The cost of job loss (2023)


Unemployment and the economic crises caused by COVID-19 are expected to have far-reaching consequences for mental health.

ByStephanie Pappas Creation date: October 1, 2020 12 minutes of reading

Flight. 51, No. 7
Printed version: page 54

  • Money
  • Economic inequality

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Pappas, S. (October 1, 2020). The cost of job loss.Psychological monitor,51(7).

The cost of job loss (1)

With the COVID-19 crisis creating economic turmoil unlike any seen since the Great Depression, public health officials and economists expect Americans to face continued job insecurity and stress, and psychological interventions will be critical to helping people cope the situation.

The mental health impacts of today's job losses are likely to be significant, given a wealth of research showing that unemployment is associated with negative outcomes such as anxiety, depression and loss of life satisfaction. Similarly, underemployment and job instability, two additional outcomes of the coronavirus pandemic, are creating distress for those not included in the unemployment numbers.

Many of these people will need psychological support. In fact, research suggests that a mental health-based approach is not only useful, but necessary: ​​job search programs that don't involve nurturing people's motivational and cognitive resources are simply not as effective as those that do, if they do. Psychologists can also inform politicians about the consequences of unemployment for physical and mental health.

"Losing a job and being unemployed for an extended period of time is psychological trauma and economic trauma, and the two are closely related," says Carl Van Horn, Ph.D., professor of public policy and expert on employment and unemployment policy. at Rutgers University. Psychological support can save lives, he says. Although psychologists can't solve the financial problem, "they can certainly help people see and deal with it."

Mental health risks

Unemployment research shows that losing a job, even without severe financial strain, is harmful to mental and often physical health. "Work gives us time structure, it gives us identity, it gives us purpose, and it also gives us social interactions with others," says Connie Wanberg, PhD, an industrial and organizational psychologist at the University of Minnesota. "When you lose all that, it creates a lot of difficulties for people."

Those most at risk of psychological problems after job loss are those for whom unemployment is an immediate threat to survival. People with fewer financial resources and those who experience greater financial pressure from unemployment are less satisfied with their lives, according to a meta-analysis led by Frances McKee-Ryan, PhD, professor of management at the University of Nevada, Reno (Journal of Applied Psychology, Flight. 90, No. 1, 2005).

"The bottom line is that people have to eat. They must have shelter. They need medical help,” says David Blustein, PhD, professor of counseling, educational, and developmental psychology at Boston College.

But job losses also have negative effects across the board. An influential meta-analysis conducted by Karsten Paul, PhD, and Klaus Moser, PhD, both in the Department of Organizational and Social Psychology at the Friedrich-Alexander University of Erlangen-Nuremberg in Germany, found that in 237 cross-sectional and 87 longitudinal studies , the unemployed they were more destitute; less satisfied with their lives, marriages, and families; and more likely to report mental health problems than employees (The magazine on professional conduct, Flight. 74, No. 3, 2009).

The analysis showed that the unemployment effect is likely causal: In longitudinal studies, unemployed people see improvements in mental health when they get a new job. Studies of factory closings where everyone loses their jobs at the same time also show that nearly all laid-off workers experience subsequent declines in mental health, proving that job losses are detrimental to mental health rather than people with poorer mental health being more affected . chances of becoming unemployed. The longer the period of unemployment, the worse off people are, with people out of work for six months or more experiencing the worst mental health outcomes. Countries with high wealth inequality and weak unemployment protection had worse mental health outcomes among the unemployed in the Paul and Moser meta-analysis, a factor that puts Americans at risk. Measured by the Gini coefficient, an economic measure of inequality, the United States has the highest income inequality of any G-7 country, and its unemployment protection is relatively weak. Many laid-off workers lose their job-based health insurance and have access to less generous unemployment benefits than workers in other OECD (Organization for Economic Co-operation and Development) countries.

(Video) The Human Cost of Job Losses During Covid Pandemic | We The People

Unfortunately for those who have lost their jobs during the COVID-19 crisis, there seems to be little solace in the solidarity. Wanberg, McKee-Ryan and their colleagues found no evidence that losing a job during a job crisis had fewer mental health consequences. Losing a job because of a massive social impact is a two-sided coin, says Wanberg. “Right now there is so much unemployment that there is little more camaraderie or support. But at the same time, mental health is further affected because people do not have an easy transition to finding a new job.'

A qualitative study by Blustein and colleagues found further evidence of workers' complex emotions when they lose their jobs. People who blamed their own shortcomings for their job loss felt worse about themselves but remained optimistic about learning new skills and finding a new, better job. Those who saw the fingerprints of systemic problems, such as discrimination or macroeconomic forces, in their job losses saw themselves less negatively but also felt more frustrated about their ability to change their circumstances (The magazine on professional conduct, Flight. 82, No. 3, 2013).

