The Effects of a High Unemployment Rate

Once the U.S. unemployment rate surpasses the 5 percent to 6 percent range, it reflects high unemployment in the country, according to a 2014 article in USA Today. The effects of high unemployment are far reaching, extending from the confines of the home to the nation's broader economy. The damage surfaces in lost wages, weaker skill sets and less business and consumer spending. The longer high unemployment persists, the more likely an individual is to stop hunting for a new job altogether.

The amount of earnings that an individual loses after being laid off is tied to the unemployment rate at that time. After all, the higher the unemployment rate, the fewer the number of companies that are hiring. Someone who is laid off when the unemployment rate is less than 6 percent will lose an average of a year and a half's worth of earnings, according to research cited in a 2012 article in The Wall Street Journal. With unemployment at more than 8 percent, the individual loses nearly three years' worth of earnings.

High unemployment slows the nation's economic growth, which hurts major pockets of the economy like consumer and construction spending. Consumer spending comprises 70 percent of the economy, according to a 2009 Bloomberg article. When unemployment is high, consumers have less to spend and are more likely to add to their savings instead. Less spending leads to weaker economic expansion, which hurts areas like construction that provide jobs to the economy.

The effect of high unemployment on youth traces back to the Great Depression. In the 1930s, the unemployment rate among youth reached 30 percent, surpassing the national average. Many young people couldn't afford to attend high school. In 2013, the unemployment rate for young adults between the ages of 16 and 24 was more than twice the average U.S. rate. Young, unemployed workers not only suffer lost income. They also lose the chance to expand their skill sets, which can suppress their earning power over the long term.

A high unemployment level doesn't just affect the wallet. It extends to the overall health of society and the home. After being unemployed for 18 months, a person's chance of developing a serious ailment like diabetes or heart trouble increases twofold, according to a 2012 "Time" article. It hits the home in other ways, too. Unemployed parents can lead to family dysfunction, where parental stress interferes with parents' ability to engage with their children. This in turn can negatively affect a child's drive to perform at school.