Unemployment and Mental Health: An Important Opportunity for Cross-Sector Action

The COVID-19 recession led to an historic spike in unemployment. Joblessness following pandemic shutdowns peaked near 15%, the highest rate since 1948 when modern unemployment rate tracking began. Assertive federal and state action brought the extraordinary spike in joblessness down quickly, but today’s low unemployment is far from assured. High interest rates and inflation, the wars in Ukraine and the Middle East, continuing supply chain disruptions, and other factors inject considerable uncertainty into job markets. Furthermore, periods of high and sustained unemployment are cyclical and inevitable given that recessions occur in the United States on average almost twice per decade.

Below the headline unemployment rate, recessions magnify deep disparities. During downturns, unemployment among some groups — racial/ethnic minority groups, low-wage, freelance and contract, and young and older workers — is typically much higher and lasts longer than among higher-wage, predominantly White groups. Not surprisingly, unemployment is associated with worsening mental health, and, in turn, diminished mental health can prolong unemployment as jobseekers lose confidence and become depressed.

Links Between Unemployment and Mental Health

A recent systematic review of 33 longitudinal studies found that sudden job loss or being continuously unemployed were associated with elevated depression, psychological distress, and anxiety. It is especially troubling that analyses of variations in state unemployment rates suggests a link between unemployment and suicide.  

Other evidence shows that diminished mental health prolongs unemployment. A recent analysis of the US Health and Retirement Study found that adults who lost jobs and subsequently became depressed had 67% lower odds of reemployment within four years compared to respondents with low depressive symptomology.

Unemployment insurance beneficiaries, who make up only a portion of the unemployed, are not immune to the mental health consequences of joblessness. Our analysis of the US Census Household Pulse survey data for the week ending July 5, 2021, shows that adults who at the time received or had recently received UI benefits had about twice the likelihood of clinically significant anxiety and depressive symptoms compared to their employed counterparts.  Further, our analyses of this cohort of UI recipients indicates that many groups at risk of long-term unemployment had higher odds of elevated depression and anxiety symptoms, although many of these differences did not reach statistical significance.  

Anxiety and Depressive Symptoms Are Twice as Common Among People Using Unemployment Insurance Benefits Than Among Working Adults

Evidence suggests that mental health support may help the unemployed get back into the workforce. A systematic review of 15 randomized trials published before the COVID-19 pandemic reported that interventions combining therapeutic methods (e.g., health advice and counseling, cognitive behavioral therapy, and physical exercise) with job search assistance had mainly positive employment effects. Developments in the pandemic, including widespread adoption of telemedicine and eased state licensure restrictions in behavioral health services, may reduce stigma and logistical barriers to mental health supports for people as they become unemployed.

An Important Opportunity for Cross-Sector Action

Addressing the mental health needs of unemployed people is of great clinical and economic importance, and therefore it should also be of interest to federal and state policymakers. There is an opportunity for a potential win-win from providing effective mental health services to UI beneficiaries. While mental health treatment would benefit unemployed persons and their families, there is also an opportunity for the time to re-employment to be shortened, thereby creating a potential cost savings for government programs, such as UI and Supplemental Nutritional Assistance Programs (SNAP).   

However, UI programs are not well positioned or prepared to do this on their own.  They do not have financial resources or expertise to address the mental health needs of their beneficiaries. Instead, cross-sector collaboration between employment and mental health agencies and organizations could potentially disrupt the cycle of unemployment and debilitating mental health symptoms.  

Moving Ahead

Achieving effective, sustainable cross-sector collaborations in government programs is challenging. Funding streams carry varying restrictions, and different agencies and professional disciplines have very different cultures. Still, working to overcome those barriers is worthwhile given the potential benefits both for people suffering spells of unemployment and for the programs that serve them.

At the federal level, agencies such as the Substance Abuse and Mental Health Administration and Department of Labor should collaborate to identify and address bureaucratic or regulatory barriers to integrating mental health services with unemployment insurance programs and identify sources of funding to develop and test integrated service delivery models. More immediately, state mental health and labor departments should initiate experimentation with integrated delivery models. Private foundations and federal research agencies like the National Institute for Mental Health or Agency for Healthcare Research and Quality should step up to support those experiments. 

With appropriate privacy protections, UI enrollment applications can be used to identify the population at risk for declining mental health and extended periods of unemployment. Such individuals can be offered mental health support. Mobile mental health apps hold promise as a cost-effective approach to delivering such supports to UI beneficiaries. While published studies about the effectiveness of these apps have only begun to emerge, promising new evidence-based models are being developed. Such tools can be blended with job search supports, which UI agencies are already required to deliver to individuals at high risk of long-term unemployment. 

Programs integrating mental health services with UI programs should be designed to assess the heterogeneous needs of at-risk populations and provide services or referrals to meet individual needs. For some, the appearance of mental health symptoms occurs following job loss. While supportive interventions are likely to help such individuals as they look for jobs, once re-employed, their changed circumstances may reduce or eliminate the impact of mental health problems on functioning. Others may face longer-lived, potentially disabling symptoms, and require aggressive clinical care to promote recovery and avoid chronic mental health problems and future job instability. For those at risk of chronic mental health problems, shortened time to recovery and improved functional status could help them avoid the negative psychological consequences of missing out on sources of reinforcement and self-esteem that work environments can provide.   

Acknowledgement: This work was supported by the New Jersey State Policy Lab with funding from the New Jersey Office of the Secretary of Higher Education. The authors are grateful to Kristen Lloyd, MPH, of Rutgers Institute for Health for assistance analyzing data presented in this blog. The opinions and conclusions expressed are solely those of the authors.