Obviously, the immediate effects of high unemployment are terrible. As a Pew study last summer found, many if not most unemployed people report having trouble getting medical care or paying rent, having to borrow money from friends, and having to raid their savings or retirement accounts to pay bills. They also report growing distant from their friends, increased discord within their families, and a loss of self-respect. But unemployment levels of the kind today’s job report confirmed also have serious longer-term impacts.
It makes you permanently poorer: In 2009, Till von Wachter, Jae Song, and Joyce Manchester released a study on what happened to the long-term earnings of laid-off workers after the 1982 recession. Immediately, laid-off workers experienced annual earnings 30 percent lower than those of workers who hadn’t lost their jobs. But even 15 to 20 years on, these workers experienced 20 percent lower wages than people who had kept their jobs decades previous. The Yale economist Lisa Kahn has found similar long-term earnings loss among college graduates who enter the workforce during a bad economy. They face a higher unemployment rate than those graduating in better years up to 10 years after leaving school, and, depending on which state they start work in, their wages fall anywhere from 1.3 percent to 20 percent lower than those not graduating during a recession every year after they graduate for over 17 years. That is, the wages of someone in the highest unemployment state are not 20 percent lower the first year, and then stay that way. They fall an average of 20 percent lower than the wages of non-recession graduates every year.
It makes you sicker: Being laid off has serious long-term health effects. William Gallo of Yale Medical School has found that people who are laid off near retirement are twice as likely to have a stroke or heart attack. Gallo, along with Jennie Brand and Becca Levy, have also found that being laid off or part of a branch closing increases one’s likelihood of depression. Layoffs are more likely to cause depression in men than branch closings, whereas the reverse is true of women. Similarly, a study by Kate Struly found that people who lose their jobs are 54 percent more likely to have fair or poor health, and 83 percent more likely to contract a stress-related malady, like a stroke, heart attack, heart disease, depression or arthritis. Long-term unemployment also increases your chance of dying. Till von Wachter (the same economist who did the long-term earnings study) and Daniel Sullivan found that high-seniority male workers experience a 50 percent to 100 percent increase in mortality the year after they’re laid off, and a 10 percent to 15 percent increase even 20 years later.
The point being, persistent high unemployment, like the kind we're experiencing, does not just hurt people in the here and now. It hurts people decades in the future, even if the economy has recovered by then.