Unemployment Impacts on Mental Health

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COVID-19 has caused historic highs in unemployment levels across the globe. Unemployment rates are expected to rise further from ripple effects of the pandemic as well as from forces that were already in motion such as automation, the rise of artificial intelligence, and the continuous skills gaps between workers and job requirements. Moreover, other than the financial crisis that comes with not having a recurring source of income, unemployment also has a detrimental effect on mental health. Let’s explore in detail.

When you lose your job, it does not only mean losing your usual source of income but in the turn of events, you might also lose your sense of self-purpose. What’s more, unemployment can often come as a shock to your entire system. The toll on your mental health is the same as mourning the loss of a loved one or going through a divorce. Unemployment is an emotional roller coaster that starts as an eagerness to secure a new job, transcending into bitterness, anger, and hopelessness when there is no luck at it. This is especially more common when people are unemployed for longer periods. The impact of unemployment on mental health can develop into mental health disorders. 

There has been a great deal of research on the subject of unemployment and its impact on mental health since the beginning of the Great Depression in the 1930s (Daly et al., 2012). The effects of unemployment can have two parallels: unemployment may worsen mental health, making it more difficult for a person to obtain or hold a job, creating a vicious circle.

Defining Unemployment 

Before expanding on the topic, it is important to be able to distinguish between unemployment and being out of the labor force. An individual must be actively looking for work to be counted as unemployed. However, those without paid employment and are not actively seeking a job are considered “inactive” and out of the labor force. In addition, research refers to the combination of unemployed and inactive as “non-employed”. Moreover, not all forms of inactivity have a similar impact on mental health.

What Is The Connection Between Mental Health and Unemployment?

Unemployment results in a loss of income, which may also lead to a decline in the individual’s standard of living and her/his family. As a consequence, it impacts both physical and mental health. However, the extent to which standards of living decline depends on factors such as, the duration of unemployment, income of other household members, unemployment benefits available, and the unemployed person’s assets. 

Ways Unemployment Can Lead to Worsening Mental Health


Some people define success through work and without it they start to feel like a failure. This including the inability to provide for their family leads to self-doubt and insecurity. The longer these people go unemployed, the more broken their confidence. Even if they are not deprived in terms of material, being unemployed leads to anxiety because of the fear of a future decline in the standard of living and long-term loss of income. The thought of joblessness can generate a feeling of insecurity that is not under one’s control. Financial hardships and uncertainty of the future leave people with stress, consequently damaging mental one’s health. 

Loss of Self-esteem 

Unemployment can cause a drop in status among friends, family, and the community at large, leading to a loss of self-esteem. In addition to this, other mental effects of unemployment other than low self-esteem include the feeling that you no longer have a purpose. Jobs give people’s lives purpose and meaning. It makes them feel more productive and that they are contributing members of society. When people lose their jobs, it leads to them feeling as though they have lost their sense of purpose. They tend to feel useless and empty till they have found a new position. Similarly, these feelings are often precursors of depression


Depression is a common negative of unemployment. Initially losing your job can leave you feeling sad and upset. With time this transcends into hopelessness about finding another job, making it much worse. According to a survey conducted on American citizens, unemployed people are twice as likely to seek treatment for depression than those who are unemployed (Di Tella, MacCulloch & Oswald). A loss of day-to-day structure of work and the stigma associated with unemployment is synonymous with stress and reduced self-esteem. 

Loss of Social Contacts 

Losing your job typically means that you will no longer have any contact with work colleagues, decreasing your social networks. A decrease in socialization can cause one’s a decline in one’s well-being (Helliwell & Putnam, 2004). The potential effects of unemployment on mental health may, however, vary with age and gender. For example, losing one’s job can have a larger impact on the prime working-age population compared to teenagers. Family and social events have a greater influence on the mental health of women, whereas financial difficulties and work stress have a greater impact on the mental health of men (Breslin et al., 2008). 


All of the above-mentioned problems mixed with frustration and not being able to find another job can make a person irritable and angry. Unemployment may even often cause you to get angry more easily and snap at your loved ones for small things that you would otherwise let slide. Everyone cannot cope up with mental health problems in a productive way. The toll unemployment has on these people’s mental health causes them to turn towards drugs and alcohol to make them feel better. This behavior can develop into substance abuse over time and cause even more problems. 


