds of times.”

Before the pandemic, Stanislaus County resident Melyssa Huerta, 46, had savings put away and was able to support herself and her daughter through her in-home nail business.

“I used to have, I say, like at least 10, 12 clients and now I'm down to like two or three. I'm not making even a quarter of what I was making before,” she said.

Huerta’s financial struggles have been particularly tough because she also cares for her 19-year-old daughter, Mariah, who has special needs.

She and Mariah were living with Huerta’s mother, who was lending her money to get by. But it was difficult for her mom to continue to support her, so now she and Mariah have moved into a bedroom in a house about 45 minutes from Mariah’s school. The instability has been especially hard for her daughter, Huerta said.


“I'm not able to take her out to go do fun things. I'm barely making ends meet. I don't have money barely for gas. Sometimes it's just, it's hard.” 

On top of all this, Huerta said her unemployment benefits had been tied up for months due to an Employment Development Department (EDD) error — even after she won an appeal. EDD finally loaded a portion of the funds into her account just last week, but now she has to hand over 25% of it to the company she hired to help her access her locked benefits.

“I'm so piled in debt right now that, I mean, to catch up and then to get back to where I was prior to the pandemic, I don't see it happening,” Huerta said, “I'm still going to have to struggle to start from scratch again.”

When Huerta does get the remainder of her delayed benefits, they’ll be the last she’ll receive, since she doesn’t qualify for regular state unemployment.

And in the last few weeks, she said, her doctor found cysts on her lymph nodes, and now she’s waiting for an explanation of her bloodwork, but can’t get anyone at the medical clinic she’s using to call her back. The lower-income health care program she’s now on isn’t what she’s used to, she said.

A growing body of research suggests that Huerta and Garnica, who are considered “long-term unemployed” (without work for 27 weeks or more) are likely to suffer both health and economic consequences for years. A number of studies, including a 2014 Brookings Institution analysis, found the longer someone is out of work, the less likely they are to find a good job. According to the study, for people who lost their jobs following the Great Recession, the chances of getting a full-time, steady job went from 19% at the start of their unemployment to 11% after seven months being out of work. After two years of not working, that rate plummeted to 6%.

“A lot of people end up getting jobs, but never getting jobs that pay quite what they used to be paid,” ​​said UC Berkeley economist Sylvia Allegretto. “Many people end up depleting some of their, if not all of their, regular savings.”

She said people often dip into their 401(k)s, as Rey Garnica did, which can be especially detrimental because it comes with steep tax penalties.

Trying to offset current debt created by unemployment with savings haunts people down the road, Allegretto said. “You're really taking a problem now and moving at least a large part of it into your future.”

At the end of this June, almost exactly a year after Garnica’s heart attack, he and his girlfriend had a baby: “He’s a junior,” said Garnica, who calls him “Baby Rey.” Like Huerta, Garnica’s unemployment benefits had also been tied up for months. They finally came through last month — but now he’s coping with debt he accrued waiting for them, and the huge new financial responsibility of caring for a newborn.

Garnica did have an interview recently with a start-up, but has yet to hear back and said, even if he gets an offer, he expects the salary will be half what he used to make.

“I’m 42, and I feel lost,” he said.


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