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Title: Quantifying the Costs of Rising Unemployment
Citation Type: Miscellaneous
Publication Year: 2023
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Abstract: There are significant costs to rising unemployment. For workers, particularly those being paid low wages, higher unemployment rates nationally are associated with worse employment prospects, health outcomes, and general well-being. In 2020, these dynamics played out rapidly. The COVID-19 pandemic brought a massive shock to the labor market and the unemployment rate climbed from 3.5 percent, a low level not seen since the 1960s, to 14.7 percent.1 By July 2022, 28 months after the start of the crisis, sizable public investments helped foster a remarkably rapid turnaround and bring the unemployment rate back to its prepandemic level. The speedy recovery of the US economy, in contrast to the slow rebound after the Great Recession, minimized many of the severe problems of sustained high unemployment. By understanding the dynamics of high unemployment, policymakers, practitioners, and employers can work to alleviate its detrimental consequences. This report summarizes existing research on the effects of rising unemployment on three different areas: first, on workers, their workplaces, remuneration, and job quality; second, on the social factors that are indirectly affected by rising unemployment, such as enrollment in education, health outcomes, crime rates, and family well-being, particularly for low-income workers; and third, on the wider economic effects of unemployment on social spending, productivity, national income, and future unemployment rates. One strand of research explores the impact of long-term employment on factors such as income, labor market attachment, and health (Nichols, Mitchell, and Lindner 2013). This paper aims to frame the parameters of a different but complementary research area: the impacts of rising unemployment at large, both in the short and medium term. The contemporary labor market is unusually tight and provides a prime opportunity for researchers to better understand the benefits of low unemployment as well as the risks of rising unemployment. This report serves as a first step in that process and as a potential foundation for future research.
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Authors: Peck, Joe
Publisher: WorkRise
Data Collections: IPUMS CPS
Topics: Labor Force and Occupational Structure
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