US unemployment is now pushing 9.8% and it's likely to hit double digits next year. Eventually, recovery will come but the damage will have already been done. Long term unemployment will have a long term impact on the workforce and business.
According to the specialists at Wharton, high unemployment has become the "new normal". As a result, we will see more companies taking on contract workers.
More to the point, workers will be even less loyal than they are today when the recovery finally comes. Stewart D. Friedman, a Wharton management professor says that the tough job market "clearly accelerates the push for an employee to recognize that you have to be more entrepreneurial and change the way you think about your employability, and not be so connected to a given firm. There's greater interest in skill development and extending your network — building your social capital is a natural outgrowth of job insecurity."
That means workers will be constantly looking for a new job even if they are not ready to move on, because the next round of layoffs might be just around the corner. "People don't feel the same sense of commitment or loyalty to a particular company [that they once did,]" Friedman says. "Very, very few of today's business students, for example, are looking to one company to spend their entire career with. That just doesn't exist — unless it's [their own] company. There's a lot more interest now in starting something you can control."
Because of high unemployment now, companies will find it harder to keep talent when the economy is booming again.
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