10 Surprising Side Effects of Long-term Unemployment

The economic downturn has left few families unscathed and, according to the Bureau of Labor Statistics, 43% of those out of work are facing unemployment lasting 6 months or more. Whether it’s lack of appropriate college education, not enough jobs in the area, or even illegal discriminatory factors like age playing a role, these individuals simply can’t find work, even after months of searching. While the financial realities of spending months, or even years, without a job can be a big enough hurdle, there are also some serious health, career, and social ramifications of long-term unemployment. Read on to learn how long-term unemployment could have unexpected side effects, some of which may last well into the next decade and beyond.

  1. Lower salaries for a lifetime

    Being out of work doesn’t just mean lost wages for those months of unemployment. For many, it may also mean a major career setback that lowers income rates and success for many years to come. Those who are laid off or fired often get back into the workforce at a much lower salary, and many are forced to take jobs that are below their skill and experience levels or not in their field of study at all, which can be a major career setback. On average, an unemployment spell will reduce wages about 3.4%, though in some cases it can be much more. For young people who can’t find work after graduation, the lack of available jobs can set the stage for a lifetime of lost earnings. How much? Studies have shown that those graduating into a bad job market will make about $100,000 less over a lifetime, and that doesn’t count the months of unemployment or underemployment that many will face.

  2. Shorter life expectancies

    One of the most serious side effects of long-term unemployment is the impact it has on life expectancy. While not every individual will deal with unemployment in the same manner, studies have shown that the lack of health insurance and preventative care, stress, and depression associated with unemployment tend to take a big toll on the overall health of just about everyone, regardless of age or disposition. A look at life expectancy rates for those who lived through past economic downturns can be especially telling in this regard. In one study, a group of economists looked at men who had been laid off in the 1970s and 1980s, tracking their health over several decades. The results were staggering. Regardless of age, unemployment was found to increase mortality rates both in the short term and the long term, with those who faced long-term unemployment dying an average of a year and a half sooner than those who had never lost a job. The effects were even more pronounced on those who faced unemployment at a younger age, with these individuals having even shorter life spans and more health problems.

  3. Changes in mental health

    It shouldn’t come as a surprise that long-term unemployment can cause a variety of mental health issues. It’s an extremely stressful situation, and one that often leads to depression, anxiety, and substance abuse. While the majority of the mental health issues associated with unemployment will be alleviated by finding a new job, some of these issues may make it difficult to find work, as individuals may not be functioning well enough to look for a job. Additionally, the stress of long-term unemployment has been linked to the emergence of previously latent mental health issues, like obsessive compulsive disorder or chronic depression. Those who face long-term unemployment in their younger years, especially their early 20s, are at a much higher risk of developing substance abuse problems and depression by middle age. Even if these individuals eventually find a job, their risk factors for these and other mental health concerns remain much higher than that of their peers who didn’t face unemployment.

  4. Greater risk adversity

    Long-term unemployment tends to make individuals very cautious, especially when it comes to money. While there are many ways in which this can be a positive thing, when it comes to building retirement savings and making smart investments, it may have some serious long-term consequences. The Merrill Lynch Affluent Insights Quarterly Survey revealed that most adults under 34 have a very low risk tolerance and prefer investments that are very conservative. While it’s smart to want to save and to exercise caution with money, many financial experts believe this risk adversity could make it difficult for these individuals to retire. Extended unemployment means that little or no money is going into retirement accounts already, so young adults need to be especially aggressive in their investment portfolios to ensure they have enough when they reach retirement age, something most simply aren’t willing to do. The results of this risk adversity may not show up for decades, but many may be facing an uncertain retirement down the road without serious changes in their retirement strategies and feelings about investments.

  5. Increased likelihood of future unemployment

    A study completed in 1993 reveals that not only do the long-term unemployed get less pay when they do find work, but that they’re also more likely than their coworkers to face future unemployment. Even worse, these periods of unemployment were found to be longer than those of others who hadn’t previously lost work. As unfair as it may be, unemployment, especially long-term unemployment, seems to create a stigma that can follow an individual through decades of their career.

  1. More health problems

    Long-term unemployment can have a huge impact on health, resulting in not only shorter life spans as we discussed above, but the development of serious health conditions in the short term as well. Loss of health insurance coverage means that many who are unemployed do not seek out preventative care and may put off going to the doctor for potentially serious conditions. Add to that increased stress levels, increases in drug and alcohol abuse, and depression and you’ve got a recipe for a health disaster. A research study by the Harvard School of Public Health found that workers who lost a job through no fault of their own were twice as likely to develop high blood pressure, diabetes, heart disease, or even gastrointestinal issues than those who didn’t face unemployment. What’s worse, this increased risk was found both in those who found a new job quickly and those who faced long-term unemployment alike.

  2. Failing confidence in democracy

    You might think you have your political beliefs set in stone, but don’t be so sure. A study using the World Values Survey found that those who face long-term unemployment changed how people felt about civil society and basic democratic institutions. In the U.S., the jobless were 11% more likely to agree that “having a strong leader who does not have to bother with Parliament or elections” was a good thing. People who have been unemployed for more than a year were even more likely to agree.

  3. Lost friendships

    Unemployment can be a lonely thing, as a study by the Pew Research Foundation discovered. Forty-six percent of those who are unemployed for six months or more report their joblessness causing stress between family members, and 43% report losing contact with close friends. Even those who were unemployed for less than three months had a hard time retaining relationships, with 35% saying they lost contact with their close friends.

  4. Damaged self-esteem and self-worth

    Being unemployed for a long stretch can take a serious toll on the amount of self-respect, esteem, and worth a person has for him or herself. In the same Pew study, researchers found that 38% of the long-term unemployed reported losing self-respect while they were out of work. Numerous studies have been done on the correlation between self-esteem and joblessness, with all reporting higher levels of depression, negative mood, and lowered self-esteem.

  5. Doubts about control over career

    Losing a job can make you feel pretty helpless, but these feelings can last long after new work is found. A National Bureau of Economic Research paper reported that young people who live through downturns are much more likely to doubt that they actually have control over their careers, viewing career success as luck rather than a result of personal action. Attitudes were found to be even more pessimistic among those who had lost a job, regardless of whether or not they had found a new one, with many believing that they had little to no control over the course of their careers. More than four in 10 of the long-term unemployed report that their joblessness will have a big impact on their ability to achieve long-term career goals, according to Pew research.

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