Human resources are arguably the most precious asset of any country which is why one of the primary goals of a nation’s fiscal and monetary policies is to prevent unemployment rate from getting too high. Not surprisingly, U.S. Fed has been keeping fed funds rate at a historically low level for years now to help bring down unemployment rate to an acceptable level in the wake of the recent financial crisis. It is important to realize that unemployment doesn’t only result in loss of income and low living standards for the affected individuals and their families but also impose other costs which only rise with the length of unemployment duration.
Long-term effects of employment include health costs which can be quite high. Long-term unemployment may lead to a variety of psychological issues such as depressive disorder, alcohol addiction, and may even increase the prospects of the person committing suicide. Other potential health issues that may affect the unemployed individual include diabetes and cardiovascular diseases. Potential health risks to unemployed individuals also include physical symptoms such as joint and body aches .
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Individuals, who have been unemployed for a long duration of time, typically more than six months, also have difficulty getting back in the job market due to employers’ bias against them. A research study found that one’s employment status is often the first thing an employer looks at when deciding whether to call someone for interview or not. The researchers found that those who have been unemployed for less than six months were more likely to be called for interview even if they didn’t have any experience as compared to those with an unemployment lasting longer than six months even if they were experienced. The employment outlook for those who have been unemployed for at least six months is so bad that one of the recommended courses of action is for government to step in to provide jobs or at least provide incentives to employers to hire those who have been unemployed for longer than six months . Even if one does get employed, his/her earnings may take significant hit. A study found that the cost of unemployment is usually lower income for up to twenty years after getting rehired. The average decline in wages for those why have been unemployed even once is about 15percent . Thus, it is clear that the stigma associated with unemployment continues to impose economic costs on the individuals in the long-term.
Long-term unemployment doesn’t only affect the individuals who are without jobs but also those related to them such as their families. The unemployed individuals may start ignoring their parenting activities, only causing strains in their relationship with their children. They may even resort to unhealthy parenting habits such as excessive use of punitive measures against children. The resulting stress may cause children to perform poorly at school and also increase the probability of them engaging in risky activities such as substance abuse and risky sexual behaviors .
Unemployment is always an unfortunate event but it can be particularly harmful in the long-term. In addition to financial costs, it may also impose huge health costs on the unemployed individuals. It may also strain their relationships with their families as well as put their children on destructive courses. Long-term unemployment is also a problem because re-entry into the market becomes more difficult due to employer bias against those who have been unemployed for at least six months.
- Downing, Roberta. Psychological Effects of Unemployment and Underemployment. 23 September 2014
- Executive Office of the President. Addressing the Negative Cycle of Long-Term Unemployment. January 2014. 23 September 2014
- Landau, Elizabeth. Unemployment takes tough mental toll. 15 June 2012. 23 September 2014
- O’Brien, Matthew. The Terrifying Reality of Long-Term Unemployment. 13 April 2013. 23 September 2014