In both therapy and advocacy settings, psychologists can help destigmatize unemployment and counter self-blame. A survey of white-collar workers in the United States and Tel Aviv found that unemployed professionals in the United States tended to blame themselves for losing their jobs, while those in Israel blamed the system in general (Sharone, O.,social forces, Flight. 91, No. 4, 2013).

A tendency toward less generous self-evaluations after unemployment is associated with poorer mental health. Psychologists also study the effects of underemployment on mental health. Evidence so far suggests that job insecurity and instability also promote poor mental health, especially if a person's wages are low or they are forced into temporary positions, says Blake Allan, PhD, associate professor of counseling psychology at the University of Houston. New research on long-term job insecurity using data collected in Australia shows that when insecurity persists for four years or more, people become less emotionally stable, less likeable and less self-aware (Journal of Applied Psychology, first online publication, 2020). These personality traits are important for both job performance and well-being, says Chia-Huei Wu, PhD, chair of organizational psychology at the University of Leeds Business School in England, who co-authored the research.

"We argue that chronic job insecurity can have such effects on personality change because it reinforces a negative loop that reinforces itself over time," says Wu. For example, he says, anxiety related to job insecurity can lead people to pay more attention to the uncertain aspects of their work and life, which in turn often distracts them from tasks that could help reduce anxiety, job insecurity, so that anxiety persists .

The way a person copes with job loss can be determined by the protective factors in their life. In their 2005 review, McKee-Ryan, Wanberg, and colleagues found that unemployed workers who had social support, the ability to maintain a daily routine, who saw work as less central to their identity, and who had high hopes for reemployment responded better. loss of job. Reframing job losses also appears to benefit people: Those who labeled themselves "retired" rather than "unemployed" had higher life satisfaction, according to a study by economist Clemens Hetschko, PhD, and colleagues (The Economic Journal, Flight. 124, No. 575, 2014).

"The interpretation is that the jump in life satisfaction is almost entirely due to stigma, identity and changing the way people treat you," Allan explains.

Populations at risk now

The COVID-19 crisis is hitting some categories of workers more than others, researchers say. "You start to see who is unemployed, and it's people in the service industry, and it's disproportionately women and people of color," says Nadya Fouad, PhD, a counseling psychologist and professor of educational psychology at the University of Wisconsin-Milwaukee. . .

Women's careers may also suffer if schools and childcare centers do not return full-time, she says, as housework and childcare fall disproportionately on women. In addition, many poor and rural Americans lack reliable broadband Internet access, Van Horn says, effectively eliminating their chances of securing telecommuting.

Research on unemployment suggests that job loss can be particularly damaging to the health and well-being of older workers. Workers in their 50s and 60s who lose their jobs during a recession show increases in their mortality, possibly because the loss of health insurance is more dangerous for them than for younger workers; however, losing a job after becoming eligible for Medicare benefits does not affect mortality(Coile, CC, et al.,American Economic Journal: Economic Policy, Flight. 6, No. 3, 2014).

The virus could also hurt the careers of younger workers, says Saba Rasheed Ali, PhD, an occupational psychologist at the University of Iowa who does research with many young people whose families work in the meatpacking industry. These young people often work in the service industry, and many of those jobs have disappeared.

"These jobs may not be available to teenagers and may certainly be quite dangerous for them right now. So how does that affect their professional development and CV? asks Ali. Meanwhile, schools may not be able to provide their usual levels of counseling and professional development, he says.

(Video) Amazon to axe 18,000 jobs globally as it cuts costs – BBC News

And without more job training, teenagers and others may not get the skills they need to get new jobs. A meta-analytic review of job search interventions found that the most successful programs taught job seekers how to network, find suitable openings, and apply for them. The best programs also taught job seekers how to psychologically handle rejection and how to stay motivated day after day (Psychological Newsletter, Flight. 140, No. 4, 2014).

"Job search interventions promoted employment effectively only when both skill development and motivation enhancement were emphasized in the training program," says Songqi Liu, PhD, an industrial and organizational psychologist at Georgia State University, co-author of the review.

Unfortunately, few programs do this well, says Liu. One that works is the JOBS program, developed by University of Michigan psychologists Richard Price, PhD, and Amiram Vinokur, PhD, which is delivered to small groups of job seekers by trained facilitators. The program focuses on building participants' confidence and uses discussion, role play and positive feedback to train job search skills. The program has proven to be effective internationally with repeated studies in China, Finland and Ireland, among other nations (“The JOBS programme: impact on jobseeker motivation, re-employment and mental health”, Oxford Handbooks Online, 2014).

