For millions of Americans laid off in the devastating recession, the job search just isn’t clicking.
And here’s the really bad news: Almost no one will be able to recover the financial ground they’ve lost.
That’s the inescapable conclusion from years of academic research into the last big recession of the early 1980s, and job shocks thereafter.
The findings have trickled out in scholarly papers, gloomy facts buried in technocratic detail.
Perhaps knowing the truth will help frustrated job seekers recognize that their struggles are the norm. “They should not take it personally,” said Till von Wachter, a Columbia University economist who studies the dismal aftermath of recession.
Understanding the economic and social toll of sweeping job cuts also puts a spotlight on government policy — and American culture. In Europe, regulation slows the quick-on-the-trigger impulse to fire staff when the economy tanks. But the U.S. has made layoffs easier for employers, on the theory that flexible labor markets propel growth in the long-run.
Exceptions exist, of course. Everybody knows a fortunate soul whose career blossoms post-layoff. Most, however, pay a butcher’s bill, as reflected in the data:
Involuntary layoffs result in lower lifetime earnings. Using Social Security and other government records, von Wachter found that workers who lost stable jobs in 1982 suffered an immediate 30 percent drop in their incomes. Even 20 years later, earnings never bounced back. And it’s not as if those losing their jobs were only the less productive, or refugees from failing industries, von Wachter said.
Income lost in a layoff mostly stays lost forever. Taking longer to hunt for a job doesn’t translate into a higher paycheck.
Data from Germany, where different benefit levels encouraged some laid-off workers to remain unemployed longer than others, show that additional time for conducting searches and awaiting an economic rebound rarely yields a higher-paying job. Over time, pay is unrelated to the length of joblessness. Compared to their peers, those out of work for longer periods aren’t particularly worse off when they finally re-enter the workforce, von Wachter said.
Almost everybody makes less.
Layoffs result in devastating health consequences. High-seniority male workers were 50-to-100 percent more likely to die in the immediate aftermath of a layoff than colleagues who were spared the ax. Even 20 years later, those who were dismissed ran a greater risk of death, reducing life expectancy by 12-to-18 months. A separate study shows that for men, layoffs lead to higher blood pressure, and for women, depression, hostility and loneliness.
Landing a job after a layoff is only the start of rebuilding. It can take as long as a decade for a dislocated worker to finally settle into stable employment. Changing jobs is common — and not necessarily for higher pay. “Most people underestimate how long it will take to rebuild the career,” said von Wachter. “It’s not over after three or four years.”