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Pink Slips and Poor Health: The Toxicity of Job Insecurity

• June 29, 2009 • 7:00 PM

Studies show that the current economic climate may very well be eroding months or even years from the lives of those on the bleeding edge of insecurity.

When you lose your job, with no prospect of finding another one quickly, you give up a lot more than income. You are deprived of a sense of security, a source of self-esteem, a certain status in the community. And, according to recent research, you also lose something even more precious: a year or more of your life.

That’s the conclusion of two prominent economists, Daniel Sullivan of the Federal Reserve Bank of Chicago and Till von Wachter of Columbia University. Matching death records with employment and earnings data of Pennsylvania workers from the 1970s and ’80s, they found mortality rates for high-seniority male workers spike sharply in the year following an involuntary job loss, and they remain surprisingly high two decades later.

If this higher death rate persists into old age, it implies “a loss in life expectancy of 1 to 1.5 years for a worker displaced at age 40,” the researchers report. Or as von Wachter puts it more informally: “We were convincingly able to show that if you lose your job, you die earlier.”

But the risk of premature death isn’t limited to those who have actually been let go. A growing body of research suggests a nagging, persistent fear of losing one’s job is also detrimental to one’s health. University of Michigan sociologist Sarah Burgard, who has extensively studied the relationship between job loss, job insecurity and health, calls this “the waiting-for-the-other-shoe-to-drop problem.” Given the current state of the economy, many people are anxiously awaiting the thud of that falling footwear.

In recent months, official Washington has been consumed by two issues: jobs and the economy, and the cost and availability of health care. But there has been surprisingly little discussion regarding the ways in which they intersect. A series of recent studies not only provide evidence these public-policy problems are interrelated: They also suggest that if, as many fear, long-term job security is largely a thing of the past, the public health consequences could be enormous.

Let us start with the latest research on job loss and health, published just last month in the journal Demography. Kate Strully, a sociologist at the University at Albany, State University of New York, found herself struggling with a question often raised by economists (including von Wachter). The correlation between ill health and job loss has long been established, but how can we know which is the cause and which is the effect? Surely some sick people are laid off because they’re physically unable to meet the demands of the job. Does this skew the numbers and cause researchers to come to false conclusions?

To find an answer, Strully examined data from the U.S. Panel Study of Income Dynamics, a nationally representative longitudinal study of American families that includes detailed information on the participants’ health and employment. The surveys reported not only if the person had lost a job, but under what circumstances.

This allowed Strully to focus her attention on what she calls “no-fault” job losses — that is, people who became unemployed when their entire workplace shut down. Examples included factory closings and companies that went out of business. In these cases, literally everyone was let go, making it highly unlikely poor health was a factor in any worker’s dismissal.

The workers were interviewed approximately a year and a half following the layoffs. Of those who were still unemployed, close to 9 percent reported developing a new stress-related health condition such as diabetes or hypertension since parting ways with their former employer. This compares to a 5 percent rate among people who reported their job condition was stable. Those who found new employment also had above-average rates of new health problems, although not as high as the long-term unemployed.

Given these figures, “I’m convinced that a large shock to one’s socioeconomic status, such as job loss, negatively impacts health,” she says.

Burgard, whose most recent research has just been published in the journal Social Science and Medicine, agrees. “Job instability is OK for some people, but not for others,” she says. “If you’re an IT guy and you have a high educational degree, part of being successful is jumping from firm to firm. That’s how you increase your income.

“But the type of workers we tend to see here in Michigan, who aren’t necessarily highly educated, are facing a really tough road. I think people have been focused on the economic payoff (of a more flexible economy where jobs appear and disappear), but are less aware of the potential costs in terms of worker health.”

Economists tend to argue that the flexibility to hire and fire workers as needed ultimately makes the economy more productive, and increases overall wealth. If that’s actually true, it would have public health benefits. As healthcare economist Jason Shafrin argued in 2007, the concept of “creative destruction” — that is, a dynamic economy where innovation leads new companies to rise and old ones to adapt or die — “has decreased average mortality for individuals all over the world due to rising living standards.”

In their latest paper, published in the American Economic Review in May, Sullivan and von Wachter present evidence that cuts both ways. They report the association between income and mortality is far stronger than was thought earlier. If the ever-churning economy produces more higher-paying jobs, those able to land one of them likely will see a positive impact on their health.

But the economists also found workers who lose their jobs — and cannot find another quickly — tend to suffer large earnings losses and go through a period of income instability. This is a big concern, since “higher variability of earnings is associated with increased mortality.”

“You’re looking at two people, both with the same long-term earnings,” says von Wachter. “The one with the more volatile earnings dies earlier. Certainly, this is interesting evidence.” However, von Wachter cautions that more research has to be done to establish that the correlation between earnings volatility and mortality in the report is causal.

Like many economists, von Wachter isn’t certain that the public perception that jobs and incomes are less stable than they once were is accurate. But he has no doubt that “sweeping restructuring” is going on in a number of industries, and workers in those sectors are experiencing significant stress.

