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SPSSI Policy Statement:

The Psychological Consequences of Unemployment.

Authors: Deborah Belle and Heather E. Bullock

It is crucial that federal, state, and local governments increase support to unemployed and underemployed individuals and their families. In October 2009, the U.S. unemployment rate rose above 10 percent, its highest rate since 1983, and in hard hit states unemployment topped 15 percent (BLS, 2009a). Unemployment rates are higher among Latinos/as (13.1 percent) and Blacks (15.7 percent) than Whites (9.5 percent; U.S. Bureau of Labor Statistics, BLS, 2009a). Immigrants (Kochhar, 2009) and people with disabilities (Shapiro, 2009) are also especially vulnerable as are those without college degrees - workers in construction, hospitality, and retail are among those bearing the brunt of layoffs (Leonhardt, 2009). High rates of joblessness are also found among youth between the ages of 16 and 24, a group now experiencing a level of unemployment not seen since record keeping began in 1948. In July 2009 unemployment rates stood at 16.4 percent for White youth, 21.7 percent for Hispanic youth, and 31.2 percent for Black youth. 

Alternative government estimates, which include people who have become discouraged and no longer actively seek work, as well as those who are underemployed (e.g., people working part time because they cannot find full-time employment), measure a 17.0 percent national unemployment rate (BLS, 2009a). Like unemployment, underemployment is unequally distributed across the U.S. population, with women, younger workers, and Blacks reporting higher rates of involuntary part-time employment and low pay, as well as higher proportions of “discouraged” workers who have given up on searching for a job (McKee-Ryan et al., 2005).

Limited benefits deepen the hardships associated with unemployment. Low-wage workers, particularly those in minimum wage jobs are often ineligible for benefits because they do not meet state criteria for earnings and/or work participation thresholds (Institute for Women’s Policy Research, 2008; U.S. Government Accountability Office, GAO, 2007). A GAO study found that low-wage workers were almost two-and-one-half times as likely to be unemployed as higher-wage workers but about half as likely to receive unemployment benefits. Although the length of time that federal unemployment benefits can be received has been extended, the United States still lags behind European countries in terms of the time period during which benefits are provided (Rampell, 2009). The temporary nature of benefit extensions further jeopardizes unemployed workers. Phasing out unemployment programs before a full economic recovery is realized threatens to leave many workers without much needed benefits (National Employment Law Project, 2009).

For many Americans health insurance is tied directly to employment, and losing a job means forfeiting that health insurance, often for one’s family as well as oneself. Unemployment is a major barrier to adequate health care. A New York Times survey found that 54 percent of 708 unemployed respondents had cut back on visits to doctors or medical treatments, and 47 percent of respondents reported being without health care (Luo & Thee-Brenan, 2009).

Psychological Effects of Unemployment and Underemployment

Individual and family consequences. Job loss is associated with elevated rates of mental and physical health problems, increases in mortality rates, and detrimental changes in family relationships and in the psychological well-being of spouses and children. Compared to stably employed workers, those who have lost their jobs have significantly poorer mental health, lower life satisfaction, less marital or family satisfaction, and poorer subjective physical health (McKee-Ryan, Song, Wanberg, & Kinicki, 2005). A meta-analysis by Paul and Moser (2009) reinforces these findings - unemployment was associated with depression, anxiety, psychosomatic symptoms, low subjective well-being, and poor self-esteem. Unemployed workers were twice as likely as their employed counterparts to experience psychological problems (Paul & Moser, 2009).

Unemployment can contribute to reduced life expectancy. In a longitudinal study in which the employment, earnings, and work histories of high-seniority male workers were tracked during the 1970s and 1980s, mortality rates in the year after job displacement were 50 to 100 percent higher than would otherwise have been expected. The effect on mortality risk declined sharply over time, but even 20 years after these men had lost jobs, elevated risk of death was found among those who had lost jobs earlier, in comparison to the stably employed (Sullivan & von Wachter, 2009). Even after controlling for baseline health and other demographic characteristics, unemployed workers report significantly poorer health and more depressive symptoms than those who remain stably employed (Burgard, Brand, & House, 2007). Low paying jobs typically offer minimal opportunities to utilize one’s skills and come with a host of negative outcomes (McKee-Ryan et al., 2005). Underemployment is associated with decreased self-esteem, increased alcohol use, and elevated rates of depression, as well as low birthweight among babies born to underemployed women (Dooley & Prause, 2004).

