Tags: Unemployment | Scars | Years | jobs

WSJ: Unemployment Scars May Last for Years

By    |   Monday, 09 January 2012 12:41 PM

Even if the U.S. economy is starting to recover, the ravages of prolonged unemployment will last for years, possibly even generations, economists say.

The country may end up with an underclass of nearly permanently unemployed workers, and that lack of widespread gainful employment will drastically impact nation's productivity and government revenue, warn economists, according to The Wall Street Journal.

Even the country's social stability might be threatened.

The longer workers are unemployed, the hard it is for them to find work, and economists worry that some of the long-term unemployed will never work again, the Journal reports.

If and when the unemployed find jobs, they often go back to work for less, research shows. Workers who lose their jobs when unemployment is high lose up to 2.8 years' worth of their pre-job-loss wages.

Their relationships with their families, mental and physically health, and even children's economic prospects suffer.

"There are people who are going to bear scars for the rest of their careers," the Journal quotes Princeton University economist Henry Farber as saying.

Perhaps even worse, the job crisis has revealed that America has lost its economic edge over developing countries, according to the Journal. Education gains have slowed.

Workers are moving less often and switching jobs less frequently, which reduces the job market's flexibility, and a smaller percentage of Americans are working or looking for work.

These trends makes it harder for the job market to bounce back quickly, as shown by the slow decline in unemployment after the Great Recession as well as other recent recessions, the Journal reported.

Making matters worse, the decline in manufacturing jobs has eliminated many middle-class jobs, while new jobs are in the low-paying hospitality and service sectors.

"It has always been harder to find work the longer you are unemployed, but the situation facing today’s workers is exceptional," states a report from the think tank, the Brookings Institution, by Michael Greenstone and Adam Looney.

"No matter how long a worker has been unemployed, the odds that they find a job are far lower than before the recession."

The unemployed will have a hard time finding work even as the economy begins to recover, and many will be paid less than they did before losing their jobs, the researchers conclude.

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Monday, 09 January 2012 12:41 PM
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