The human disaster of unemployment

The prospects for the re-employment of older workers deteriorate sharply the longer they are unemployed. A worker between ages 50 and 61 who has been unemployed for 17 months has only about a 9 percent chance of finding a new job in the next three months. A worker who is 62 or older and in the same situation has only about a 6 percent chance. As unemployment increases in duration, these slim chances drop steadily.

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The result is nothing short of a national emergency. Millions of workers have been disconnected from the work force, and possibly even from society. If they are not reconnected, the costs to them and to society will be grim.

Unemployment is almost always a traumatic event, especially for older workers. A paper by the economists Daniel Sullivan and Till von Wachter estimates a 50 to 100 percent increase in death rates for older male workers in the years immediately following a job loss, if they previously had been consistently employed. This higher mortality rate implies that a male worker displaced in midcareer can expect to live about one and a half years less than a worker who keeps his job…

Some countries that were more familiar with long-term unemployment, notably Germany, were much better prepared to deal with the fallout from the crisis. The German government aggressively pushed work-sharing measures. This meant that instead of workers’ being laid off and receiving unemployment benefits, the German government helped companies keep employees, working fewer hours, on their payrolls by subsidizing their wages with the money saved on unemployment benefits.

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The result of this policy is that Germany’s unemployment rate is now lower than it was at the start of the downturn, even though its growth has been no better than ours.

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