The Psychology of Job Loss Amid COVID-19 Pandemic
Tue, April 20, 2021

The Psychology of Job Loss Amid COVID-19 Pandemic



COVID-19, which was first identified in Wuhan, China last December 2019, has infected more than 700,000 people and claimed nearly 34,000 lives. Many countries imposed social distancing measures and announced a total lockdown in several cities to control the spread of the virus. They are already feeling the intense economic pain wrought by the pandemic, which is expected to trigger a global recession. 

During the past few weeks, many employers were forced to reconsider not only the global mobility of their workforce but also to facilitate the large-scale adopting of home-working. Many organizations were also forced to invest in using relevant technologies, an effort to modify formal processes and manage a remote workforce. Employees, on the other hand, have no choice but to develop the capability to work at home. However, recent evidence suggests relatively low levels of home working with less than 5%. 

While it’s still too early to see how this pandemic would affect our ways of working in the long term, recent reports have shown a decrease in employment rates across the world, particularly in the US. It is expected that the scale of job losses would hit unprecedented levels in the coming weeks and months as business activity in cities, municipalities, and states are brought to a sudden halt. 

"There is a real danger that the economic crisis that comes out of this health crisis is worse than what we experienced in 2008. There is a complete shutdown of economic activity across the entire planet ... of a type we've never seen before,” Jason Furman, formerly a top economist for the Obama administration, said.



Job Losses During Coronavirus Shutdowns

Recent shutdowns due to this pandemic unleashed a tidal wave of layoffs across the world. The US Private Sector Job Quality Index estimates that some 37 million domestic jobs are vulnerable to layoffs due to the temporary shutdowns created by the viral outbreak. “There is a subset of these workers, in jobs often offering substantially less income than the above average, who are particularly vulnerable to cessation of economic activity due to the spreading pandemic,” the researchers wrote. 

According to Forbes, a global media company, focusing on business, investing, technology, entrepreneurship, leadership, and lifestyle, people working in department stores, malls, and specialty retailers would be some of the most affected workers during these shutdowns because people would not be leaving their homes. Companies that are in the travel, hotel, airlines, sporting events, concerts and restaurant sectors will also be forced to downsize their employees because they will become unfunctional due to the pandemic.

Recent reports show that many US companies have already announced more than 1,000 job cuts. Challenger, Gray and Christmas, an outplacement firm, also stated that almost eight million jobs in the leisure and hospitality sector could be affected. Scott Stringer, the City Comptroller of New York City, anticipates that 75% of hotels will be empty through June and real estate agents will lose 20% of their sales. 

The US Department of Labor recently reported a record-breaking number of 3,283,000 Americans who have filed for unemployment, which is over 10 times the 281,000 initial jobless claims filed during the first weeks of March. According to Business Insider, a fast-growing business site with deep financial, media, tech, and other industry verticals, experts believe that these figures are likely much higher because gig workers and contractors are often shut out from receiving jobless benefits at the state level. 

A recent survey conducted by ABC News also found that one in three Americans said they or an immediate family member have been laid off or lost their job as a result of the pandemic. The findings showed that 71% of Americans either have had a layoff or job loss, while 76% either have lost pay or work hours. Those who have higher levels of job losses and pay cuts are people with lower incomes, racial and ethnic minorities, and women who lack a four-year college degree.

The unemployment crisis is also happening in many parts of the world. According to Reuters, an international news organization, the British government reported that over 477,000 people have applied for Universal Credit, a payment to help with living costs for those unemployed or on low incomes, over the past few weeks. The Resolution Foundation think-tank revealed that this is an increase of more than 500% from the same period of 2019, showing that the country was “already in the midst of an unemployment crisis that is building much faster than during the financial crisis.”



Impacts of Job Loss

Psychologists said that losing a job is just like losing a loved one. The stages of grief people have to go through, such as shock and denial, when losing a loved one is the same as losing a job. Unfortunately, losing a job during this pandemic can be a lot more emotionally wrecking. The heightened uncertainty of this health crisis adds to the stress employees are experiencing. 

“How we all deal with stress is being intensified by this particular situation. Some people are going into control mode and trying to control everything. But we have to face facts that we are not in control of our situation as much as we’d like to be,” Adam Benson, a New York-based psychologist, said. 

According to BBC, an operational business division of the British Broadcasting Corporation responsible for the gathering and broadcasting of news and current affairs, it’s important that we acknowledge that emotions linked to a job loss may take time to process. New research studied unemployed participants’ feelings 12 weeks after job loss and then again a year later. Sarah Damaske, an associate professor of sociology, labor and employment relations at Pennsylvania State University, stated that the participants were really angry at first. 

“People who get laid off feel fairly angry about it and upset with their employers. I argue that a lot of the anger comes either from feeling like you are replaceable – they found someone who was cheaper to do the work. Or, like you weren't really part of the team after all – [they] moved the work away from the team or took people off a team they had thought themselves to be a critical part of,” Damaske said.

Previous studies showed that people who suffered financial, housing-,or job-related hardship following the Great Recession were more vulnerable to mental health problems. A recent study suggested that the same thing can happen during this pandemic. According to The Conversation, a network of not-for-profit media outlets that publish news stories written by academics and researchers, the findings revealed that being made redundant reduces a person’s life satisfaction by about 20% -- psychological scarring that can even remain after getting another job.

Research also shows that loss in income from being made redundant only accounts for about half of the big drop in life satisfaction. Thus, Benson suggested that people should recognize the elements of their situation they can and cannot control, and choose to focus on the former. Identifying immediate problems and putting some fixes in place will help.