Being unemployed causes many people to suffer a loss of confidence, self-esteem, and even become depressed. Unemployment brings stress because in many families lives, and lifestyles take on a drastic change. .
Unemployment causes many social and economic problems; it reduces national income, and decreased living standards. When individuals lose their source of income and have issues finding another job that meets their living standards, they tend to accept jobs that are below their standards. They will usually work for as low as minimum wage to make ends meet. Due to this fact employers tend to find laborers more easily and are less likely to increase wages to attract workers. When employers lower, their wages American society is once again affected by lowering consumer goods and capital.
The increase in unemployment not only affects individuals, their families, and communities, but unemployment also causes a loss of human capital. When citizens are laid-off, they cause a loss in human capital because they don't contribute skills and experience to the workforce. Securing a job is difficult the longer a person is out of employment because they are less preferred as new workers. The unemployed experience a loss of self-esteem and dignity which reduces their motivation leading to long-term unemployment and dependence on welfare for income support. Thus, unemployment results in a decline in labor market skills because those who are tirelessly unemployed lose valued skills. Job loss reduces the production of consumer and capital goods and decrease living standards and economic growth. Reduced production of capital goods leads to a slower rate of economic growth in the future. As the unemployed continues to consume resources without contributing to the production process, the employed shoulder these higher costs leading to a reduction in living standards in the long term. Unemployment leads to an unequal distribution of income as the unemployed relies on welfare payments and are concentrated disproportionately in the lowest decile of the distribution of household income.