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Two graphs that should really scare us

Both of these come from the International Monetary Fund's new paper (pdf) on employment, which is graph-tastic. The first looks at the long-term effect unemployment has on the average male's long-term earnings.

longtermeffevtsunemployment.jpg

So a 25-year-old worker whose firm went under in 2008 will still be earning less than the guy in the office park across from him whose firm barely rode out the recession. We tend to think of employment as being binary: You have a job, or you don't. But it's more complicated than that. Losing a job has lingering effects, and not just on income. It also raises your risk of death going forward:

joblossmortality.jpg

This is one reason that jobs-sharing proposals like the one Germany implemented make some real sense: Keeping the maximum number of people in their jobs -- even if you temporarily reduce their hours or wages -- means fewer people losing their jobs altogether. That means their skills don't deteriorate, it means they're less likely to have to take a new job that they're not as good at or where they're paid a lot less, it means they don't have to explain away their unemployment to prospective employers, and so on.

By Ezra Klein  |  September 14, 2010; 2:58 PM ET
Categories:  Charts and Graphs  
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Comments

If only we cared about our fellow citizens as much as they do in parts of Europe. An excess of individualism is one of the main things that will take us under. We can't solve problems collectively--in fact, that sounds like some sort of Coimmie idea.

Posted by: Mimikatz | September 14, 2010 3:39 PM | Report abuse

What's also very interesting to me is who tends to lose jobs. My hunch is that it's not usually the "worst" or least productive workers. Rather, it's young workers or new hires, who actually may be doing very good work. I am on staff (nonacademic) for a large, state-run university system, and with budget cuts, the employees who I saw get laid off were mostly the ones who do most of the work. The long-term bureaucrats or somewhat lazy staffers who had been around for more than five years all kept their jobs, even though most of them do about two days worth of work in a week. This is because we are very poor at evaluating performance here in the U.S.

My relatives who work in the corporate world have similar anecdotes about new and young workers who are actually more productive and up-and-coming getting cut. If this was generalizable across sectors, in fact what we would see is the people whose total earning potential is getting lost are workers who otherwise would have been highly productive.

Posted by: spogburn | September 14, 2010 5:03 PM | Report abuse

Based on the first graph, it looks like real wages on average start to decrease in the years before a worker is laid off. This might make sense for a higher positioned managers who would be more likely to have some say-so in sacrificing some of his wages to help his struggling company, but not so much for lower-level employees who receive a pink slip out of the blue. Maybe I'm just not connecting the dots.

Posted by: mattpagan | September 14, 2010 5:14 PM | Report abuse

The last graph could be important, but it isn't easy to track -- is there a key identifying those three lines? Which are presumably different populations?

Because I don't see one.

Posted by: upperojai | September 15, 2010 12:34 AM | Report abuse

Opps, never mind. Standard deviation. Sorry.

Posted by: upperojai | September 15, 2010 12:40 AM | Report abuse

Well I can see the next thing coming, bosses telling workers not to complain or they'll lose their job, and die.

Posted by: TomCantlon | September 15, 2010 12:47 AM | Report abuse

"it's young workers or new hires, who actually may be doing very good work. I am on staff (nonacademic) for a large, state-run university system...long-term bureaucrats or somewhat lazy staffers who had been around for more than five years all kept their jobs, even though most of them do about two days worth of work in a week. This is because we are very poor at evaluating performance here in the U.S."

You need to consider the organization. Is this a U.S. problem, or is this a state university / government staffing problem?

I can assure you, private organizations don't manage their payrolls in that manner - cheap effective employees are the ones with the most job security.

"If only we cared about our fellow citizens as much as they do in parts of Europe. An excess of individualism is one of the main things that will take us under. We can't solve problems collectively--in fact, that sounds like some sort of Coimmie idea."

If only we could get unionized (often but not always public sector) workers to commit to such lofty ideals first. It's hard to read the news anymore without hearing about some union rejecting a wage freeze (or rejecting an insufficient raise even) and low and behold, jobs are sliced. Of course on occasion, taxes are simply raised on already struggling taxpayers.

Just google "union rejects wage freeze", and you'll find page after page of stories, often including something along the lines of "layoffs to follow". These unions are destroying jobs (and wouldn't you know it, the destroyed jobs are the young, enthusiastic and cheap workers spogburn tells us about). Amazingly, many Democrats still think card check is a good idea.

Posted by: justin84 | September 15, 2010 7:19 AM | Report abuse

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