Job Losses Have Lasting Impact

The ripple effects of large-scale job losses linger for years and can keep adolescents from attending college later in life, according to new research carrying significant ramifications for policy makers, college recruiters and counselors.

Poor middle school and high school students who live through major job losses in their region attend college at significantly lower rates when they are 19 years old, according to new research published in the journal Science. A 7% state job loss when a student is an adolescent is tied to a 20% decline in likelihood that the poorest young people will attend college.

Local job losses hurt adolescent mental health, researchers found. Job losses also cut academic performance. The negative impacts are not limited to children from families where parents lost jobs – they extend to those who witness their friends, neighbors and others in the community being affected by layoffs.

Researchers argue that large-scale job losses are not simply economic events touching directly affected families. They are community-level traumas, said Elizabeth O. Ananat, an associate professor of public policy studies and economics at Duke University who is one of the lead authors of the paper appearing in Science.

“Worse mental health and worse test scores, they are all going to be blows to you that knock you off the path,” Ananat said. “That was a difficult path to begin with.”

In the economic theory, a student may have watched their father lose his job when a mine closed. Or they watched a friend’s mother be laid off when the local factory downsized. Those students should then be drawn to a college education because of the promise of larger financial returns and more stable employment in the newly developing knowledge economy.

In other words, economic theory has tended to focus on the idea that a shrinking pool of blue-collar jobs increases the relative return on investment of a college education. But it’s not working that way in the real world.

“Economists tend to think about it as a change in relative prices – the return changes,” Ananat said. “They miss the fact that it’s an emotional blow, like another kind of community trauma would be.”

An October Present for Hoosiers

I walked into a store earlier this week and the first thing to catch my eye was a vast display of Christmas merchandise. It’s not the retailers’ fault, but for whatever reason that bothers me. Call me a Grinch, but I’m just not in the holiday mood two months ahead of time.

But Indiana companies and employees received, in one sense, an early present this week — one that is most welcome. Senate Republicans announced their intention to seek a one-year delay in the uemployment insurance tax increases that were passed in April. The governor’s office is supporting the move, and it is hoped that Democrats will agree that the last thing needed in these still slow economic times is more Hoosier job losses.

This has been a top issue for the Chamber throughout the year. And while those involved in the lawmaking process thought at the time that they were offering a reasonable answer to a difficult problem, employer feedback and new analysis showed that wasn’t going to be the case.

After the legislative session, the Chamber documented the tax increases that nearly all Indiana businesses would face over the next two years – thousands of dollars on average, nearly $1.7 million for one company that used our online calculator and nearly $500 million for Hoosier companies in total. We shared the clear message that additional employee layoffs would unfortunately be the only way most could pay for the tax hike. We brought in new, independent analysis to demonstrate that despite more money being taken from businesses and more employee jobs being threatened that the unemployment trust fund deficit would actually increase.

The Chamber will continue to lead the way. No, this delay doesn’t solve the problem of a bankrupt UI trust fund, but that is a challenge that an estimated 40-plus states will soon be facing. There will need to be a federal solution. Now is not the time to take $500 million more from Hoosier companies and their employees without fixing the system. 

Just the Facts, Please, On UI Tax Job Killer (Find Out How Much It Will Cost Your Business!)

There is an old "Dragnet" and Sgt. Joe Friday reference in here somewhere (just the facts, ma’am), but I am sidetracked already. This is about a more than $700 million business tax increase with the unemployment insurance trust fund legislation passed by the General Assembly and signed by the governor.

It’s bad for employers and employees — those who will lose their jobs or not see a pay increase due to this additional and unreasonable tax burden. Yes, employers need to pay more to shore up a bankrupt system. But eligibilty, benefits and other issues must also be addressed.

Here is how you can learn more and have your say:

  • Calculate your business tax increase over the next two years (all you need is your current unemployment tax rate — the range is from 1.1% to 5.6% — and total number of employees)
  • From there, send a letter, or otherwise, communicate with legislators. Let them know a more balanced solution is needed
  • Read the facts, countering the myths that have been communicated by Senate Republican leaders on this issue. Why would legislators institute the largest business tax increase in state history and go out of their way to brag about it?

Companies are struggling and people are losing their jobs. Ironically, and sadly, a "solution" for the unemployment funding woes will only lead to more job losses.