Hafemeyer Law

Report Shows Encouraging Economic News

A recent report shows there was a reduction in the number of individuals who filed bankruptcy in 2011. This reduction may be a sign that the economy is showing some improvement. In the wake of one of the worst economic downturns in U.S. history this is encouraging news. However, this upward movement in the economy may not be felt by everyone.

For those who are unemployed, reported improvements in the nation’s economy have not made a difference in their personal situation. Many are still looking for work. One reason is that only one-half of the jobs that were lost in the downturn have been recovered and those that have been recovered are paying less.

A study performed by the Brookings Institute shows that this reduction in pay may be permanent. The report can be viewed here. This study specifically followed individuals who became unemployed during an economic downturn. Results reported that these individuals may experience on average a 19 percent reduction in lifetime earnings, which amounted to approximately $112,000. A Columbia University Economics professor states that many of these individuals will likely never recoup this financial loss.

Reasons for the phenomenon are not clear. Many theorize that one reason may be that individuals who lose their jobs during an economic downturn may be required to change occupations. Or jobs lost may be permanently eliminated. Interestingly, individuals who became unemployed in a good economy also saw a reduction in earning capacity, but on a much smaller scale equating to only about 10 percent or $65,000 of their lifetime earnings.

This report shows that individuals who become unemployed may not be able to recover financially. Extended periods of unemployment, and a reduction in wages is difficult and can have a detrimental effect on individuals and a family’s financial stability.

Bankruptcy may be an option for individuals who find themselves in this difficult situation. The discharge of unsecured debt which typically includes credit cards, medical bills and personal loans can give individuals a fresh start and help them turn their financial situation around.

If you are experiencing financial difficulties contact me to discuss your legal rights and options.

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