Jobless likely to feel pain long-term

By Stephen Dinan, The Washington Times

Losing a job is always tough, but losing it in the middle of what’s been dubbed the “Great Recession” could hurt for years, according to a new report by the Congressional Budget Office that hints at just how deep the damage could be to those laid off.

CBO analysts are forecasting that even when the out-of-work do find jobs, they’ll be well behind their peers who stayed employed and will lose out on thousands of dollars of earning potential over their lives.

Worse still, the study found that, unlike past recessions, the jobs picture won’t improve as quickly this time, meaning more people will feel the pain for longer. The CBO says unemployment will remain above 5 percent for another six years.

“Workers and family incomes are going to be taking this on the chin for a very long time,” said Heidi Shierholz, an economist at the Economic Policy Institute, a labor-oriented think tank.

Alison Doyle, a job-search specialist for, said workers laid off now just don’t have the same bargaining power in negotiations with potential employers as those laid off during better economic times. That lack of bargaining power leads to lower paychecks.

“I don’t know that they will be able to make up what they’ve lost over their working life,” she said. “For job-seekers, it’s tough to negotiate salary when there is so much competition for every job.”

The CBO analysis warned that the problems from losing a job go beyond just economics.

“People who lose a job tend to have more health problems later in life, their family life can suffer and entire communities may struggle, especially if job loss is concentrated in particular geographic areas,” the report’s authors wrote.

Ms. Doyle said that losing a job can begin a bad cycle where the unemployed find their credit records shredded and their bills mounting. That makes it harder to get a job with a firm where an employer runs a credit check as part of the hiring process.

“Those unemployed workers are in dire straits,” she said. “People who have worked their entire lives, some at the same company for even 20 or 30 years, are losing everything – their retirement funds, cars, homes.”

She said those who have lost jobs should work to keep their skills up-to-date by taking classes online or in person, and should try to volunteer or do freelance work, if possible.

Ms. Shierholz said the broader solution is for the federal government to step up its job-creation efforts.

“There’s absolutely one answer, and it’s [that] we need more government intervention to create jobs. You can do tweaking around the edges, you can do retraining, but the thing we need to move the dial on is unemployment,” she said.

Congress and President Obama last year enacted an $862 billion economic-stimulus plan, but the unemployment rate still rose well beyond their projections. The administration now says it underestimated how deep the recession was.

The House late last year passed a second stimulus bill, including more aid to states to keep government workers on the payroll. But the Senate has instead focused on passing multiple bills with smaller job-creation potential and on extending unemployment benefits for the jobless.

The CBO said this recession is so deep and the job losses so extensive that nearly 55 percent of the unemployed exhausted their regular jobless benefits. That’s more than 10 percent higher than after the last recession.

All told, the government is expected to spend $156 billion on unemployment benefits in fiscal year 2010.

But Ms. Doyle said they still don’t reach the long-term unemployed, who call themselves the “99ers,” because they have used up the 99 weeks of unemployment benefits available to those in states with the highest unemployment rates.


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