Other people have pointed out how rough the period around 2000 was but it's also worth looking at how similar things were the previous time that'd happened in the early 90s when the defense contractors laid off a ton of engineers as the Cold War died down. That meant that you had large numbers of people with similar backgrounds all on the job market, in the same areas at the same time, competing for a sharply reduced number of jobs. Those kind of effects cascade: maybe you find a job but need to relocate, which means selling your house for a lot less than it was worth last year, or your spouse's job is also cut back because it was still linked to the local economy even if they didn't work at the same company.

I got my first tech job in 1996 doing QA for a COBOL compiler vendor in San Diego. It paid $15/hour and there were multiple applicants with physics & engineering Ph.Ds and years of experience! The detail which is more sobering the older I get is that the company figured – correctly, I'm sure – that the more experienced applicants were likely to leave as soon as they could find something better, so it didn't matter how willing anyone was to take any job available.

Sure, the market eventually recovered and some people repurposed all of that Cold War tech to make things like carbon-fiber golf clubs and bicycles commonplace but that's hardly going to help the person who went from living the American dream to struggling just to make the next mortgage payment, pay for their kid's braces or college tuition, etc. Even if they did eventually find a job, let alone one which pays comparably, it can take years to recover financially even if nothing else happens.