Long-term Unemployment: the Start of a New Reality? Unless We Change It!

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What are the real effects of long-term unemployment? The Wall Street Journal had an interesting article "Recession Strikes Deep Into Work Force."

"The nation's 9.7% unemployment rate tells only part of the recession's story, according to a new study that found more than half of adults in the U.S. labor force have suffered a spell of unemployment, a pay cut or reduction in work hours. Middle-age workers—50 to 64 years old—are most likely to have taken a hit in the last 30 months of the downturn, a group normally at the peak of its earning potential ...

"Those without jobs are enduring the longest spells of unemployment recorded in modern history. The typical unemployed worker today has been out of work for nearly six months, almost double the previous post-World War II peak—12.3 weeks in 1982-83...

"Long-term unemployment is associated with severe breaks in career paths and erosion in income, health and other aspects of well-being."

The opinion page of the Wall Street Journal has a certain slant, but business investors require the news articles to be a more accurate picture of reality. And that reality is grim:

"Among workers 50 to 64 years old, 27% reported that their salaries were reduced, compared with 22% of workers 30 to 49 and 20% of those 65 or older. Among those 50 to 61 years of age, 60% predicted they would delay retirement because of the downturn. More than a quarter, or 26%, of those who are currently working had at least one stint of unemployment in the past 30 months. And a quarter of those who are working again say they had to accept part-time work after losing a full-time job.”

The article refers to a Pew Research Center survey that was released on June 30, "How the Great Recession Has Changed Life in America". This survey notes:

“More than half of the adults in U.S. labor force (55%) have experienced some work-related hardship — be it a spell of unemployment, a cut in pay, a reduction in hours or an involuntary move to part-time work. In addition, the bursting of the pre-recession housing and stock market bubbles has shrunk the wealth of the average American household by an estimated 20%, the deepest such decline in the post-World War II era”