Social determinants of work
Research Summary

Less Money, More Problems: Financial Stress and Psychological Harm among Vulnerable Workers

Annabel Stattelman ScanlanJanuary 09, 2024
Source: Journal of Family and Economic Issues Title: The Relationship between Financial Worries and Psychological Distress among US Adults Author(s): Soomin Ryu, Lu Fan Original Publication Date: February 2022 Read Full Research Article

Rising rents, ballooning credit card debt, and recent holiday expenses are all straining wallets as 2024 begins. Last month, more than half of US adults reported feeling stressed about either spending too much money or not having enough money. Research shows that this financial stress may be closely linked with worse psychological health, especially for those who are already disadvantaged in the labor market.

Financial worries, defined as both perceptions of economic hardship and emotional responses to financial strain, are subjective measures of economic difficulties. They do not correspond directly with objective measures of finances, so two individuals with the same income may have different levels of financial worries depending on their spending habits and perceived job security. Financial worries may be more likely to cause psychological distress, including feelings of hopelessness and worthlessness, for certain populations based on variation in coping resources. As a result, disadvantaged groups that are more likely to be exposed to stressors also suffer larger negative impacts to their overall mental health because of these experiences, which can in turn affect their ability to maintain and rise in economic status.

Researchers Soomin Ryu and Lu Fan examine the influence of socioeconomic characteristics on the relationship between financial worries and psychological distress, using the 2018 National Health Interview Survey. Their study fills a gap in the literature by exploring subjective measures of financial conditions and how different populations react to economic strain.

Key Findings
  • Economic worries are consistently connected to higher psychological distress regardless of an individual’s demographics, socioeconomic characteristics, and health-related variables. Experiencing financial stress is associated with worse mental health across the population, to varying extents.
  • Financial worries are more likely to be accompanied by even higher psychological distress for those who are low income, unemployed, renters, or unmarried. This remains true even after comparing workers with different health, health insurance, and employment statuses.
  • On average, both financial worries and psychological distress are higher for those who are women, less educated, low income, unemployed, renters, or unmarried, compared to their counterparts. A higher proportion of these groups state that they are concerned about paying for costs lsuch as housing, medical care, and monthly bills. They also reported feeling nervous, hopeless, depressed, and worthless more often than other demographic groups.
  • Being employed and earning more than $35,000 a year better insulates workers from financial worries and psychological distress. When an individual is unemployed or low income, they are more likely to experience both economic worries and psychological harm as a result of their financial situation.
Policy and Practice Implications

The authors identify the following implications for policy and practice:

  • Legislators could improve the well-being of unemployed and low-income workers by implementing policies that alleviate financial stress, including expansions of unemployment benefits, support for workforce development programs, increases in housing assistance, and the creation of permanent affordable housing.
  • Policymakers could help the most disadvantaged workers by making health care services for mental health issues available to the unemployed, low-income households, and others at high risk of financial worries.
  • Mental health and finance professionals should expand and target services to better reach those who are already disadvantaged in the labor market—those who are women, less educated, low income, unemployed, renters, and unmarried—to mitigate the impact of economic uncertainty on psychological health and help these workers thrive.

Not only are financial worries strongly associated with psychological harm, but this relationship is heightened for several already-disadvantaged groups. Without access to resources to help them cope with money-related stress, those who are most at risk of economic instability must also contend with its impacts on their mental health unless legislators and practitioners step in with supports.

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