Long-term unemployment and limited opportunities are dampening the lifestyles and outlook of American workers, according to a new study by the Rutgers University Heldrich Center for Workforce Development.
More than 40 percent of Americans who lost a job during the recession are currently unemployed or under employed, according to the study, “Out of Work and Losing Hope: The Misery and Bleak Expectations of American Workers.”
The study revisits a group of 1,202 unemployed workers first surveyed in August 2009 and finds that half the participants have scaled back their lifestyles significantly in the past two years. One-third has had to give up something they previously considered essential and half are spending less on food. More than 40 percent have made significant cuts on health care to the point it impacts their daily life.
“No group has suffered more from the Great Recession than the very long-term unemployed,” said Carl Van Horn, director of the Heldrich Center. “The grim reality is that millions of workers with valuable skills and experience still cannot find a full-time job.”
Stubborn high unemployment, now at 9.1 percent for the second consecutive month, has undermined consumer confidence and inhibited spending that could help stimulate the economy. Instead, Americans are paying down debt and building up their savings.
The weak job market is creating a key drag on the housing market as job loss and fear of job loss are preventing prospective buyers from realizing their dream of homeownership. Investors interviewed by Millionaire Corner see unemployment as the chief obstacle to a robust economic recovery. Most affluent investors feel unemployment needs to fall below 6 percent to signal a healthy recovery.
Fear of job loss crosses all wealth levels. More than 30 percent of affluent investors surveyed by Millionaire Corner in June say they worry about themselves or someone in their household losing their job. Fewer than one-fourth sees the employment situation improving within the year.
One-third of the jobseekers first surveyed by Rutgers two years ago are looking for work, while 8 percent are working part time but looking for full-time jobs. More than 70 percent have been jobless for more than six months, and half have been unemployed for more than two years, states the study, released just before Labor Day weekend. About one in four of the “Great Recession’s” unemployed found full-time work, but half of these new jobs pay less than the old ones.
Three-fourths of the long-term unemployed say that the recession has had a major impact on their families. Sixty percent say they have borrowed money from family or friends to make ends meet, and have also had to cut back on food and health care.
“Among those fortunate enough to find work, over half settled for lower pay” said the study, adding that “nearly one-third saw their job-related benefits cut.” Fewer than 60 percent believe their new jobs will last and a similar share says they took the job just to get by while looking for something better. About 45 percent are working in a new area.
Reemployed workers are grateful to be working but are twice as likely to “describe their new job as a step down rather than a step up,” the study says.