A high unemployment rate affects the economy in many ways. People who are unemployed tend to spend less, can accumulate more debt, and unemployment can cause state and federal governments to pay more for things like food stamps. Unemployment can also have negative health consequences. Unemployed people report feelings of depression, anxiety, low self-esteem, demoralization, 6.8 worry, and physical pain.33 Unemployed people tend to suffer more stress-related illnesses, such as high blood pressure, strokes, heart attacks, heart disease and arthritis, 8,38,39 In addition, experiences such as perceived job insecurity, downsizing, or the closure of the workplace and underemployment also have implications for physical and mental health , 8.Prolonged unemployment can lead to an erosion of skills, essentially depriving the economy of talent that would otherwise be useful.
At the same time, the experience of unemployment (whether direct or indirect) can alter the way workers plan for their future. Long-term unemployment can lead to greater skepticism and pessimism. Unemployment figures include people who work in low-paying or low-skill jobs that don't offer enough full-time hours to receive benefits or to earn a living wage. Unemployment costs go far beyond the cumulative sums provided as unemployment insurance benefits.
The economic costs of unemployment are probably more obvious when viewed through the lens of the national checkbook. The Coronavirus Aid, Relief and Economic Security (CARES) Act (CARES) extended unemployment benefits to self-employed and part-time workers and helped maintain the creditworthiness of individuals and families during a global pandemic. Even people who qualify for unemployment benefits and other forms of government assistance feel that this is not enough, since these benefits often only replace 50% or less of their regular income. If you find that your unemployment benefits are running out or that your benefits aren't extensive enough to pay the bills, you might be tempted to withdraw money from a retirement account.
Similarly, the absence of income generated by unemployment can force families to deny educational opportunities to their children and deprive the economy of those future skills. More research is needed to better understand the beneficial effects of employment on health and to promote interventions that address disparities in employment and health. Unemployment can result in higher payments from state and federal governments for unemployment benefits, food assistance and Medicaid. People who are unemployed report feelings of depression, anxiety, low self-esteem, demoralization6,8 worry and physical pain.
Workforce participants have different skill levels and educational backgrounds, creating inequalities in wages, opportunities for advancement, job security, and other job benefits.