Grieving job layoffs while battling the uncertainty of navigating a fiercely competitive job market can impact your mental health. New research reveals that layoffs are sparking a mental health pandemic in the U.S. The American Psychological Association notes that the impact of layoffs can have a long-term impact on workers’ mental health and emotional well-being. As the workforce witnessed a 140% increase in layoffs in July 2025 compared to July 2024, laid-off workers are left suspended in a “what’s next?” mindset.

The Neuroscience Of Job Layoffs

Losing your job can be both psychologically and financially traumatic, elevating stress, creating depression, and in some cases it can be a blow to self-confidence. Even if you don’t lose your job, the uncertainty of it poses a threat, raising worry and anxiety and taking a greater toll on your health than actually losing your job.

“Because the brain dislikes uncertainty, it creates negative stories to fill in the gaps, fueling intrusive thoughts such as ‘I’ll just be rejected again,"’ according to Stephanie Thomas, licensed mental health counselor, "These patterns can lower motivation and make it harder to keep job hunting. Over time, prolonged uncertainty can harm both mental and physical health, increasing anxiety and depression symptoms.”

Uncertainty is an inevitable part of our careers, you might say. None of us knows the future, so we must live with a certain amount of it, but that doesn’t make the anxiety of job loss any easier. In fact, growing fears have sparked a rising trend known as “job hugging” --sticking in a predictable holding pattern when it feels like your job is at stake.

I enlisted the help of Stephanie Thomas and Amanda Augustine, resident certified career expert, also at Careerminds, to explore the psychological impact of being laid off and share strategies to help you move forward after job layoffs.

Thomas told me that job loss feels deeply personal because our work is often tied to our identity, self-worth and daily structure. “Even when the layoff isn’t about performance, we may still question our competence, replay what we ‘should have’ done differently, and worry about how others perceive us,” she explains. “That combination of identity loss, self-blame and disrupted routine makes it feel far more personal than it may actually be.”

“When we experience any intense emotion, such as a layoff, the amygdala — the part of the brain that processes many of our emotions — becomes active," says Thomas. “Once the amygdala is triggered, the sympathetic nervous system kicks in, activating the fight-or-flight (or freeze or fawn) response. This can raise your heart rate, affect your breathing, make you feel on edge and even impact memory.”

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