The stress of unemployment can lead to declines in the well-being of spouses (Rook, Dooley, & Catalano, 1991) and to changes in family relationships and in outcomes for children. Research dating back to the Great Depression found that men who experienced substantial financial loss became more irritable, tense, and explosive. Children often suffered as these fathers became more punitive and arbitrary in their parenting. Such paternal behavior, in turn, predicted temper tantrums, irritability, and negativism in children, especially boys, and moodiness, hypersensitivity, feelings of inadequacy and lowered aspirations in adolescent girls (Elder, 1974; Elder, Caspi, & Nguyen, 1986). Subsequent studies have continued to find such a pathway from economic loss to father’s behavior to child’s well-being (e.g., Galambos & Silbereisen, 1987).

Elevated depressive symptomatology has also been found among unemployed single mothers, and mothers who were more depressed more frequently punished their adolescent children (McLoyd et al., 1994). Frequently punished adolescent children, in turn, experienced increased distress and increased depressive symptoms of their own.
Unemployment may even impact decisions about marriage and divorce. Unemployed or poor men are less likely to marry and more likely to divorce than men who are employed or who are more economically secure  (McLoyd, 1990).

Community effects. The impact of unemployment extends beyond individuals and families to communities and neighborhoods. High unemployment and poverty go hand in hand, and the characteristics of poor neighborhoods amplify the impact of unemployment (Wilson, 1996). Inadequate and low-quality housing, underfunded schools, few recreational activities, restricted access to services and public transportation, limited opportunities for employment - all characteristics of poor neighborhoods - contribute to the social, economic, and political exclusion of individuals and communities, making it more difficult for people to return to work. In a six country study, increased risk of mortality was associated with higher neighborhood unemployment rates (van Lenthe, Borrell, Costa, Diez, Roux, Kauppinen, et al., 2005). Unemployed workers also report less neighborhood belonging than their employed counterparts, a finding with implications for neighborhood safety and community well-being (Steward, Makwarimba, Reutter, Veenstra, Raphael, & Love, 2009).

Occupational networks are also impacted. Coworkers who have not lost their jobs may suffer from anxiety that they, too, will soon be fired, and from a heavier work load, as they must now take on the work once done by their former colleagues.  Those who retain their jobs in the midst of downsizing may experience comparable physical and emotional effects to workers who lose their jobs (Kivimaki, Vahtera, Elovainio, Pentti, & Virtanen, 2003).

Protective Factors

Countries with stronger systems of protection for the unemployed have lower rates of mental health problems among the unemployed than countries such as the United States, with its relatively weaker supports (Paul & Moser, 2009; Murphy & Athanasou, 1999). Poorer outcomes for the unemployed are also found in countries with high rates of income inequality and low levels of economic development. For these reasons, comparative analyses find that U.S. workers fare less well than their Dutch counterparts in terms of mental health (Schaufeli & Van Yperen, 1992). An economic and cultural climate that is more accepting of collective responsibility for its citizens coupled with the availability of generous unemployment benefits may make job loss less psychologically distressing.

The broader economic and political climate including unemployment rates also influences the level of distress experienced. Workers who lose jobs when unemployment is high may engage in less self-blame and consequently experience less psychological distress (Dooley & Prause, 2004). Conversely, unemployment may be more stressful when general unemployment levels are high because the competition for remaining jobs is more intense and the chances for re-employment lower. However, other studies find no evidence that unemployment rates impact the level of personal distress associated with losing a job (McKee-Ryan et al., 2005).

The effects of unemployment may be especially harsh for workers of color and their families. Even in good economic times, African Americans and Latino/as face higher unemployment rates than do European Americans, and do so with fewer family economic resources to fall back on. Racial and ethnic disparities in household wealth are even more extreme than disparities in annual income. People of Color own 8 cents of wealth for every dollar owned by Whites, and nearly 30 percent of African Americans have zero or negative worth compared to 15 percent of Whites (United for a Fair Economy, 2009). Many African Americans and Latinos/as face unemployment without the security of a family home, as African American and Latino/a communities were targeted for predatory subprime lending (e.g., adjustable rate mortgages that move from low to extraordinarily high, unpayable interest rates; Bajaj & Fessenden, 2007). As the housing market crashed, foreclosures and evictions were concentrated in many communities of Color.

