Scary Stats About the Recession

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If there was ever any doubt about the staggering impact of the recession on America’s workforce, a new study has just shattered it.

The Pew Research Group has found that one-third of Americans have been unemployed at some point during the recession, which is significantly higher than the 10% unemployment number we seem to be hovering around from month to month. What’s more, 55% of adults in the workforce have either lost a job, suffered a pay cut or been forced to work fewer hours or a part-time job. These numbers are based on a survey Pew did of nearly 3,000 adults.

Beyond this, the Pew study shows the devastating effect that the recession has had on people’s finances. Nearly half of those surveyed say their finances are worse off now than they were before the recession began and government estimates show that the average household has seen its assets drop by a whopping 20%.

This study also echoes other recent findings that show Americans have learned to pinch pennies. Some of the financial changes that people have taken are positive. For example, 70% of those surveyed said they have started buying less expensive brands and 30% have cut back on buying alcohol and cigarettes. Yet, others have been forced to take more drastic steps like putting off getting married and having a baby (11%), borrowing money from friends and family (24%) and moving back home with parents (9%).

Perhaps most troubling of all is that the recession has forced many Americans to take risky steps that they might otherwise have avoided. Of those surveyed, 15% confessed to increasing their credit card debt to pay off bills. But that’s not even the worst of it. According to Pew Research,“Four-in-ten adults (41%) who have a checking, savings or retirement account say that during the recession they have had to withdraw money from their savings account, 401(k) account or some other retirement account to pay their bills.” This is happening particularly often among younger and middle-aged Americans.

Of course, there were some positive stats from the study, but even those need to be taken with a grain of salt. One of every five people surveyed said their employment situation had actually improved during the recession, as they were either promoted or had found a new and better position. Similarly, 40% of those surveyed said they had received at least one raise during the recession, but as Pew Research notes, that number would likely have been much greater “if the economy had been more robust.”

As we reported recently, there are signs that we may dip back into another recession in the not-too-distant future, but for most Americans, we never actually got out of the first recession. Of those surveyed, 54% said we were still in a recession and 41% saw signs that we are beginning to recover. Only 3% believe we are actually out of the woods now.

—For a comprehensive credit report, visit the BankingMyWay.com Credit Center.

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