EPI report on the long term consequences of unemployment

There is a new Economic Policy Institute report, h/t'ed by Paul Krugman, on the long term negative consequences of recession and unemployment. I have attached the report, A Economic Scarring: The long-term impacts of the recession by John Irons, to this post.

Here are the highlights:

  • Educational achievement: Unemployment and income losses can reduce educational achievement by threatening early childhood nutrition; reducing families’ abilities to provide a supportive learning environment (including adequate health care, summer activities, and stable housing); and by forcing a delay or abandonment of college plans.
  • Opportunity: Recession-induced job and income losses can have lasting consequences on individuals and families. The increase in poverty that will occur as a result of the recession, for example, will have lasting consequences for kids, and will impose long-lasting costs on the economy.
  • Private investment: Total non-residential investment is down by 20% from peak levels through the second quarter of 2009. The reduction in investment will lead to reduced production capacity for years to come. Furthermore, since technology is often embedded in new capital equipment, the investment slowdown can also be expected to reduce the adoption of new innovations.
  • Entrepreneurial activity and business formation: New and small businesses are often at the forefront of technological advancement. With the credit crunch and the reduction in consumer demand, small businesses are seeing a double squeeze. For example, in 2008, 43,500 businesses filed for bankruptcy, up from 28,300 businesses in 2007 and more than double the 19,700 filings in 2006. Only 21 active firms had an initial public offering in 2008, down from an average of 163 in the four years prior.

Irons calls these events scarring and can last across generations of families. We have other reports on how people who are laid off rarely obtain their original income levels.

What a surprise, people, i.e. workers are not disposable.

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Or, as Prof. James K. Galbraith

stated in a most pithy and succinct manner:

Inequality causes unemployment. Unemployment causes inequality.

Great catch!

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we need a paradigm shift on labor in this country

From what I gather, labor is seen only as a business expense and wrongly viewed as something that is mobile, fluid and that by itself is static, isolated. In other words, labor is treated almost like a raw commodity, to throw away or reduce if costs are high and something to stock up on later.

That is just a plain, 100% false view of labor. It's not mobile, skill sets atrophy if not used, those are people, citizens, consumers, producers and future innovators. All of those factors are ignored!

Now the chickens are seemingly coming home to roost, which is my premise, destroy the U.S. middle class you will destroy the national economy and basically the United States of America.

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France Telecom committing suicide

22k in layoffs and some of the French are killing themselves. story here.

What kills me on this news is how little suicides over economic despair are reported in the U.S. Even the ones where someone goes postal and commits mass murder they don't mention these stressors.

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