Struggling Economy Threatens Psychology Safety in the Workplace

By Christina Mimms, SIOP Marketing Manager

The U.S. workforce is coping with a critical threat to its stability, driven by worsening economic conditions, steep cuts in federal funding, widespread layoffs and ongoing budget reductions. Federal jobs – both in civil service and foreign service – in the Department of Education and the State Department are among the most recent downsizing efforts, but the termination of federal grants is deeply impacting roles and research at major universities across the nation.

The American Psychological Association’s 2025 Work in America survey found that a majority of U.S. workers (54%) said job insecurity has had a significant impact on their stress levels at work. (APA, 2025) When workers feel unstable in their jobs, it affects their sense of psychological safety at work. They may be less vocal about sharing their concerns or even speaking against injustice. The “squeaky wheel” doesn’t always get the grease; sometimes it gets rolled out the door and into unemployment.

“From both personal and professional experience and research, I can confidently say that current economic conditions are affecting the psychological safety of our workforce,” said Cherise Fuller, MSIO, PhD student, SIOP student member, and organizational development consultant. “Looking at the APA data is both discouraging and a call to action for us as I-O psychologists to help organizations understand how they engage with their talent. When individuals feel they are in psychologically safe environments, they are more likely to speak up and share areas where they need support.”

For I-O psychology professionals who work in companies, universities or other organizations where they have implemented policies that support psychological safety may feel that some of their work is being undone by sweeping financial decisions. The “safe space” they worked so hard to create suddenly shrinks, leaving workers afraid to speak up, admit mistakes or even be authentically themselves without fear of consequences. Their sense of belonging is replaced with the need to “just make it through the day.”

In a recent survey conducted by psychsafety.com, workers were asked to rank their three biggest barriers to speaking up at work, with 12 options to select from. The top four selections were:

• 43 percent: I don’t think it will make a difference anyway
• 38 percent: I might be seen as a troublemaker
• 38 percent: I might be punished or face negative consequences
• 30 percent: No one else seems to think it is a problem

When safety and trust are shaken by the economy or other factors, employers need to reassure their employees. Vulnerability and transparency from leadership, sharing information publicly, enforcing policies, and reducing stress in the workplace will benefit employees’ mindset. For example, workers may be afraid to take their earned vacation days, which in turn affects their mental health, adding to stress levels and feelings of disengagement. Employees should be assured that not only will their job be intact when they return from vacation, but taking time away is something their leader values and encourages.

“I-O practitioners are people-first solution makers, and we want to see people thrive,” Fuller said. “Organizations cannot rely on policy alone to boost psychological safety; rather, they need to ensure that the culture is also in alignment with those policies. If the underlying economic conditions create a pervasive fear, policies alone won’t be sufficient to overcome that fear.”