What Are the Negative Effects of Job Loss?

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It seems like a normal day, until you get called into the boss’s office and hear those dreaded words, “we’re letting you go” – or worse yet, “you’re fired.” Losing a job is one of life’s major stresses and can actually lead to serious health issues, according to the Harvard School of Public Health. Along with the increased risk of high blood pressure, diabetes, heart disease and more, losing your job can have additional negative consequences.


Losing a job has the immediate consequence of loss of income, which, if you don’t receive a generous severance package or have significant savings, can cause stress, damage to your credit and other negative consequences. In some cases, your employer may provide a severance package equivalent to several weeks or months of pay, but if you’re fired for cause, you may not be eligible for severance pay. Losing your job due to firing can also limit your ability to collect unemployment benefits in some states; for example, if you’re fired for theft or insubordination, you may not be eligible for unemployment. Even if you do qualify for and collect unemployment benefits, your weekly pay will only be a percentage of your previous salary.


In addition to affecting your income, losing your job also affects your access to benefits. Unless you qualify to purchase health insurance through COBRA – which is often expensive — you’ll lose any health insurance benefits when you lose your job. While you can keep any retirement accounts you’ve established with the employer, if the employer matched your contributions and you leave before those contributions are fully vested, you’ll lose the matching contributions. Depending on how long you’ve been employed, that could translate into thousands of dollars. Losing your job can also end your access to other benefits, such as gym memberships, tuition reimbursement and child care.


If you lose your job when the hiring market is tight, it can take months or even a year or more to find another position. Depending on your industry, your position and where you live, it may be necessary to take a job at a lower level or even an entirely different industry to earn an income. Taking such a position can affect your career momentum. Unless you take steps to stay current on the changes and growth within your industry, losing your job can affect your ability to compete with other applicants. If you’re fired for cause, you’ll most likely be unable to use that employer as a reference on other applications.

Physical and Emotional Health

Losing your job, especially if it is unexpected, can be emotionally harmful as well. You may feel a sense of disappointment, failure or hopelessness, especially if finding another job proves to be difficult. The loss of income and job security can lead to worry and anxiety and strain family relationships. Without a steady income, you’ll likely be forced to make lifestyle changes and perhaps give up certain luxuries, such as vacations, entertainment or unnecessary purchases. And when you lose health insurance, you may put off necessary medical care due to the cost, causing more severe health issues.