A 2015 report by the International Labour Organization covering more than 180 countries and over 84% of the global workforce warned of “widespread job insecurity in the global labor market,” finding that only one-quarter of the world’s workers have a stable employment relationship. In the United States, according to the 2016 Work and Well-Being Survey conducted by the American Psychological Association, more than one in three working adults report job insecurity as a significant source of stress.
Unfortunately, research has found that the resulting consequences of job insecurity are significant, negative, and widespread. For example, job-insecure employees are more likely to report burnout, decreased work engagement, and lower organizational commitment than their job-secure counterparts.
In examining the negative outcomes of job insecurity, a great deal of attention has been given to individual-level variables (e.g., secure attachment style, psychological capital, resilience). As a result, much of the previous research has examined job insecurity in a vacuum — isolating employees from their broader social contexts. However, factors that influence employee reactions to job insecurity may operate at the individual level and at higher levels (such as the group, organizational, industry, or even national level). Nevertheless, few studies within the management and business literature consider the influence of these multilevel, complex, and dynamic social contexts. Because employees are nested within organizations, states, and countries, it is crucial to investigate how these social contexts influence employees’ reactions to job insecurity. Therefore, the purpose of our study was to assess whether and how such social contexts change these employee reactions. Specifically, our research focused on country-level and state-level income inequality.
By nearly any accounting, the data indicates that income inequality is growing in many countries, including the United States. Statistics indicate that the number of billionaires in the world has doubled in the past eight years. In the U.S., the top 5% of households saw a 75% increase in income from 1979 to 2012. Yet during that same period the lowest-income earners experienced a 12% decline. Similarly, among individuals in OECD countries, average incomes of the richest 10% of the population is now nine times that of the poorest 10%, a substantial increase from 25 years ago.
Researchers from a variety of disciplines (e.g., economics, political science, sociology, and social epidemiology) have found numerous negative impacts of income inequality. In reviewing previously published evidence, Richard Wilkinson and Kate Pickett summarized the detrimental effects of income inequality on employees and society at large, including worse physical and mental health, greater drug abuse, lower educational attainment, more imprisonment, obesity, reduced social mobility, decreased trust, diminished community life and child well-being, increased violence, and higher rates of teenage pregnancy. However, no studies have examined whether societal level income inequality might also result in worse employee responses to economic stressors such as job insecurity.
We conducted two studies to examine how employees responded to job insecurity in countries and states with different levels of income inequality. In the first study we focused on the impact of country-level income inequality. We obtained the country-level income inequality data (the Gini coefficient) from the Standardized World Income Inequality Database and the individual-level job insecurity and burnout data from the International Social Survey Programme. Analyzing data from 23,778 individuals in 30 countries (including Australia, Belgium, Bulgaria, Canada, Cyprus, the Czech Republic, Denmark, the Dominican Republic, Finland, France, Germany, Hungary, Ireland, Israel, Latvia, Mexico, the Netherlands, New Zealand, Norway, Portugal, Russia, Slovenia, South Africa, South Korea, Spain, Sweden, Switzerland, Taiwan, the United Kingdom, and the United States), we found that employees in high-income-inequality countries who were experiencing job insecurity reacted with even higher levels of job burnout, compared with employees in countries with lower income inequality.
In other words, job insecurity leads to burnout, but this is even more the case if job insecurity occurs in the context of greater societal income inequality. However, the overall size of the effect was modest, likely due to the distal nature of country-level income inequality.
In the second study we narrowed our focus to examine the impact of state-level income inequality within the U.S. We collected individual-level job insecurity and burnout data from employees in the U.S. from Amazon Mechanical Turk, an online crowdsourcing service, and 2015 state-level income inequality data from the County Health Rankings & Roadmaps program. Using data from 402 individuals in 47 states and Washington, DC, we similarly found more-extreme burnout reactions to job insecurity among employees in states with higher income inequality, compared with those living in states with lower income inequality. Interestingly, in Utah, Alaska, and Idaho — states with relatively low income inequality — job-insecure employees reported similar levels of burnout as job-secure employees. That is, job insecurity was unrelated to burnout among employees in these three states.
Taken together, our results indicate that country- and state-level income inequality makes job insecurity worse for employees. That is, the highest levels of burnout were observed among employees who were uncertain about their future job prospects and were living in states or countries with high income inequality.
The important question is why income inequality makes things worse for job-insecurity employees. Milan Zafirovski suggested that societies with high income inequality have fewer employment protections, an absence of labor standards, shorter duration of unemployment benefits, and lower union density and coverage. Thus, those who are faced with the possibility of job loss may not be able to get sufficient material coping resources (e.g., unemployment benefits) during unexpected periods of unemployment.
In addition to the lack of material coping resources in high-income-inequality societies, income inequality divides community members and makes people trust others less, because income inequality may cause individuals to be more interested in keeping up with other people at the expense of beneficial social cohesion. Indeed, using General Social Survey data from 1972 to 2008, Shigehiro Oishi, Selin Kesebir, and Ed Diener found that lower perceived fairness and general trust could explain why individuals reported lower overall happiness in years with greater income disparity. In other words, in addition to a lack of tangible support, individuals may lack intangible coping resources (e.g., supportive relationships) to help them get through the difficult times of job insecurity.
In all, income inequality at the state and country levels may reduce coping resources for job-insecure employees and worsen their stress reactions to job insecurity.
By Lixin Jiang