Great article from Professor Katherine V.W. Stone of UCLA: The deeper roots of the mortgage crisis: employment instability:
In the 1980s, adjustable mortgages became commonplace and most mortgages ceased imposing prepayment fees, so that homeowners gained flexibility to adjust their debt level as interest rates changed. But that flexibility did not address the deeper source of instability – the danger of joblessness.The problem now is that few people have the kind of long-term job security that our housing policies take for granted. According to the Bureau of Labor Statistics, the median length of time a worker spends with a particular employer has decreased in every age group.Today people have a more episodic experience in the labor market, moving from employer to employer, with periods of employment often followed by periods of unemployment and transition. When unemployment strikes, mortgage payments that once had been manageable become impossible.
These episodic employment patterns can also impact benefits negatively as well: people may lose their health insurance, or never build up a very big retirement nest egg because they are always leaving an employer before vesting in the employer’s retirement plan, etc.