“Since the start of the recent recession, which began in December 2007, many unemployed Americans have entered the ranks of the long-term unemployed (those who are unemployed for 27 weeks or more). Long-term unemployment peaked at 46 percent of total unemployment in May 2010, well after the recent recession ended in June 2009. In contrast, after an earlier recession, which lasted from July 1981 to November 1982, the long-term unemployed number peaked at 26 percent of total unemployment in 1983. These point-in-time estimates, however, do not indicate the proportion of people who have a long-term unemployment spell over their labor market career, how long it takes to find a job after their first long-term unemployment spell, or how the spell affects wages over time. This Beyond the Numbers article begins to answer these questions. Using the employment history of men in the National Longitudinal Survey of Youth 1979 (NLSY79), the article examines entry into and out of long-term spells of unemployment and looks at the effect of long-term unemployment on average wages. The men in the NLSY79 were born in the years 1957 to 1964. The analysis covers the mid-1980s through 2009, focusing on men’s employment histories from their mid-20s, after they have become integrated into the labor market, until their middle to late 40s and early 50s. Researchers find that workers who have been unemployed due to job displacement often experience persistent subsequent earnings losses, earnings volatility, and later periods of job loss, although none of these studies looks specifically at the long-term unemployed. When a household member is unemployed, household finances suffer, which often leads to depleted savings, increased debt, and trouble making rent or mortgage payments. In addition to negative financial impacts, long-term unemployment may adversely affect the physical and mental health of the unemployed and may negatively affect their children’s academic achievement.”
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