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Unemployment Affects Long Term Stability of Families

The Pew Charitable Trusts

Unemployment has long term effects on the economic stability of a family which, in turn, affects the financial mobility of later generations according to a new report. The Pew Charitable Trusts Economic Mobility Project recently released Hard Choices: Navigating the Economic Shock of Unemployment, a report on their study of the impact financial setbacks have on American families.

While unemployment impacted families with all levels of wealth, low income families and minority families were most at risk for job loss and had the fewest resources to lean on to recover. Families with more wealth and families that were white were better able to recover and had more resources to pull on to recover from the setback. Of the families that were unemployed, the median wealth of white households was at least seven times that of black households in each year of the study.

The analysis used a nationally representative sample of working-age families from the Panel Study of Income Dynamics (PSID), following the same households from 1999 to 2009. One third of these families experienced unemployment between 1999 and 2009.

Given the financial disadvantage that unemployment inflicts upon families - those who experienced unemployment between 1999 and 2009 were 1.3 times more likely to have suffered a loss in wealth during the decade than other families – the report offers a few policy recommendations to help stabilize these families. Some of the recommendations include more incentives to build savings, low cost loan options for families in need, and opportunity investments in education or starting a business.

Click here to read the full report. Hard Choices: Navigating the Economic Shock of Unemployment.


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