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Great Recession Putting Strain on Mental Health

Adam Rust's picture

Posted December 21, 2012

The impact posed by the sustained shortage of jobs is taking a toll on the mental health of some people.

"The constant drain and sense of defeat is creating a crisis, a mental health

crisis," a public interest attorney recently told me.

This attorney's case load consists of helping families in some kind of financial crisis - either in pursuit of a loan modification to avoid foreclosure, or after being victimized by fraud. Most of her fraud cases seem to revolve around credit restoration schemes, tax fraud, or identity theft.

"I don't have the statistics but I feel that it is out there," she says. "The people that are going through it have friends and family members that are also going through it. It means a lack of security: 'any minute it could be me.'"

Typical of her experience is the story of a state employee who had been making eighty thousand dollars per year before she lost her job in 2010. After looking for eight months for work, she found a new position, but with a twenty-five thousand dollar pay cut. After eight months without a job, Wells Fargo denied all loss mitigation options and scheduled the foreclosure sale for July 2011. She was out of her town house by summer 2011.

After moving to an apartment to avoid an anticipated eviction, she learned that Wells did not - and still has not - sold the town house.

According to this attorney, her client ended up feeling so defeated that she contemplated suicide.

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Given what we know what the distribution of wealth in this country, many American households are one paycheck away from the financial abyss. Savings rates are low. Households in the bottom quintile of wealth have an average worth of only seven thousand dollars.

Academic research is less consistent. While losing a job can raise the risk of death for men by as much as fifteen percent, nutritionists say that some people's health actually improves when they lose income because they stop buying so much junk food. Oddly enough, losing a job is less significant of a predictor of death as is the loss of income: the more your earnings suffer, even if you find a lower-paying job later on, the more hazard you will face.

I read that people imagine that sales of down-market beer go up during a recession. To an extent, that kind of thinking probably helps some people to feel less guilty about the problems of some of their neighbors. Buying beer is no different than buying potato chips. Being out of work doesn't mean that beer-thirty begins at 2:30. People cut back wherever they can. Is it a coincidence that Hostess, the maker of Twinkies and Ding Dongs, went out of business?

Numbers do seem to bear out the idea that a lot of people have emotional trouble. Even though jobless people do not have health insurance, spending on mental health care has actually increased.

Significantly, while losing a job does hurt, losing a home can be far worse.

"We get calls all of the time from people that are suicidal," the attorney acknowledged.