The number of Americans filing for unemployment dropped another 43,000 last week , but joblessness remains the primary lasting effect of the global economic crisis. In a new report from the White House, President Obama's Council of Economic Advisers are predicting unemployment will stay near 10% for the rest of the year, and won't fall below 6% until 2015 (from the Chicago Tribune) . The effect of this period of high unemployment might last much longer than 5 years for many Americans, according to The Atlantic 's Don Peck : It will leave an indelible imprint on many blue-collar men. It could cripple marriage as an institution in many communities. It may already be plunging many inner cities into a despair not seen for decades. Ultimately, it is likely to warp our politics, our culture, and the character of our society for years to come. That's from Peck's new article: How a New Jobless Era Will Transform America. Peck breaks down the lasting effect of today's joblessness into four key areas, with the first half of the article focusing on the effect on two groups he says are particularly hard hit--young workers, and men. This is a must-read for soon-to-be college graduates especially, though it is not a pleasant read. Lisa Kahn, an economist at Yale, has studied the impact of recessions on the lifetime earnings of young workers. In one recent study, she followed the career paths of white men who graduated from college between 1979 and 1989. She found that, all else equal, for every one-percentage-point increase in the national unemployment rate, the starting income of new graduates fell by as much as 7 percent; the unluckiest graduates of the decade, who emerged into the teeth of the 1981–82 recession, made roughly 25 percent less in their first year than graduates who stepped into boom times. But what’s truly remarkable is the persistence of the earnings gap. Five, 10, 15 years after graduation, after untold promotions and career changes spanning booms and busts, the unlucky graduates never closed the gap. Seventeen years after graduation, those who had entered the workforce during inhospitable times were still earning 10 percent less on average than those who had emerged into a more bountiful climate. When you add up all the earnings losses over the years, Kahn says, it’s as if the lucky graduates had been given a gift of about $100,000, adjusted for inflation, immediately upon graduation—or, alternatively, as if the unlucky ones had been saddled with a debt of the same size. When Kahn looked more closely at the unlucky graduates at mid-career, she found some surprising characteristics. They were significantly less likely to work in professional occupations or other prestigious spheres. And they clung more tightly to their jobs: average job tenure was unusually long. People who entered the workforce during the recession “didn’t switch jobs as much, and particularly for young workers, that’s how you increase wages,” Kahn told me. This behavior may have resulted from a lingering risk aversion, born of a tough start. But a lack of opportunities may have played a larger role, she said: when you’re forced to start work in a particularly low-level job or unsexy career, it’s easy for other employers to dismiss you as having low potential. Moving up, or moving on to something different and better, becomes more difficult. Read the full article here .
Filed under: jobs, unemployment, jobless recovery, The Atlantic, generation Y, joblessness and men, Don Peck, male workers, millenials, lasting effects of joblessness, young workers