15 Jul The Ripple Effects of Unemployment
When we think of unemployment, we often think of its immediate effects: people who are unemployed are unable to earn a regular salary, and are therefore unable to pay their bills. However, unemployment has much further-reaching effects on individuals, families, and the economy at large. It is essential to consider these ripple effects when working to build a New American Skills System that allows Americans to build the skills needed to get on the path to meaningful work.
Beyond the immediate monetary concerns associated with unemployment, individuals without work are weighed down by many other factors. According to the American Psychological Association, unemployed workers face twice the incidence of psychological problems as compared to their employed counterparts. These include high rates of depression, anxiety, and a lack of self-esteem, which can feed into a vicious cycle of decreased confidence and failure to attain a job. In addition, the longer unemployment lasts, the more difficult it is to find a new job. For example, people who are unemployed for longer than six months only have a 16% chance of finding a job in the following month. This “damaged goods” effect can be extremely detrimental to long-term job security.
The ripple effects of unemployment extend beyond the worker to families as well. Families are not only faced with lost income during the unemployment period, but also experience long-term decreases in wealth, which forces them to deplete their savings and rely on loans and alternative sources of credit. These effects in turn cause a decline in long-term financial security. The stress and psychological effects experienced by the unemployed can be passed on to families, which results in negative long-term outcomes for family members, particularly children. A University of Michigan study showed that levels of tension and conflict between family members increase when families experience financial difficulty. Low-income and minority families are already at a high risk for job loss, and long-term unemployment can be crippling for these higher-risk populations, who are limited in their ability to recover.
The effects of large-scale unemployment can reach as far as the national economy. When more individuals are unemployed, there is less overall spending and demand for products, which can in turn lead to decreased profits for employers as well as hiring cutbacks. More unemployed workers means a higher burden on public assistance programs as well.
By the year 2020, it is estimated that there will be a surplus of 90 million low to mid-skilled workers, and a shortfall of 40 million high-skilled workers. This mismatch is a major driver in today’s high rates of unemployment. Instead of continuing the devastating cycle of unemployment, with its ever-increasing ripple effects, a New American Skills System would empower individuals to gain the proper skill set to attain a high-skilled job. The economic health of our citizens, our families, and our country depend on a system that lowers unemployment and supports the rapidly-increasing and constantly-changing skill requirements of the 21st century.