“This we can say: The large number of people being laid off in this recession will be subject to higher earnings volatility, and that could potentially affect their mortality.”

This is still more bad news for the former employees of General Motors and Chrysler, but what about workers at, say, Ford? Their company hasn’t gone bankrupt, but they’re fully aware that the industry is on shaky ground, and there are no guarantees their jobs will exist in a year. Using data from two nationally representative samples — the Americans’ Changing Lives and Midlife in the United States studies — Burgard and two colleagues looked at people in that precarious situation for a July 2008 Population Studies Center research report.

Their study (to be published later this year in the journal Social Science and Medicine) concluded that “among people who are currently employed, those who have been persistently worried about losing their jobs have significantly worse self-rated overall health than those who haven’t been consistently worried.” Strikingly, these worried workers “are worse off than people who have had a job loss in the past few years, but are currently re-employed.”

That makes perfect sense to psychologist Sheldon Cohen of Carnegie Mellon University, one of the nation’s leading researchers on the relationship between stress and disease.

“There is a fair amount of evidence that expecting a major stressor is often worse than the actual occurrence of the stressor,” he says. “My understanding is people who lose their jobs and get new ones pretty quickly don’t show many of these effects. That’s consistent with what we know about stress in general. Generally, the longer the stressor lasts, the greater the risk you are under for various diseases.”

Cohen reports there are “two general pathways linking stress to disease-related outcomes. One is the behavioral pathway. We know that under stress, people smoke more, drink more. They don’t sleep as well. They don’t exercise. They have poorer diets. All of these things can put people at greater risk of disease.

“The other is the physiological pathway. There is considerable evidence that under chronic stress, the immune system does not work the way it should. There’s evidence for underresponsivity, where the immune system does not respond adequately to challenges and also for overresponsivitity.”

What’s the problem with an overly vigilant immune system? In many cases, the body’s response to a perceived threat is what causes the symptoms we associate with a disease. “In cold studies, we find people who are under chronic stress, when we expose them to a virus, they’re more likely to get sick,” Cohen says. “They’re producing much more pro-inflammatory cytokine, which is what produces the symptoms of colds.”

So expect to hear a lot of sneezing in coming months. But Cohen counters that thought with some good news: The fact job anxiety is so widespread could actually dampen its destructive impact.

“A lot of the experience of stress has to do with challenges to your self-esteem — that feeling you’re not accomplishing what you should be able to accomplish,” he says. “Being out of work is a stressful event, irrespective of the reason, but it is buffered a bit by the idea that it’s the economy that’s at fault — not the fact I’m incompetent.”

Cohen doubts there are any simple public-policy solutions to this particular health facet of the current financial crisis. “There are interventions that can influence aspects of stress in people’s lives,” he says. “But I’m not sure how effective they’re going to be for people who are unemployed. The major stressors that put people at risk are the chronic, enduring problems that are engrained in their lives, and they’re the ones least susceptible to interventions.”

One obvious response is being considered as part of current the health-care debate in Congress: Finding a way to ensure laid-off workers continue to have health insurance. Under the current system, where most people receive health benefits from their employer, laid-off workers are losing coverage precisely at a time when they are at increased risk of disease.

On the other hand, Strully notes, “Making sure people have health insurance won’t negate or undo the health consequences of job loss. In my analysis, it doesn’t reduce the effect of job loss that much.

“If people are developing health problems as a result of job loss, being able to continue their health care will certainly impact how well they can manage. So it’s definitely a good idea (to find a way to make sure the unemployed are covered). But any intervention is going to have to be more broad and holistic.”

Meaning what? “Some combination of income protection and helping people cope with stress in a reasonably healthy way is probably the most practical intervention,” she says. “There’s a lot of research showing social support — access to supportive, healthy relationships — is really important in how people cope with stressful events.

“I was exchanging e-mails with a union organizer. He was asking me what that kind of organization could do. I suggested a support group that offers really practical advice, like how to maintain a healthy diet on a budget, could be really helpful. Having a group in which people share and develop ties with people who have gone through similar experiences has the potential to be beneficial.”

“All the research suggests the mental health costs are reduced substantially when people return to work,” adds Burgard. “You want (as a society) to give people help in finding another job, perhaps retraining, health coverage in the interim. Those are all things our current system doesn’t necessarily supply. So from a policy angle, there’s a lot we can do.

“Will it be expensive? Probably. Will it be more expensive to pay for medical care when they get sick down the road? That’s an open question. We need to think about preventive maintenance. Just telling people to sleep more and buy COBRA won’t do it.”

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Tom Jacobs
Staff writer Tom Jacobs is a veteran journalist with more than 20 years experience at daily newspapers. He has served as a staff writer for The Los Angeles Daily News and the Santa Barbara News-Press. His work has also appeared in The Los Angeles Times, Chicago Tribune, and Ventura County Star.

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