How Factory Closures Doom the Next Generation

Justin Williams, now 24, was a teenager when the Indiana manufacturing plant where both of his parents worked shut down in 2007. He still works in the eastern Indiana town where he was raised, but told me he didn’t feel that there was a very supportive network for him growing up. “It’s hard to do anything around here if you don’t know people—you need connections,” he said. He didn’t go to college, and now works as a bartender at a local bar. He’s worked in a few factories, but none of them paid as well as his parents were paid.

This experience isn’t all that uncommon. Children of parents who lose their jobs perform worse in school, and are less likely to go to college, research shows. But a new study by Elizabeth O. Ananat, Anna Gassman-Pines, and Christina M. Gibson-Davis, of Duke University, and Dana V. Francis of the University of Massachusetts-Amherst, suggests that these negative effects aren’t limited to the families of those who lose their jobs. According to the paper, widespread layoffs affect the future of many children in a community, worsening their mental health, decreasing their test scores, and diminishing their chances of going to college. Unsurprisingly, those consequences are felt most by the lowest-income students.

Ananat and her colleagues looked at suicidal thoughts reported among 12- to 17-year-olds in the year after companies in their home states reported large layoffs. They found that suicidal thoughts in African American youth increased by 2.33 percentage points in the wake of statewide job losses. They looked at test scores and found that eighth-grade math achievement scores fell in the wake of a mass layoff. They also looked at the job losses in the context of data from Stanford economist Raj Chetty that shows which children from different regions of the country end up going to college. They found that if a state suffers cumulative job loss of 7 percent during a child’s adolescence, there is a 20 percent decline in the likelihood that the poorest students attend college (there was no noticeable impact in college attendance for students from the highest-income families)

Ananat theorizes that the far-reaching impact of unemployment is because adolescents are affected not only by their own parents, but by their networks of contacts, such as teachers, coaches, and friends’ parents. When someone in that network experiences job loss, that person may become more stressed; when people in that network are stressed because their friends experienced job loss, that further increases anxiety and tension. And even adults who haven’t lost their jobs may be stressed if they fear impending job loss, which also affects the children around them.

“Macrolevel job losses are best conceptualized as community-level traumas that harm the mental health of both children and adults,” the authors write, “and of both families who experience job loss and those who only witness it.” Still, such large-scale job losses often hit low-income communities harder. Low-income workers are often the first to lose their jobs in a recession, and have less of a financial safety net to fall back on in the event of job loss. Unemployment is also more stressful for those who will presumably have a tough time finding new employment, which is often true of low-wage workers.

The findings that widespread job loss can hamper college attendance among many children in a community is frustrating, but it’s especially devastating for low-income students. That’s because college is often seen as one of the best ways for people from low-income backgrounds to protect themselves from future job loss. Unemployment is lower among the college-educated, and pay is higher for those workers—which can provide not only employment insulation, but social mobility. But unfortunately, massive job losses make it more difficult for low-income students to get to college in the first place, the study suggests.

It’s not just that job loss in a community creates financial challenges that prevent poorer kids from going to college. First-generation students who go to college need to have confidence in their abilities, Ananat said, and “anything that worsens mental health is going to make people have lower optimism and more doubt about their ability to do something that they don’t have a lot of role models for.” That means that widespread job loss not only robs poorer kids of the means to get to college, but also creates a mental and emotional toll that can decrease their belief in their academic and social abilities.

Many other countries don’t have the same linkages between job loss and declines in test scores and college attendance. In Scandinavia, test scores don’t go down nearly as much after large job losses, Ananat said. That is likely because there is a stronger safety net in those countries, and thus less stress about job loss. People know, in Denmark, for example, that if they lose their job, they will be able to survive, and that they will likely be able to enter a subsidized program that will get them back to work. “We don’t have to abandon these communities,” Ananat said. “Not every place does.”

Less stress among the unemployed leads to less stress among everyone else, too. The solution is simple, the study's authors say: Governments can support people who lose their jobs, which in turn can prevent the deterioration of a community.