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Impact of long-term unemployment: Lost income, lost friends, loss of self-respect and depression
By Michael Hennigan, Founder and Editor of Finfacts
Jul 26, 2010 - 6:35:13 AM
Long-term unemployment in the US is
where an individual is out of work six months/27 weeks or more while in Ireland,
one has to be jobless 12 months or more. Nevertheless, being unemployed for at
least six month has a deeper human toll than short-term unemployment on a
person's finances, emotional well-being and career prospects. A US survey
published last week, reveals the impact in terms of lost income, lost
friends, loss of self-respect and depression.
In Ireland, in the year to Q1
2010, the number of long-term unemployed persons - - out of work at
least 1 year - increased by 63,500, bringing total long-term
unemployment to 112,600. The long-term unemployment rate now stands
at 5.3% compared with 2.2% in the first quarter of 2009 and 1.3% in
the first quarter of 2008. As of Q1 2010, long-term unemployment accounted for 40.9% of
total unemployment compared with 22.0% a year earlier. In the US in June, the number of long-term unemployed (those
jobless for 27 weeks and over) was unchanged at 6.8 million. These
individuals made up 45.5% of officially unemployed persons - - one
of the highest levels since 1948. The US broad measure of unemployment was 16.5% - - includes
partimers seeking fulltime jobs and workers who are categorsied as
“discouraged.”
Last week, when the Democrats overcame Republican
opposition to the restoration of unemployment benefits to more than 2 million
financially desperate Americans, by winning the support of two Republican
senators to get to the 60 vote filibuster threshold, the Pew Research Center
reported on analysis of recent employment data to create a demographic portrait
of the long-term unemployed. According to the Bureau of Labor Statistics (BLS),
the median duration of unemployment stood at 25.5 weeks in June 2010, meaning
half of the unemployed -- the largest proportion since World War II -- have been
looking for work for six months or more. The previous high, in May 1983, was
12.3 weeks, less than half the level today. The Pew Research Center's
demographic analysis finds that the median duration is highest among older
workers, blue-collar workers and black workers. However, all workers, regardless
of race or ethnicity, age, gender, nativity or occupation, have experienced a
sharp increase in long-term unemployment during the recession.
To measure the impact of
unemployment during the Great Recession, the Pew Research Center interviewed 810
adults ages 18 to 64 who are currently unemployed or who were jobless sometime
since the recession officially began in December 2007. They were part of a
nationally representative survey of 2,967 adults conducted May 11-31, 2010.
Pew said the
the survey and analysis of employment data document how a
prolonged period of joblessness can strain household budgets,
test personal relationships, force changes in career plans and
erode self-confidence. Key findings include:
Family finances:
A majority of the long-term unemployed
(56%) say their family income has declined during the
recession, compared with 42% who were out of work less than
three months and 26% of adults who have not been unemployed
since the recession began in December 2007. Overall, the
long-term unemployed are also more likely to say they are in
worse shape financially now than before the recession.
Impact on relationships: Nearly half (46%) of those
unemployed six months or more say joblessness has strained
family relations, compared with 39% of those who were out of
work for less than three months. At the same time, more than
four-in-ten (43%) long-term unemployed say they lost contact
with close friends
Loss of self-respect: Nearly four-in-ten (38%) long-term
unemployed report they have lost some self-respect while out
of work, compared with 29% who were jobless for shorter
periods of time. The long-term unemployed also are
significantly more likely to say they sought professional
help for depression or other emotional issues while out of
work (24% vs. 10% for those unemployed less than three
months).
Impact on career goals: More than four-in-ten (43%) of
the long-term unemployed say the recession will have a "big
impact" on their ability to achieve their long-term career
goals. Among those unemployed less than three months, 28%
said being jobless would have a similarly serious impact.
Am I in the right job? More than seven-in-ten long-term
unemployed say they changed their careers or job fields or
seriously thought about doing so. They also were more likely
to pursue job retraining programs or other educational
opportunities while out of work.
Settling for less:
Among workers who found a job after
being unemployed for six months or longer, about
three-in-ten (29%) say their new job is worse than the one
they lost, compared with only 16% of re-employed workers who
had been jobless for less than six months. In separate
questions, these workers also report their new job paid less
and had worse benefits than their old one.
Pessimism on the job hunt:
Among adults who are
currently unemployed, those who have been jobless for six
months or longer are significantly more pessimistic than the
short-term unemployed about their chances of finding a job
as good as the one they lost.
While the long-term unemployed have suffered the most during
the Great Recession, the survey found that shorter spells of
unemployment also have been painful for many Americans and their
families.
For example, a third of all long-term unemployed (33%) say
they have had problems paying their rent or mortgage --
identical to the proportion of those unemployed less than three
months who experienced difficulty paying for housing. This
proportion is more than double the share of Americans who have
not been jobless at any point during the recession but who have
had difficulty paying for housing during the recession (16%).
The remainder of the Pew report examines in more detail how the
unemployed -- particularly the long-term unemployed -- have
fared during the Great Recession. Chapter 1 offer a demographic
profile of the long-term unemployed. The report then examines
the problems encountered by those who have been unemployed
during the recession and the larger hardships faced by the
long-term unemployed. The final chapter examines how long-term
unemployment affects workers even after they find another job
and the attitudes of the currently unemployed.
Last week, we
reported on the new
US Economic Security Index and how it takes
an average individual experiencing an income shock six to eight years to return
to the same income level.