The program has also been shown to particularly improve reemployment and mental health in participants at high risk for mental health problems (Vinokur, A.D., & Price, R.H., in Vuori, J., et al. (eds.), “Sustainable working life: coordinating perspectives on health, safety and well-being”, Springer, Dordrecht, 2015).

In the current pandemic, job hunting is challenging for two reasons. One is that the general economic downturn has reduced the number of new job openings, which means that candidates face stiff competition for the job. A psychologically-informed approach cannot help with this problem, but an understanding of mental health, motivation and human behavior can solve the second challenge: tailoring professional interventions in a socially distanced way.

Although there are many online job search interventions, few are well-researched, Liu says. An exception is the University of MinnesotaIntervention Building Relations and Improving Opportunities (BRIO), which teaches networking skills through a series of videos and online modules. In a field experiment with 491 unemployed people who participated in the program, Wanberg, Liu, and colleagues found that the intervention improved participants' ability to network and their sense of self-efficacy around networking compared to a control group that did not receive the intervention (Personnel psychology, first online publication, 2020). BRIO also helped participants translate their networking efforts into tangible benefits, leading to higher job quality as measured by improvements in position and income.

Psychologists working to understand unemployment are also mobilizing to respond to the unique aspects of the pandemic. Blustein and his colleagues are conducting a qualitative study of work and insecurity to learn more about people's experiences as the pandemic progresses, while collaborating with a network of psychologists, economists and employment counselors to develop interventions to protect against the effects of work on mental health. losses during this crisis. These would include traditional mental health interventions as well as career-focused interventions, Blustein says. It also encourages psychologists to recognize the uncertainty surrounding the pandemic and resulting economic crisis as an existential experience of loss (Journal for Humanistic Psychology, first online publication, 2020). Psychologists can help by advocating for policies that have been shown to protect the mental health of the unemployed, including basic income guarantees and policies to provide safe housing and access to health care, he says.

"We don't know what's going to happen in this COVID crisis, whereas in a recession you tend to know that we're going to get out of it eventually," Blustein says. "It is a place where psychologists must be involved in clinical work and in public policy."

It is also important to see the current economic crisis in the context of working life before the pandemic, says Allan. Even before the coronavirus, work in the U.S. was still more precarious, he says, with more workers working in contract or gig positions, often with few protections or benefits. These workers are often the ones who now face the most dangerous and unsafe working conditions or risk losing their jobs altogether.

"Psychologists must be at the table when we make political decisions, because we have a lot to contribute to those discussions," says Allan. “We have the data and understanding of the systemic issues, but we also have the connection to the voices of the people who experience this through our clinical work and qualitative studies. We know how to change attitudes and promote more accurate narratives, and we need to do more of that."


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What is the impact of job loss? ›

Aside from the obvious financial anguish it can cause, the stress of losing a job can also take a heavy toll on your mood, relationships, and overall mental and emotional health. Our jobs are often more than just the way we make a living. They influence how we see ourselves, as well as the way others see us.

What is the cause of job loss? ›

Trade, trade deficits, offshore outsourcing, overseas investment, and economic restructuring all cause gross job loss.

What are the cost of unemployment? ›

For the individual, the greatest economic cost of unemployment is lost income. 2. For society, the greatest economic cost of unemployment is the decrease in goods and services that occurs as a result of the unemployment.

Is job loss the same as unemployment? ›

Job loss is not synonymous with unemployment. A period (at times a prolonged period) of unemployment typically, but not necessarily, accompanies job loss.

Why is job loss bad for the economy? ›

Prolonged unemployment may lead to an erosion of skills, basically robbing the economy of otherwise useful talents.

How does job loss affect society? ›

Social Pressures Mount. When a community has a lack of jobs and a high unemployment rate, it can see an uptick in substance abuse, depression and other psychological and sociological problems that are common effects of losing a job.

What is the main causes of unemployment? ›

What Are the Main Causes of Unemployment? There are a number of reasons for unemployment. These include recessions, depressions, technological improvements, job outsourcing, and voluntarily leaving one job to find another.

Why is unemployment a problem? ›

Communities with high unemployment rates are more likely to have limited employment opportunities, low-quality housing, fewer available recreational activities, limited access to public transportation and public services and underfunded schools.

What are the harmful effects of unemployment? ›

Unemployed individuals are at a higher risk for depression, anxiety and other mental health issues than people with jobs. Research shows that people who have experienced longer periods of unemployment have poorer health by age 50 than people who have been steadily employed.

