An Economic Perspective: Unemployment is as bad for your sex life as it is for your wallet

The United States has had an unemployment rate of over 9.5 percent for 14 straight months, the longest such stretch since World War II. Since the start of the recession, the economy has lost over 10 million jobs.

The good news is that this will eventually get better. Some economists argue the unemployment rate may never return to its prerecession levels, but firms will start hiring again once consumer demand rises. The bad news is that the jobs recovery doesn't appear to be happening anytime soon. The worse news is that this lengthy period of high unemployment will have severe long-term effects on our generation.

The median length of unemployment is currently about six months. As the duration of their unemployment increases, many out of work Americans are forced to settle for employment in positions for which they would ordinarily be overqualified. This puts experienced workers in direct competition for jobs with new college graduates. In many cases, this leaves graduating seniors with three choices: settle for a job they are overqualified for, go to graduate school or remain jobless.

Settling when it comes to employment is not just a short run issue. In fact, studies have shown that students who graduate in poor economic climates and are forced to take less-than-ideal jobs still suffer from lower income 10 years after graduation. After stumbling out of the gate, it's simply too hard to catch up.

Going to graduate school has become the de facto backup plan for many graduating seniors. On the one hand, this may provide a more educated work force in the future that will be more mobile and thus hit less hard by recessions. On the other hand, it may begin to water down the quality and reputation of a graduate school education.

Remaining jobless for long periods of time can seriously affect physical health, especially in young people. A recent Gallup poll asked 18-29 year olds how many days in the past month they had experienced poor health. Those unemployed for over six months reported feeling ill 6.3 days during the past month, over four days longer than those who were either employed or had only recently lost their job.

What is more troubling for the economy as a whole is how many young people are just leaving the labor force completely. Before the recession, the labor force participation rate for people ages 16-24 was around 60 percent. As of July 2010, that number has fallen to 55 percent.

This is leading to comparisons with the so-called "Lost Generation" in Japan. Japan, whose economy has been stagnant for over 20 years, has seen a dramatic rise in young people who have just given up on the notion of finding a career. Instead, these young people bounce around odd-jobs and mooch off their parents.

If mooching off your parents and lying around all day doesn't sound like such a bad deal, consider this: Condom maker Durex found that in 2001, Japan ranked dead last in frequency of sex, partially due to low self-esteem amongst young Japanese men.u

An Economic Perspective is a work of the Economics Society and does not necessarily represent the collective views of that organization.

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