We’ve seen high unemployment rates during the Great Depression, the Great Recession, and of course, the 2020 Pandemic. All of which in one way or the other have led to long term unemployment for many. This is as a result of businesses not doing well or certain skills no longer needed in the workforce.
The U.S. Bureau of Labor Statistics (BLS) defines long-term unemployment as those who have been unemployed for longer than six months.
They studied the effects of long-term unemployment over men’s careers and concluded that over 22 percent of men experienced at least one period of long-term unemployment in their lifetime.
Meanwhile, research by the Urban Institute shows that while women make up 47.1% of the workforce, they make up 45.2% of the long-term unemployed.
In addition, studies by the Economic Policy Institute have shown that while workers with college degrees have lower long-term unemployment rates they are not unaffected.
Long term unemployment can have a devastating impact on your finances if it happens to you. However, there are steps you can take and programs you can participate in to minimize the impact.
This article will shed more light on what you should be doing if you are impacted by long term unemployment.
What to do if you are impacted by long term unemployment
Depending on the reason for unemployment, there may be several options available to you during this difficult time.
File for unemployment insurance benefits
Unemployment benefits are state-run programs. Eligibility and duration of the unemployment insurance vary by state.
For example, in Alabama, the maximum weekly benefit is $275 and covers up to 26 weeks while North Carolina benefits can only be claimed for 12 weeks for $350 a week. New Jersey has one of the most generous programs of up to $713 a week for 26 weeks. (Ten states currently give unemployment benefits for fewer than 26 weeks.)
About 50% of the states are underfunded and do not have fully funded unemployment insurance benefit programs.
Unfortunately, there is no remedy for those who have been unemployed for longer than their state’s benefit covers. Some states, however, provide additional or extended benefits when there’s high unemployment.
In some states, it's incredibly difficult to apply and qualify for unemployment insurance. A move to an online-only unemployment application process has a major effect on those who might need it the most.
That being said, if you are ready to apply, be sure to gather all the necessary documents.
Common documents needed are:
- Your social security card
- Direct deposit information
- Names and address of your employers for the past 12 months
- Employer registration number
- Recent pay stubs
- Any documentation that proves you are unemployed.
Be sure to check your state’s Department of Labor website for a list of necessary documents.
Keep in mind that when applying for unemployment benefits you may need to explain why you are no longer employed. Avoid using the word “fired” unless you were clearly dismissed because of something you did wrong. Using words like “dismissed” or “laid-off” is recommended.
Determine what healthcare coverage you qualify for
While unemployed you’ll need health coverage. Consolidated Omnibus Budget Reconciliation ACT (COBRA benefits) may be available to you but can be an expensive option. COBRA gives you the opportunity to keep your employer-sponsored health insurance for a temporary time.
Check your local Government Healthcare Marketplace or Healthcare.gov for marketplace coverage. You'll be able to determine if you qualify for lower Marketplace insurance.
Medicaid might be another option. It provides health coverage to households with low incomes. One thing worth noting is that eligibility is based on the income and size of your household and not your job situation.
Medicare is available to people with disabilities or those aged 65 or older.
Find out your disability insurance eligibility
If you are unable to work due to illness or injury you might eligible for long-term disability benefits.
Keep in mind that you’ll need to read the fine print as generally, you are only able to apply for long-term disability payments or unemployment benefits but not both. This will depend on the type of disability insurance you have if you have any.
Look into worker’s compensation
If you were hurt or injured while on the job you might qualify for worker’s comp, a form of insurance benefit that employers pay for.
It allows you to claim for work-related injuries or illnesses without having to take legal action.
Research other government benefits
Federal benefit programs can help low-income earners cover living expenses like healthcare, housing, and food.
For instance, if you haven’t been able to find employment to cover your expenses you might consider applying for TANF (Temporary Assistance for Needy Families.)
Programs like this are designed to help you get back on your feet. Although federally funded they are state-run benefit programs that can vary by state.
A good place to begin your research is on usa.gov/benefits.
Key steps to take if you become unemployed
Applying for unemployment as soon as you are unemployed is a great first step. However, there are a few other steps you can take during this difficult time.
1. Review your expenses and cut back where possible
Take a look at your expenses and try to ruthlessly cut expenses. Reevaluate subscription services and other miscellaneous expenses. Determine what things you can temporarily do without.
Budget any money you have in savings and see what expenses you can cover and for how long. Consider making extreme cuts to housing, food, and transportation expenses. For instance, you can cut back on your grocery spending by meal planning. Now is the time to cut your expenses to barebones.
2. Communicate with lenders and creditors
If you are struggling to pay your bills it's important that you communicate with your lenders. Call loan and other creditors and ask for payment deferrals or payment plans. They may even have special financial assistance programs you can join.
It is however important that you are aware of the fine print, specifically around fees.
3. Tap into your personal and professional network
Now is the time to reach out to your connections and network. If it’s been a couple of years since your last job search, this is also a great time to update your resume.
Get letters of recommendation from former supervisors. Ask former bosses or co-workers if they can refer you to jobs. Put time on your calendar each day to job hunt and network.
Looking for ways to earn additional income can also ease the financial burden. You can consider gig work or side hustles for extra income. Examples of things you can do include:
- Dog Walking/ Pet Sitting
- Virtual Assistant
- Food/Grocery Delivery Services
- Task Rabbit/Fiverr/Upwork
- Restaurant/Retail work
- Living with a roommate
Remember that you are not alone. Long-term unemployment isn’t something that anyone expects and it can happen to anybody.
Long term unemployment can be an incredibly frustrating setback on your career path. It can leave you feeling hopeless and affect your self-confidence.
Family relationships and friendships might suffer. And the mental and emotional impact of what may seem like the inability to achieve your career goals can leave you feeling deflated.
However, you can still find opportunities. You can use the time to improve your skills or learn new skills to help fill employment gaps on your resume. Make it a priority to focus on your mindset and mental wellness.
It’s also important not to isolate yourself and to reach out to supportive family and friends. Journaling, meditating, or prayer can help with mindfulness and gratitude even during this difficult time.
Finally, keep in mind that your situation is only temporary. With continued effort, you will get through this.