Layoffs and the mental health and safety of remaining workers: a difference-in-differences analysis of the US aluminium industry

Correspondence to Dr Holly Elser, School of Public Health, Division of Epidemiology, University of California Berkeley, Berkeley, California, USA; [email protected]

Introduction

The consequences of socioeconomic shocks such as plant closures, downsizing and layoffs for workers are well characterised. Job displacement, for example, has been linked with prolonged periods of subsequent unemployment, diminished earnings and declines in job quality.^1–4 Job loss is also a major social stressor that may simultaneously disrupt family dynamics and social conditions.⁵ Job loss has also consistently been associated with poor health,^6–9 psychiatric distress^{8 10–12} and drug and alcohol abuse.^13–15

Fewer studies have focused on the effects of layoffs on remaining workers—the so-called ‘layoff survivors’. Yet the effects of layoffs and downsizing events may extend beyond those employees who lose their jobs.¹⁶ Remaining workers may experience greater job insecurity in the wake of layoffs, especially in the context of recessions when labour markets are relatively weak and other employment opportunities may be limited.¹⁷ Layoffs and the resultant job insecurity may additionally serve to weaken remaining workers’ organisational commitment, increase work related stress and decrease job satisfaction.^18–20

Remaining workers may also experience psychiatric distress in the wake of layoffs due to guilt or remorse for their terminated coworkers.¹⁶ Research on the mental health effects of the Great Recession among continuously employed US workers found that rates of mental health-related outpatient visits and prescriptions increased most among workers at plants where mass layoffs had occurred.²¹ Layoffs and downsizing events may also increase rates of injury among the remaining workers, as one common expectation of management following downsizing is that output levels will not decline even with fewer workers to complete the tasks.^22–24 Moreover, multiskilling, job reassignment and associated management problems may increase injury risk.²⁵ Existing research also suggests that employees who perceive their jobs to be insecure report lower levels of safety knowledge and reduced motivation to comply with safety policies.²⁶

The present study adds to the growing literature on the short-term effects of layoffs on remaining workers. We examined the effects of layoffs on workers employed by a single aluminium manufacturer at one of 30 US plants between 2003 and 2013. Using a difference-in-differences (DID) approach, we estimated the association...