What does job loss mean? ›

(dʒɒb lɒs ) noun. business. the act or an instance of a person losing his or her job.

How do you deal with losing a job? ›

5 tips for dealing with job loss
  1. Give yourself time to adjust. It's natural for you to wonder “Why me?” and search for things you did wrong that may have led to your job loss. ...
  2. Accept the reality of the situation. ...
  3. Take care of yourself. ...
  4. Reach out for support. ...
  5. Stay positive and reinvest your energy.

What is the fear of job loss? ›

Definition. The fear of job loss refers to the felt threat, stress, and perceived powerlessness due to the possibility of leaving the current job and being not hired in the labor market. Fear as such generates anxiety and lowers the well-being of workers and even their dependents.

What are four causes of loss in job satisfaction? ›

Limited career growth at an organization. Lack of meaning behind a role. Lack of work-life balance. Poor management.

How common is it to lose a job? ›

In 2022, there were 15.4 million layoffs in the U.S. There were 6.9 million layoffs between August and December 2022. 40% of Americans have been laid off or terminated from a job at least once.

How does job loss affect poverty? ›

The Relationship Between Poverty & Unemployment

A 1% increase in unemployment yields a 0.4 to 0.7% increase in poverty rates, and a 10% increase in minimum wage yields a 2% decrease in poverty rates, it states.

Does job loss cause inflation? ›

This has been formalized according to what is known as the Phillips Curve. According to the Phillips Curve, lower unemployment means people spend more, leading to more pressure on prices.

Why does inflation lead to job loss? ›

This is because businesses may not be able to keep up with the increased cost of goods and services, leading to fewer jobs being created. At the same time, workers may find that their wages are not keeping up with inflationary pressures, making it harder for them to stay employed.

What do we know about job loss in the United States? ›

According to data from the U.S. Bureau of Labor Statistics (BLS) Current Employment Statistics (CES) survey, nonfarm payroll employment in the United States declined by 9.4 million in 2020,1 the largest calendar-year decline in the history of the CES employment series.

How does losing a job affect your family? ›

Job loss increases marital conflict, ups the risk of divorce, and leads to more ineffective parenting, sometimes too harsh, sometimes too neglectful.

Why is unemployment so high in the US? ›

As U.S. economic activity and output dropped far below full capacity, and employers shed large numbers of jobs, the unemployment rate climbed to more than twice the corresponding natural (full capacity) rate of unemployment.

What problems do families face because of unemployment? ›

Joblessness in families is also examined. The impacts of unemployment on families include poverty and hardship, strained relationships, poorer health (although the causal rela- tionships are not always clear), and housing stress. Unemployment could also harm children's development and employment futures.

Why does unemployment affect everyone? ›

Unemployment adversely affects the disposable income of families, erodes purchasing power, diminishes employee morale, and reduces an economy's output.

How can we reduce unemployment? ›

  1. Improve skills / human capital to make people more flexible in the workplace.
  2. Provide stronger incentives to look for and accept work.
  3. Increase the occupational and geographical mobility of labour.
  4. Maintain a sufficiently high level of demand to create enough new jobs.
Mar 21, 2021

What is the most effective solution to unemployment? ›

The unemployment problem is a critical issue that cannot be solved in a short period. However, the measures like change in the education system, assistance to self-employed people, change in the industrial technique, and introduction of better government policies can help tackle the situation.

How does unemployment benefit the economy? ›

By helping households with very low incomes, unemployment benefit programs lower the poverty rates. And unemployment benefit programs encourage people to take socially beneficial jobs, despite some risk of future layoffs, which improves the economy.

What is the most harmful unemployment? ›

Out of all, structural unemployment is one of the most serious forms of unemployment. It is also the most common type of unemployment. It is the involuntary form of unemployment and arises when the economy sees a long term transformation. It is inherent in the economic systems and takes a long time to get resolved.

Does unemployment affect mental health? ›

Unemployment causes stress, which ultimately has long-term physiological health effects and can have negative consequences for people's mental health, including depression, anxiety and lower self-esteem.

What is one word for loss of job? ›

The state of being unemployed is unemployment.

How do jobs affect mental health? ›

However, working in a negative environment can have the opposite effect and take a heavy toll on your emotional health. Long hours, understaffing, a lack of support, and harassment in the workplace can ramp up your stress levels and contribute to mental health problems such as anxiety, depression, and substance abuse.

Is job loss a traumatic event? ›

The aftermath of job loss also can be traumatic because it involves many secondary losses and impacts far beyond losing a paycheck. These impacts can affect one's mental and emotional well-being as well as one's social standing. Negative emotions are one common outcome of job joss.

