The Impact of the Financial Crisis on Jobs


Written by: Liwin Troy Lee

The credit crisis has had a huge impact on the financial firms. It has caused many workers on Wall Street to be out of jobs and for others, the uncertainty of whether they would lose their jobs in the coming months. In 2008, 600,000 people lost their jobs from the crisis and 9.4 million people were looking for jobs in the United States.

The blame for the crisis is on banks who have stopped making loans because they do not believe the loans they lend out will be repaid. The cause of the crisis is subprime mortgage borrower's inability to pay back their home loans. The explanation for this is the drop in housing prices in recent months. Prior to this, if a mortgage borrower could not pay their loans back, they could always sell their home. However, with the decline in housing prices, the borrowers could not sell their homes. The effect of this is that it makes it tougher for businesses to finance their operations, which hinders their growth and cause layoffs.

The rising food and gas prices has been affecting the markets for months. So the credit crisis only adds more stress to a market that is already facing difficulties. Since May 2008, General Motors has laid off 19,000 workers, Starbucks has cut 12,000 jobs and American Airlines recently cut 7,000 jobs. Some of the other companies have put on hiring freezes. The employers who are hiring are hiring very slowly and being more selective.

Sources
Sharp rise in unemployment as financial crisis hits jobs market

What about my job?

Credit Crisis in Hand, Economy Faces Rolling Lay-Offs Which could hit millions