(NEW YORK) — Jey Austen, a brand designer at a fintech company, lost their job about two weeks ago. But the layoff didn’t come as a surprise, said Austen, 27, who is trans and uses they/them pronouns.
A market downturn in recent months has hammered the tech industry, eliciting a wave of layoffs. Austen, whose lease on an apartment in Austin, Texas ends in August, will receive three weeks of severance pay but otherwise lacks savings, they said.
“Worst comes to worst, I’ll sleep in my car,” said Austen, who was making $80,000 a year. “It’s a sucky situation all around.”
Compounding the stress, Austen will likely struggle to afford their usual weekly therapy appointments, they said. To save money, they’re considering a reduction to bi-weekly or monthly appointments. “Therapy was already expensive,” Austen said.
Austen is hardly alone. So far this year, more than 21,000 tech workers have been laid off, according to Crunchbase. While notable, the layoffs make up a small fraction of the 8.9 million tech employees nationwide, according to an employment tally from the industry trade group CompTIA.
Across the economy, acute financial distress could grow as the Federal Reserve pursues a series of rate hikes that aim to dial back sky-high inflation but risk tipping the economy into a recession, experts told ABC News earlier this month.
Nearly 70% of economists believe that a recession will begin at some point next year, according to a survey of 49 macroeconomists conducted by the Financial Times and Chicago University’s Booth School of Business this month.
Research has linked economic recessions — a shrinking of economic output that lasts at least several months — with a rise in mental health issues, such as anxiety, depression and even suicide, experts told ABC News. In hard economic times, the prevalence of potentially catastrophic financial events — such as job loss or foreclosure — exacerbates preexisting mental health challenges and gives rise to new ones, worsening such challenges further if a financial downturn persists over many months or years.
Moreover, since the U.S. healthcare system largely ties insurance to employment, the loss of a job often compromises access to mental health support when a person needs it most, the experts said. The prospect of heightened mental health issues — combined with inadequate support — poses added concern in light of the pandemic, which has already taken a toll on the psyches of many people, the experts added.
“After COVID, there was an unprecedented rise in mental health issues,” Ronald Kessler, a professor of health care policy at Harvard Medical School, told ABC News. “This coming in the wake of that is a real double whammy.”
Typically, the economy loses millions of jobs in a recession. During the Great Recession, between 2007 and 2009, nonfarm employment dropped by 6.8 million jobs while the unemployment rate rose from 4.8% to 9.6%, according to the Federal Reserve of St. Louis.
A robust, decades-long body of research links economic downturns with a rise in mental health issues, establishing the role played by a spike in major hardships tied to employment, housing, and other financial supports, experts told ABC News.
A 2019 study published in the Association for Psychological Science — which examined individuals affected by the Great Recession — found an increase in depression, anxiety, and problematic drug use among those who underwent even a single major hardship, such as job loss or foreclosure, let alone multiple incidents.
The loss of a job during the Great Recession increased the risk of a mood disorder in the U.S. by 22%, according to a study released last year by researchers at the University of Alberta that examined the available literature on the subject. The researchers also found found 1.2 to 5.8 times higher odds of a major depressive episode associated with the experience of home foreclosure during the Great Recession.
“Pre-existing mental health issues get worse, and mental health issues newly arise for some undergoing economic hardship,” Ralph Catalano, a professor of public health at the University of California, Berkeley, told ABC News. “How would you feel if you lost your job?”
Chris Ruhm, a economics and public policy professor at the University of Virginia who specializes in the health effects of economic downturns, put it bluntly: “When the economy gets worse, mental health gets worse,” he said
One alarming finding shows a correlation between recessions and increased rates of suicide, Ruhm said. Between 2008 and 2010, the first three years following the financial crisis, the suicide rate rose at a pace more than four times higher than it had over the eight years prior to the crisis, according to a 2012 study in The Lancet. “We’ve known for many years that the suicide rate goes up reliably with the unemployment rate,” Ruhm said.
The adverse mental health effects of an economic downturn fall disproportionately on low-income people and minorities, since they’re less likely to have built up savings or alternative sources of wealth that could soften the blow, experts said.
“People of lower socioeconomic status are always more adversely affected by things like this,” Catalano said. “They have a more difficult time when recessions come.”
The scale of such mental health effects depends on the severity and duration of a recession, experts said. A long recession can prolong the time that individuals spend out of work, deepening mental health struggles as a person grapples with financial stress and possible feelings of self-blame, experts said. “When there’s a more severe recession, the effects are going to be more severe,” said Ruhm, the economics professor at the University of Virginia.
To be sure, the U.S. economy could avoid a recession altogether. If a recession does occur, it could prove short and mild, some economists predict. A mild downturn would blunt many of the worst mental health effects, in part because people are better equipped to withstand a brief financial challenge with savings or government support, experts said.
“With economic downturns that are short, it’s not an enormous effect,” said Kessler, the professor at Harvard Medical School. “A lot of resources are there to buffer for those types of things.”
Still, a potential recession brings stress, in part because the extent of financial difficulty remains uncertain, even for those in the middle and upper-middle class, Ruhm said. “In general, people live with a degree of anxiety and uncertainty,” he said.
A New York City-based employee at the cryptocurrency exchange Coinbase — who was laid off this month and requested anonymity due to the terms of a severance agreement — said the prospect of a recession worries her because it could dry up job prospects after the severance pay runs out.
“What if a recession happens and I don’t get something?” she said. “How will I pay the rent?”
If you are struggling with thoughts of suicide or worried about a friend or loved one, help is available. Call the National Suicide Prevention Lifeline at 1-800-273-8255 [TALK] for free, confidential emotional support 24 hours a day, 7 days a week.
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