Mid-Career Layoffs Can Take Two Years Off Your Life

Being laid off in middle age can subtract as much as two years from your life.

That's the conclusion of an analysis from Daniel Sullivan of the Federal Reserve and Till von Wachter of Columbia University. They looked at employment, earnings, and mortality data for over 35,000 Pennsylvania workers over a twenty year period.

Workers who were part of a mass layoff drop saw their mortality rate -- the odds of dying in a given year -- worsen over a five year period and then stay at that higher rate for rest of the twenty years. The new mortality rate was 15% - 20% higher than it would have been otherwise. That translates into a "substantial loss of life expectancy," according to Sullivan and von Wachter: "A worker displaced in mid-career can expect to live about two years less than a luckier counterpart."

Younger workers have a similar pattern. The effect is much less significant for older workers who are laid off closer to retirement -- presumably because there's less time for it to impact their career, and they're closer to receiving Social Security benefits.

The authors write that "... an increasing amount of research links stress from economic uncertainty and unemployment to unhappiness and mental health problems, and a growing literature in epidemiology shows that job
loss is associated with strokes and heart attacks and other detailed health measures, especially for older workers." The authors suggest that the long term increase in mortality shown in their study is due to chronic stress, which in turn is caused by lower post-layoff pay and less stable employment. It's also possible that the loss of health insurance has an impact (some of the data was from before the passage of COBRA in 1985. That law allows people to keep their health insurance after a layoff, if they pay for it).

The new study seems to be the first large scale analysis to track employment and health for individuals over an extended period of time.

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Sources and other resources:

An abstract of the report is here.

Healthcare Economist blog discusses the paper.

Interview with co-author von Wachter