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Blog: Scarring Effects of Unemployment

Nov 23, 2010 | By Casey Schoeneberger

There is nothing quite as jarring as the blunt assertion that our nation’s children are in serious trouble. This isn’t a new claim, and sadly this wouldn’t be a jarring sentiment for many people. This is, however, a new way of looking at parental unemployment. Even if one doesn’t find the scarring of children enough of a reason to act, common sense will tell you that responding now will cost less than doing it later, according to sentiments expressed by Peter Edelman, Professor of Law at Georgetown University Law Center and the keynote speaker at the Economic Policy Institute event entitled The Scarring Effects of Persistently High Unemployment.

Not responding to scarring (defined as long-lasting damage to individuals’ economic situations and the economy more broadly) will create greater inequality, less opportunity for our children, and a less productive workforce in the future. We can’t afford this now, nor should we pass these costs on to future generations. I dare say it is more reprehensible to pass on this huge burden of economic and social inequality, than it is to pass on America’s large, but still surmountable, deficit.

This discussion focused on the effects of parents’ unemployment on children. High rates of unemployment have created a declining tax base, reducing school resources. Since the start of the recession, 29 states and the District of Columbia have reduced educational funding. Not only does unemployment affect children during their childhoods, but children who face parental unemployment have been shown to grow into adults with decreased earnings, according to studies by Ann Huff Stevens, Professor of Economics at the University of California, Davis.  

African Americans lost more wealth in the great recession due to the real estate and foreclosure crisis than in any other single event in history. With such a large decline in housing wealth, minorities have less housing equity available to help pay for college expenses. Home equity allows parents to fund college expenses, but when a loss of home equity disproportionately affects minorities; those same populations will be disproportionately kept out of higher education.  Rucker Johnson, Assistant Professor in the Goldman School of Public Policy at the University of California, Berkeley, proposed dedicated education trust funds which are built up in booms and drawn down in recessions. Trust funds would provide those without a funding source the opportunity to attend college, regardless of whether or not America was in a boom or bust cycle.

Cycles are not a surprise, and we must begin to prepare for them in advance and utilize tools to protect the marginalized from being permanently, adversely affected by these booms and busts in our economy. I wish all our nation’s policy makers and pundits could have really listened to this event and truly heard the costs that  our children face now,  before these challenges bleed into future generations.