Long after the U.S. economy recovers, the scars of the financial crisis will still be felt.
That’s because there are more long-term unemployed than ever, and economic studies have shown that the damage done to their careers last for decades:
The previous high in long-term unemployment was 26% in June 1983, just after the deep downturn of the early 1980s. The 44% rate in March translates into more than 6.5 million people.
There is widespread agreement that, for whatever reasons, long periods of unemployment tend to make it tougher to get reemployed.
And even after getting hired, such workers will probably experience a sharp and lasting hit to their incomes.
In one prominent study, Columbia University economist Till von Wachter examined the pay history of workers who lost their jobs during the early 1980s recession. Using Social Security earnings records, Von Wachter and co-researchers found that these previously stable workers who lost their jobs but found new ones later were earning 20% less a decade later than other workers who weren’t let go during that period.
For the laid-off group, the income losses didn’t fade away completely even 20 years later.
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