"The Help that We Get": Racial Differences in Private Safety Nets and the Scarring Effects of Unemployment Following the Great Recession

October 2014

Alix Gould-Werth, University of Michigan

Download '2014-01-npc-working-paper.pdf'.


Though the Great Recession came to a close in June 2009, workers are still feeling its effects due to continued high rates of underemployment and long-term unemployment. The long-term unemployed are more marginally attached to the labor force than their short-term unemployed peers, yet less is known about how people sort into long-term unemployment or cope with this status, nor why African Americans are disproportionately represented in this group. Using data from qualitative interviews with a diverse group of individuals who experienced job loss between 2007 and 2011, this study identifies the important role private safety nets play in ameliorating the scarring effects of unemployment in the aftermath of the Great Recession. Private resources, which are unequally distributed along racial lines, connect job losers to satisfactory jobs, provide high quality re-training opportunities, and facilitate more comfortable labor force exits. Private resources also augment the living conditions of individuals who find themselves longterm unemployed or underemployed, buffering them from the potential negative consequences of the decline in the quality of their employment situation. Because these resources are unequally distributed along racial lines, African Americans who lose their jobs experience worse labor market outcomes and greater decreases in their wellbeing than their White counterparts. These results suggest that job loss is a turning point in the life course—like incarceration, eviction, or high school completion—in which racial inequality is magnified and reproduced.