The impact of unemployment has far-reaching consequences. Even those who don't suffer layoffs in an office may find that their jobs (as well as their personal lives) have been negatively impacted. And for those who have lost their jobs, hopes for a timely retirement may be dramatically altered.

Employees Work Harder but Earn Less
Labor Department statistics show that Americans are producing more goods than in previous years, but are being paid less for their work. When coworkers are laid off, those that remain must pick up the slack, meaning longer hours, harder work and less pay. Although corporations may show some profits during these times, it often comes from employee cuts or reduced wages for those who remain.

Fear of job loss may leave employees feeling like they are at the mercy of their employers. For some companies, the hardest working employees may be the only ones around when the dust settles. While this may be a way to weed out the less productive workers, many of these productive workers may be facing burnout, as well. (To help avoid burnout, see our article Top 10 Ways To Avoid Burnout In Corporate Finance.)

It can be difficult to find motivation when there are no incentives (bonuses and raises). However, the fear of not having income may force employees to step up to the plate and work harder than ever before.

Impact on Retirement Savings
Personal savings accounts can be one of the first things impacted by loss of a job. That's why it is important for those who are fortunate enough to have a job in good times to take advantage of the automatic enrollment of their retirement plan. According to a survey from The Hartford in 2009, 32% of respondents were likely to postpone putting money into their retirement plan and 24% felt they were going to have to retire later. (Find out more about planning to achieve your retirement goals in Five Retirement Questions Everyone Must Answer.)

What To Do if Laid Off
When you find yourself laid off, it's time to network. There are plenty of online networking sites that can help you get back on your feet. Just remember – any connection can lead to employment.

One of the major issues people are facing when they get laid off is what to do about health insurance. Remember that there are plans like COBRA that can continue passed your employment.

Who Does Not Get Hurt During Hard Times
Not everyone gets hurt by a recession or downturn in the economy. Trends in employment statistics show that women may pass men in terms of numbers in the work force. According to the Bureau of Labor Statistics (BLS), as of November 2008, women held 49.1% of jobs. Although there are more women entering the work force, they are still working fewer hours than men, and make only 80 cents for each dollar that men earn, according to the government report.

In times of recession, not all companies cut jobs – and some even thrive. Historically, dentists have done well in hard times, due to fact that people who have skipped taking care of their teeth find themselves having to play catch up. A survey by San Diego's AMN healthcare in 2009 showed that during a recession, many nurses went back to work to fill the financial void from a family member's lost wages. In the survey, 58% of those who responded said they were working more hours compared to the previous year.

Filing for Unemployment Insurance
How do you know if you qualify for unemployment insurance? The first place to start is your state's Department of Labor website, in order to answer a few qualifying questions. There is usually a waiting time before benefits take effect, and even then, the total amount you receive will not equal the amount you'd make while working. So, plan accordingly.(Preparation for unemployment can help you land on your feet should the day come, check out our article Planning For Unemployment for more.)

Conclusion
When unemployment is high, people who have jobs may be more stressed and overworked than ever. Those that have lost jobs may be feeling depressed and anxious. Though recessions end, and unemployment rates will fluctuate, it takes more than high hopes to land on your feet after a stint of unemployment. Plan ahead and use the money you have wisely, and you should be back in the office in no time.

For related reading, take a look at Are Layoff Protection Plans A Good Deal Or A Gimmick?

Related Articles
  1. Active Trading Fundamentals

    The Top 5 Impact Investing Firms

    Learn what impact investing is and obtain information on some of the top impact investing firms ranked by total assets under management.
  2. Retirement

    Retirement Planning for Entrepreneurs and Small Businesses

    If your business has receiveables, here's a smart way to leverage them to build up your retirement fund fast.
  3. Retirement

    Overhaul Social Security to Fix Retirement Shortfall

    There are several theories and ideas about how we can make up for the $6.6 trillion retirement savings shortfall in America. Adjustments to Social Security and our retirement savings plans are ...
  4. Economics

    Leading Economic Indicators: U.S. Bureau of Labor Monthly Stats

    The Bureau of Labor Statistics' monthly employment figures are a key economic indicator. Here's how they work.
  5. Investing News

    How Does US Social Security Measure Up Abroad?

    Social Security is a hotly debated topic. After examining the retirement plans of three different countries, the U.S.'s does not come out the winner.
  6. Investing Basics

    Explaining Trade Liberalization

    Trade liberalization is the process of removing or reducing obstacles that impede the exchange of goods and services between nations.
  7. Investing

    What’s Holding Back the U.S. Consumer

    Even as job growth has surged and gasoline prices have plunged, U.S. consumers are proving slow to respond and repair their overextended balance sheets.
  8. Economics

    The Problem With Today’s Headline Economic Data

    Headwinds have kept the U.S. growth more moderate than in the past–including leverage levels and an aging population—and the latest GDP revisions prove it.
  9. Economics

    Explaining the Participation Rate

    The participation rate is the percentage of civilians who are either employed or unemployed and looking for a job.
  10. Economics

    What Qualifies as Full Employment?

    Full employment is an economic term describing a situation where all available labor resources are being utilized to their highest extent.
RELATED TERMS
  1. Purchasing Power

    The value of a currency expressed in terms of the amount of goods ...
  2. Monetary Policy

    The actions of a central bank, currency board or other regulatory ...
  3. Cost, Insurance and Freight - CIF

    A trade term requiring the seller to arrange for the carriage ...
  4. International Monetary Fund - IMF

    An international organization created for the purpose of standardizing ...
  5. Inflation

    The rate at which the general level of prices for goods and services ...
  6. Delivered Duty Unpaid - DDU

    A transaction in international trade where the seller is responsible ...
RELATED FAQS
  1. Can my IRA be garnished for child support?

    Though some states protect IRA savings from garnishment of any kind, most states lift this exemption in cases where the account ... Read Full Answer >>
  2. Can I use my IRA savings to start my own savings?

    While there is no legal reason why you cannot withdraw funds from your IRA to start a traditional savings account, it is ... Read Full Answer >>
  3. Can creditors garnish my IRA?

    Depending on the state where you live, your IRA may be garnished by a number of creditors. Unlike 401(k) plans or other qualified ... Read Full Answer >>
  4. Is Japan an emerging market economy?

    Japan is not an emerging market economy. Emerging market economies are characterized by low per capita incomes, poor infrastructure ... Read Full Answer >>
  5. Can my IRA be used for college tuition?

    You can use your IRA to pay for college tuition even before you reach retirement age. In fact, your retirement savings can ... Read Full Answer >>
  6. Why are IRA, Roth IRAs and 401(k) contributions limited?

    Contributions to IRA, Roth IRA, 401(k) and other retirement savings plans are limited by the IRS to prevent the very wealthy ... Read Full Answer >>

You May Also Like

Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!