Long-term Unemployment Hurts Consumers

July 23, 2010

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Long-term stretches of unemployment can have serious consequence for consumers’ finances, emotional health and career development, according to new data from The Pew Research Center.

Almost Half of Long-term Unemployed Report ‘Major Changes’
Of those who have experienced an unemployment spell of at least six months, more than four-in-ten (44%) report that the recession has caused “major changes” in their lives. By comparison, fewer than one- third (31%) of those who had been unemployed less than six months and 20% of adults who were not unemployed during the recession which began in December 2007 say they were similarly affected.

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More than Half of Long-term Unemployed See Family Income Drop
A majority of the long-term unemployed (56%) say their family income has declined during the recession, compared with 42% who were out of work less than three months and 26% of adults who have not been unemployed since the recession began in December 2007. Overall, the long-term unemployed are also more likely to say they are in worse shape financially now than before the recession.

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Long-term Unemployment Has Negative Career Impact
More than four in ten (43%) of the long-term unemployed say the recession will have a “big impact” on their ability to achieve their long-term career goals. Among those unemployed less than three months, 28% said being jobless would have a similarly serious impact.
In addition, more than seven in 10 long-term unemployed say they changed their careers or job fields or seriously thought about doing so. They also were more likely to pursue job retraining programs or other educational opportunities while out of work.

Among workers who found a job after being unemployed for six months or longer, about three in 10 (29%) say their new job is worse than the one they lost, compared with only 16% of re-employed workers who had been jobless for less than six months. In separate questions, these workers also report their new job paid less and had worse benefits than their old one.

Short-term Unemployment Hits Mortgages as Hard
While the long-term unemployed have suffered the most during the Great Recession, the survey found that shorter spells of unemployment also have been painful for many Americans and their families.

For example, one-third of all long-term unemployed (33%) say they have had problems paying their rent or mortgage, identical to the proportion of those unemployed less than three months who experienced difficulty paying for housing.

However, this proportion is more than double the share of Americans who have not been jobless at any point during the recession but who have had difficulty paying for housing during the recession (16%).

Older, Blue Collar, Black Workers Most Likely to Be Unemployed Long-term
Pew Research Center researchers analyzed recent employment data to create a demographic portrait of the long-term unemployed. According to the Bureau of Labor Statistics (BLS), the median duration of unemployment stood at 25.5 weeks in June 2010, meaning half of the unemployed — the largest proportion since World War II — have been looking for work for six months or more.

The Pew Research Center’s demographic analysis finds that the median duration is highest among older workers, blue-collar workers and black workers. However, all workers, regardless of race or ethnicity, age, gender, nativity or occupation, have experienced a sharp increase in long-term unemployment during the recession.

Recession Hits Jobs, Wallets
More than half (55%) of US adults have felt some type of negative work-related impact from what is generally seen as the ongoing “Great Recession,” according to other data from the Pew Research Center.

About one-third (32%) of adults in the labor force have been unemployed for a period of time during the recession. Another 6% have been underemployed, meaning they want full-time employment but cannot find it due to economic reasons.

And when asked about a broader range of work-related impacts, 55% of adults in the labor force say that during the recession they have suffered a spell of unemployment, a cut in pay, a reduction in hours or an involuntary spell in a part-time job.

Among currently employed adults, 28% have had work hours reduced, 23% had their pay cut, 12% had to take unpaid leave, and 11% have been forced to work part-time.

About the Data: The Pew Research Center interviewed 810 adults ages 18 to 64 who are currently unemployed or who were jobless sometime since the recession officially began in December 2007. They were part of a nationally representative survey of 2,967 adults conducted May 11-31, 2010.

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