Kyle Shannon has a Sunday ritual: kicking back in his St. Paul home, watching football.
After losing a job as an environmental consultant about a year ago, Shannon developed another, less relaxing ritual, one that he finds hard to stop.
"My habit is to get online and immediately go to job Web sites. And I found myself doing that and telling myself, 'Wait a minute, I don't have to do this anymore,'" Shannon said.
Shannon, 30, recently got a job advising homeowners about their energy use with the Center for Energy and Environment. Over the summer, he took a certification course to pursue that career path.
After a nearly year-long job hunt, Shannon was delighted to land the kind of work he feels passionate about.
"I feel like I'm helping people, and people are becoming more aware of easy ways to reduce energy use, water use in their home," he said.
For now, Shannon will have to reduce his consumption as well. He's earning 33 percent less than what he made at his last job. He's not too worried about it now. With income from a tenant, he can still afford his mortgage.
"It's not necessarily a problem. I think I'll enjoy this job more so than the previous job, so I think it'll be more rewarding. But yes, the pay is definitely a lot less," he said.
Some workers in Shannon's situation may not suffer such sizable earnings reductions, but many do according to several economists' research. Till von Wachter, an economist at Columbia University, co-authored one such study that examined workers who suffered mass layoffs in the 1982 recession (pdf).
"What we find is that losing a job from a stable employer leads to losses in earnings that are very severe initially -- about 30 percent -- and last a very long time," von Wachter said. "Meaning the loss is still present 15 to 20 years after the displacement, and of an order of magnitude of 15 to 20 percent."
Another important study by Princeton University economist Henry Farber found more modest earnings losses after layoffs.
Farber looked at full-time workers who were displaced between 1981 and 2003 (pdf). His research only considered workers who went on to find full-time work, so their earnings losses were not as steep as some identified in other studies. On average, Farber says displaced workers who find new full-time jobs earn about 13 percent less than at their lost job.
The loss is higher -- more like 17 percent-- when you consider their "foregone earnings increase," or, as Farber puts it, "the loss in the sense of never having realized about a 4 percent increase in earnings that people who didn't lose their jobs enjoyed."
Much of the research on the subject of post-layoff earnings losses shows certain factors can play a mitigating role. Workers with a college degree tend to catch up faster. Age matters, too. Younger workers suffer smaller losses and bounce back more fully from earnings losses than older workers do.
Mary, 50, of St. Cloud, got laid off from a job early in the recession in April 2008. She has a new job and didn't want to use her last name because she's afraid of reprisal from her employer. She went from earning $40,000 at her old job to $28,000 in her current work. Her husband took a pay cut last year as well.
"You start at the bottom all the time," she said. "You have to learn your job, you have to learn all their systems, you have to learn all their people, you have to hit the ground trying to run. And as you get older, that gets harder."
Mary and her husband are empty-nesters. They're cautious planners, so they're not in dire straits, but they're finding it tough to follow through on some dreams, like building a new house. They're delaying dental and eye care to save money, and Mary's working two side jobs.
Mary's frustrated that her income hasn't grown steadily over the years.
"You think you're going to get with a company and learn a job and progress, or you would see a job at another company, that you would move forward, you would always be building," she said. "But ever since I got out of college. I've had several jobs, and there's always layoffs."
Von Wachter said if workers take lower paying jobs to get back to work, they should not give up their hunt for better-paying jobs.
Von Wachter acknowledges that process could take several years. It might seem demoralizing, but on the other hand, regaining lost wages is not impossible.
"If you do have the resources and the time and energy to stick in there, you might be doing better than what we describe in our sample," von Wachter said.
On the other hand, Farber cautions against workers rushing into the first low-paying job offered.
"You get into a cycle of moving from job to job. The unemployment insurance program is designed to give them the breathing room to find a good match to find a decent job," he said.
Both von Wachter and Henry Farber say while earnings losses can be devastating for individuals, they do not have a negative impact on the broader economy.
Farber and von Wachter doubt that earnings losses suffered by laid-off workers will be worse in this recession compared to other ones, but Farber does believe a future study of this recession's overall employment picture will prove it to be worse than past downturns.
"I believe what could well wind up happening is that a substantially smaller fraction of the job losers will have found work at all, and even a smaller fraction will have found full-time work," he said.