Getting Laid-Off May Lead to Early Death -- But There Are Ways to Cushion the Severe Health Impact of Job Loss

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.