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Employers have power to set wages because workers incur substantial personal cost during unemployment. Employers exercise that power by paying their employees less than what they would earn in a truly competitive market. By paying lower wages, employers may cause higher turnover and incur higher costs to recruit, train, and supervise their workers.

In the recession, the average length of time a person who lost a job was unemployed increased to 24.1 weeks in June 2009, from 16.6 weeks in December 2007, according to the federal Bureau of Labor Statistics. Since the end of the recession, that figure has continued to increase, reaching 40.5 weeks in September, the longest in more than 60 years.