Early research on the impact of unemployment focused almost exclusively on men, although today women are equally likely to be included. In a study by Kessler, House, and Turner (1987), women were part of a subgroup of respondents who appeared to experience no adverse health effects despite being unemployed for considerable periods of time. In particular, single mothers of young children and women married to men who were the chief family breadwinners seemed to be protected from the negative health effects of unemployment. Similarly, in Paul and Moser’s (2009) meta-analysis of studies published between 1963 and 2004, men were more distressed than women by unemployment. However, McKee-Ryan et al.’s (2005) review of studies published between 1985 and 2002 found that unemployed women reported poorer mental health and lower life satisfaction than did unemployed men. With over 70% of U.S. women now employed outside the home and heterosexual married women earning 36% of the income in two-parent families, future researchers may find that women’s responses to underemployment and unemployment are increasingly similar to those of men. This will likely be the case among female-headed households in which women are the sole or primary earners.

The impact of job loss and of inadequate employment is lessened for those who have economic, social, and personal resources to cushion the blow. Individuals who face unemployment with more financial resources, as well as those who report lower levels of subjective financial strain, report better mental health and more life satisfaction than those who experience unemployment with fewer economic resources and a greater sense of financial stress (McKee-Ryan et al., 2005). Such factors may account for a finding from Paul and Moser’s meta-analysis that blue-collar workers were more distressed by unemployment than were white-collar employees.

Attributions for unemployment are also important in determining the extent of distress following job loss. Those who blame themselves by making internal attributions for their unemployment report lower life satisfaction and poorer physical health than those who externalize blame for their situation (McKee-Ryan et al., 2005).

Other factors, such as social support, can also mitigate the negative impacts of unemployment and underemployment. Being married is a protective factor during periods of unemployment and underemployment, although having more dependents is a risk factor for poorer mental health (Dooley & Prause, 2004; McKee-Ryan et al., 2005). In a longitudinal study of men experiencing job loss following plant closings, Gore (1978) found that laid-off men who reported a lower level of supportive connections with wives, friends, and relatives also had significantly worse health as evidenced by self-reported illness symptoms and by elevated cholesterol levels. Those few men in Gore’s study who blamed themselves for their own unemployment were significantly more likely to report low levels of social support. Supportive social relationships, including those that provide instrumental and emotional support, have been found to be protective of mental health and life satisfaction among unemployed workers (McKee-Ryan et al., 2005). In contrast, “undermining” by members of the social network (i.e., directing anger, criticism, or dislike toward the unemployed individual) was found to be significantly associated with worse mental health among the unemployed (McKee-Ryan et al., 2005).

As the U.S. economy pushes record numbers of workers into the ranks of the unemployed and shifts others into poorly paid, part-time, and insecure jobs that fail to provide the economic and psychological benefits of adequate work, it is crucial to adopt practices and policies that protect workers.

Therefore, be it resolved that SPSSI:

1.  Draw upon psychological evidence to support legislation aimed at reducing unemployment.
2. Advocate that federal and state governments strengthen unemployment programs and related support to families of unemployed people.
3. Encourage state governments to modernize unemployment insurance by allowing part- time workers to receive benefits.
4. Advocate that federal and state governments fund comprehensive job training programs and educational opportunities at all levels for underemployed and unemployed workers.

Be it further resolved that SPSSI encourage other social science associations to draw upon scientific evidence to:

1. Encourage and support research and advocacy related to underemployment and unemployment.

2. Develop guidelines for working with individuals, families, and communities struggling with the economic, social, and psychological impact of underemployment and unemployment. To be effective, these guidelines must attend to intersections of gender, socioeconomic status, race, ethnicity, and age.

3. Encourage the federal government to make the creation of full employment opportunities a priority.


The authors gratefully acknowledge the research assistance of Melike Eger,
Alice Gomez, and Shirley Truong. The authors also wish to thank Randy Albelda, Lisa
Dodson, Bernice Lott, Miranda Schirmer, and several anonymous reviewers for their
helpful comments.

This statement is intended to represent the members of the Society for the Psychological Study of Social Issues, Division 9 of the American Psychological Association. It does not necessarily represent the American Psychological Association as a whole or any of its other subsidiary groups.