Unemployment has a drastic effect on one’s mental health, which can lead to chronic anxiety. When a comparison was done between those who were employed and those who were unemployed, anxiety was higher in those who were jobless. Jobless people worry a lot about finances and how they’ll make ends meet, which is a natural response. However, with time, it can cause severe anxiety disorders that cannot be tackled without treatment.

The Impact of Unemployment

The impact of mental health also differs with the duration of unemployment. Several theories explain how this may happen. Some argue that the trauma of losing your job is the most intense at the time it occurs and subsides later. Others say that social isolation, stigma, and material deprivation associated with unemployment are likely to become greater over time. The economic conditions at the time put people at risk of sliding into despair. 

The impact of unemployment is not only limited to mental health and behaviors can extend to your family and spouse, as well. Your loved one can feel overwhelmed with emotions, such as, hopelessness, anger, depression, and anxiety. This is especially unavoidable if the effects are drastic and noticeable. Your loved ones are most likely experiencing these emotions with you. As a result, causing voids in your family that are difficult to heal. 

There are different stages of progression for stressful events in psychology, for example, unemployment-induced anxiety also has stages. The initial phase is characterized by shock. In this stage, the individual is unbroken and optimistic despite being jobless. As time goes by and unemployment advances, the individual becomes pessimistic and suffers from distress. Eventually, he becomes fatalistic about the situation and adapts to the new stage without any enthusiasm.

Hence, unemployed people have poorer mental health due to increased levels of anxiety, frustration, and disappointment. Furthermore, these feelings are worse in those who are the breadwinners of their houses and have the weight of various financial responsibilities on their shoulders. They have a greater sense of efficiency because of their former successes in terms of work and school. This is especially common in highly educated people and in people who are vulnerable to the emotional consequences of unemployment. 

How To Cope With These Feelings?

While everyone grieves differently, there are both healthy and unhealthy ways to cope with unemployment. 

  • Give yourself time to adjust and don’t try to bottle up your feelings.
  • Write about your feelings. 
  • Rather than dwelling over how you could have prevented losing your job, accept reality. The sooner you do, the sooner you will be able to move past it. 
  • Don’t blame yourself for what happened. It is easy to criticize yourself when you’ve lost your job but it’s important to avoid putting yourself down. Navigate through the negative thoughts in your head and start looking for a new job with your confidence intact. 
  • Think of this job loss as a temporary setback. Pick yourself up and turn things around, learn from experience and try again. 
  • Remember that some people used events like unemployment to come back stronger than ever, look no further than to the late Steve Jobs, famous for coming back to Apple to turn the company from near bankruptcy to being the most valuable company in the world.


There is a bidirectional relationship between unemployment and mental health. Good mental health has a pivotal impact on finding a good job and overall employability. Whereas long-term unemployment can negatively affect people’s mental health, causing depression, lower self-esteem, and anxiety.

At the end of the day, look for a lesson in your loss. It is always easier to cope with loss by looking for a silver lining. Maybe this unemployment has allowed you to rethink your career and priorities. The stress of losing your job can take a toll on your mental health and leave you more vulnerable. Therefore, it is now even more important to care of yourself. 

Don’t shy away from seeking support

If you require support, go for it. Seeking support is not something to be thought twice about, however, something that will bring you to a position of greater strength. You cannot hesitate when it comes to caring for your mental wellbeing. 


Breslin, F. C., Tompa, E., Zhao, R., Pole, J. D., Amick Iii, B. C., Smith, P. M., & Hogg-Johnson, S. (2008). The relationship between job tenure and work disability absence among adults: A prospective study. Accident Analysis & Prevention40(1), 368-375.

Daly, M. C., Hobijn, B., Şahin, A., & Valletta, R. G. (2012). A search and matching approach to labor markets: Did the natural rate of unemployment rise?

Di Tella, R., MacCulloch, R. J., & Oswald, A. J. (2001). Preferences over inflation and unemployment: Evidence from surveys of happiness. American economic review91(1), 335-341.

Helliwell, J. F., & Putnam, R. D. (2004). The social context of well–being. Philosophical Transactions of the Royal Society of London. Series B: Biological Sciences359(1449).

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