More than a year into the coronavirus recession, unemployment in the United States remains high, and there are 8.4 million fewer jobs than prior to the pandemic. As the U.S. economy begins to recover from the recession caused by this historic public health crisis, some of those who lost their jobs are experiencing what economists refer to as job displacement, where their prior positions no longer exist even as the economy recovers. These workers face unique circumstances when seeking to rejoin the labor force and to reestablish economic security for themselves and their families.
Job displacement is generally understood as a form of job loss that stems from shifting economic and business conditions. For instance, workers can be displaced from their jobs due to a plant closure, a corporate downsizing, insufficient work, or the outsourcing of positions. Job displacement is generally outside of the control of individual workers, but it nonetheless can break down career ladders, dissolve valuable worker-employer relationships, and widen existing racial disparities in labor market outcomes because the research shows that workers of color, and especially Black workers, are most often first in line when job displacement occurs.
All of these consequences of job displacement lead to deep and persistent harmful effects for those who experience it and cause damage to the entire U.S. economy. This issue brief reviews the academic literature on job displacement and offers labor market policies that could help mitigate the negative effects of job displacement. We examine each of the following:
- The long-lasting effects of job displacement
- The especially severe labor market outcomes for workers who are displaced during recessions
- The higher likelihood of severe job displacement for workers of color, and particularly for Black workers
- The effects of job displacement rippling through the entire economy
Read the full article about job displacement by Kate Bahn and Carmen Sanchez Cumming at the Washington Center for Equitable Growth.
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