The Pew Charitable Trusts conducted a study recently that examines just how joblessness affects American families — not just their pocketbooks, but how the economic uncertainty could hinder their choices from there on out, such as savings, assets and health.
“Even during periods of strong economic growth, unanticipated financial shocks can harm a family’s prospects for upward mobility,” said Erin Currier, Pew’s economic mobility expert. “Savings and assets play a critical role in ensuring that families can build the resources to protect themselves in times of need and preserve the well-being of their children.”
Researchers at the Institute on Assets and Social Policy at Brandeis University used a combination of quantitative and qualitative analysis to complete the study from 1999 to 2009. They examined various situations of unemployment in different races and family income levels.
According to the U.S. Bureau of Labor Statistics, in the past 10 years, the unemployment rate has jumped around along with the economy. In 2003, it hovered around 6 percent and continued to drop in the years before the recession, dipping below 5 percent in 2007. In 2008, it crept up to about 5 percent and by 2009, the last year of the study, it shot up to 8 percent.
The study found that families who experienced unemployment were 1.3 times more likely to have experienced a loss in wealth than other families, even when taking into consideration marital status, change in family income, gender of the head of household, education and race.
Respondents also said that to get through their period or periods of joblessness, they had tapped into savings for their children’s education or their own retirement, had depleted assets to qualify for public assistance or took out high-risk, small loans with fees just to make ends meet, which could ultimately lead to poor credit.
“The evidence in this report provides insight into the actions that policymakers can take to help people who have experienced unemployment,” said Janet Boguslaw, researcher at Brandeis’ Institute on Assets and Social Policy. “There is no question that providing mechanisms for Americans to hold and secure assets in good times and in bad will help them and the economy as a whole over the long run.”