Once You're Unemployed, You'll Earn Less in Next Job

Recent research supports the theory that many of us feared was true: that unemployment has a negative impact on a worker's future salary, especially if the unemployment continues for a long period of time.

The study analyzed employment mobility and "relative losses" to salary when an individual goes through a period of inactivity -- reporting that they are neither looking for, nor available to work -- or unemployment.

Granted, the study was conducted in Western European countries such as Spain, Italy, Portugal, the United Kingdom, France and Germany, but many aspects of their economies are similar to economic conditions in the United States. The results were published in the journal Manchester School.

Not all the news from this study is negative, however. At least the periods of salary loss following unemployment are not permanent. "For workers who have changed jobs due to a recent period of unemployment, their salaries are 4.5 percent to 7 percent less (depending on country) when compared with people who have remained in work, but these figures recover quickly and the differences disappear within a year," says Carlos García Serrano, a researcher at the University of Alcalá and one of the authors of the study.

Younger workers register the greatest salary increases (particularly if they change jobs voluntarily). However, individuals ages 31 to 45 are the most likely to find that periods of unemployment affect their subsequent salaries, and the effects are longer-lasting for this age group.

This would appear to be proof of what we've always suspected -- that it's better to go from one job right into the next, without any lag, rest or "deciding what I really want to do" time in between. The numbers suggest that young people are more easily forgiven for their bouts of unemployment, but once you hit 30, that new salary grace period is over.

This may not be what you wanted to hear right now but the truth is not always pretty.