NYT: Income Loss Persists Long After Layoffs

[Omaha Steve]

http://www.nytimes.com/2009/08/04/us/04layoffs.html?_r=1&partner=EXCITE&ei=5043

By MICHAEL LUO
Published: August 3, 2009

RIVIERA BEACH, Fla. — Chuck Dettman said he had not really considered the notion back in 2001 that he and his friends in a job-search support group would never recover from being laid off.

The country was in a recession then, as now, and the professionals who had just lost their jobs met weekly at a local job center to network and trade advice. Despite the national economic problems, they remained confident that they would not only find work but would also be compensated as they had been in the past.


Josh Haner/The New York Times

Jim Clark, 60, made $20,000 a year as a cantor at a Catholic church after being laid off as an engineering assistant pulling in about $49,000.


Eight years later, however, most of the people who formed the core of Mr. Dettman’s group have not made it back to their old income levels, even if they eventually landed jobs.

“I think there’s maybe only one or two that have been successful in making what they did then,” Mr. Dettman said.

Taken together, their struggles are stark illustration that it can take years for a worker’s earnings to bounce back after a layoff, and that it can take even longer for a layoff during a recession. Economists, in fact, say income losses for workers who are let go in a recession can persist for as long as two decades, a depressing prognosis for the several-million people who have lost their jobs in the current recession.

“On average, most workers do not recover their old annual earnings,” said Till von Wachter, an economics professor at Columbia University, who recently completed a working paper with two other economists that examined the long-term earnings of workers who lost their jobs in the recession of the early 1980s.

FULL story at link.