I like this Robert Schiller column on the impact of unemployment on the employed. This isn't ground-breaking stuff, but it's clear and intuitive and makes the important point that mass layoffs have ripple effects that extend to corners of the economy that you might not expect ... like spending habits of the employed:

Managers interviewed by Professor Bewley in the 1990s said that employees who hold onto jobs often suffer "survivors' guilt." They are genuinely pained, experiencing empathy with the less fortunate. In this troubled state, they don't think about taking extravagant vacations, or buying new houses or fancy new cars. And this frugality detracts from demand that might produce jobs for others.

Similar thinking underlies the relatively low level of business expenditures today on buildings, equipment and software. Lower-level managers won't ask for scarce resources for such things, because those items look like luxuries to fellow employees, who worry that there won't be enough in the company budget for them to keep their jobs.

Read the full story at NYT.

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