What not to do after losing job? ›

10 Things Not To Do If You Lose Your Job
  1. Don't make a scene when you leave the employer's premises. ...
  2. Don't sign or agree to anything on your way out. ...
  3. Don't pretend that everything is OK. ...
  4. Don't bottle up your emotions. ...
  5. Don't hang on to equipment or documents owned by the employer. ...
  6. Don't wait to apply for Employment Insurance.

How do you survive financially after losing a job? ›

How to Budget After a Job Loss
  1. Focus on Your Four Walls. If you already budget, it's time to trim the fat—aka get to the real meat of your budgeting priorities. ...
  2. Pause Your Extra Debt Payments. ...
  3. Cut Out All Unnecessary Expenses. ...
  4. Make Money While Unemployed. ...
  5. Use Your Emergency Fund as a Last Resort. ...
  6. Realize This Is Temporary.
May 26, 2023

Can you grieve a job loss? ›

“Losing a job, especially involuntarily, is a big loss that needs to be grieved,” Tessina says. It's perfectly normal to grieve, but the longer you wait to begin to make a plan, the more difficult it may be to get back into the workforce.

Can I lose my job because of anxiety? ›

“Can you fire someone for other mental health issues?” The simple answer is yes, so long as you follow a fair process. If the employee is suffering from severe anxiety or stress, the same rules apply.

What causes fear of loss? ›

Few common causes that may build fear of loss in us are death of a loved one, separation including divorce, betrayal, war, cheating, insecurity, hereditary, illness or some other mental illnesses like depression. This fear impacts our behaviours as well.

How traumatic is job loss? ›

The aftermath of job loss also can be traumatic because it involves many secondary losses and impacts far beyond losing a paycheck. These impacts can affect one's mental and emotional well-being as well as one's social standing. Negative emotions are one common outcome of job joss.

What does impact of job mean? ›

Impact in your job means seeing positive, effective, and worthwhile outcomes and results from your work.

How does job loss affect you emotionally? ›

Job Loss Depression Symptoms

Loss of identity as so much of a person's sense of self and self-esteem is tied up in their occupation. Loss of social support and feelings of isolation and loneliness due to no longer being able to connect with their colleagues, who may be important members of their personal network.

Can losing a job be a good thing? ›

You have time to stop and reassess

All of the above leaves little room for self-reflection or the opportunity to take a step back and figure out if you're on the right path. Losing your job gives you a chance to pause and think about what you really want from a career.

What does the story of Job teach us about suffering? ›

The book invites us to honestly bring our pain and grief to God and to trust that he cares, realizing that he knows exactly what he's doing.

How did Job suffer in the Bible? ›

Job, a righteous, God-fearing man, experienced severe trials and afflictions. Job lost all of his property, his children died, and he suffered great physical agony. In the midst of his suffering, Job was visited by three friends. Though Job's friends intended to comfort him, they accused him of transgression.

What does the story of Job teach us? ›

The story of Job exemplifies our struggle to understand the problem of suffering. Job was upright and unwavering in his commitment to God, yet he loses everything—his children, his wealth, and eventually his health. For some of us, his experience of suffering resonates profoundly.

What is the loss of job? ›

What is the loss of a job? When you lose your job, you are no longer gainfully employed by the employer who let you go. You may lose your job through termination, also called being "fired," or through a layoff. Although being terminated differs from being laid off, the end result is the same: you lose that job.

What causes unemployment? ›

What Are the Main Causes of Unemployment? There are a number of reasons for unemployment. These include recessions, depressions, technological improvements, job outsourcing, and voluntarily leaving one job to find another.

Is losing a job a stressor? ›

The loss of a job can be one of the most stressful events that a person may experience. In fact, the loss of a job is included within the top 10 list of stressful events. A job provides more than simply just a paycheck. A job also provides a sense of identity, self-confidence, respect, and stability.

Do you grieve when you lose your job? ›

Job loss grief is natural. After all, losing your job is among the top five life stressors a person can experience. The grieving process is very similar to the stages of grief one goes through after losing a loved one or experiencing a medical emergency.


1. Disney to implement hiring freezes, job cuts to manage costs
(Yahoo Finance)
2. Amazon aiming for additional job cuts amid cost-cutting plans
(Yahoo Finance)
3. Goldman Sachs says more job cuts are coming
(Bloomberg Television)
4. IT Giant Accenture Plans To Cut 19,000 Jobs In A Bid To Optimise Cost | India Business Hour
5. Parents in US grapple with childcare costs, job losses
6. UK Faces 500,000 Job Losses as BOE Fights Inflation
(Bloomberg Television)


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