Recession, Fear of Job Loss, and Return to Work

By Richard A. Victor, Bogdan Savych

April 1, 2010 Related Topics: System Review, Worker Outcomes

Recessions typically mean fewer job opportunities and a greater likelihood that an injured worker will not be able to find suitable return-to-work employment. In a particularly severe recession, therefore, we might expect that a larger number of injured workers will suffer longer-term unemployment.

Despite the severity of the current recession, which began in December 2007 and is deeper and longer than past recessions, this study suggests that some injured workers in this recession may speed up their efforts to return to work when they are concerned about their job security.

The study reported that if a recession is sufficiently serious that it generates an especially high level of fear of job loss, workers may behave differently by engaging in more aggressive efforts to return to work, offsetting a portion of the traditional negative effects of recessions on return-to-work outcomes of injured workers.

By connecting local economic opportunities, workers’ concerns about job security, and the workers’ return-to-work outcomes, this study provides a framework for predicting return-to-work outcomes when the unemployment rate rises and the fear of job loss is magnified.

The report may be useful to those who are trying to predict the impact of the current recession on return-to-work interventions and outcomes, as well as on workers’ compensation claims and costs—especially for income benefits. It may also be relevant for predicting the impact of an economic recovery. As the economy strengthens and the unemployment rate falls, there will be more job opportunities, less fear of job loss, and perhaps less aggressive efforts by injured workers to seek reemployment.

Key findings:

Workers who are afraid of being fired are less likely to become longer-term unemployed after an injury. These workers may be more aggressive in seeking return-to-work opportunities, making an extra effort to return to work earlier or to take steps to increase their chances that their job will exist after return to work.
Injured workers in areas with unemployment rates that are rising or that are higher than normal for the area are more likely to fear losing their jobs. The greater the fear, the more likely it is that workers will more actively pursue returning to work, thus reducing the number of workers that experience longer-term unemployment.

Recession, Fear of Job Loss, and Return to Work. Richard A. Victor, Bogdan Savych. April 2010. WC-10-03.


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