Given the increasing prevalence of job insecurity across the globe, the purpose of this chapter is to identify variables operating at the individual, occupational, organizational, and societal levels that have been found to influence employee perceptions of job insecurity and to discuss the outcomes (related to organizational well-being and employee well-being) that accrue as a result of such insecurity. In doing so, we bring together two disparate bodies of literature on economic stress (job insecurity and anticipated job loss) by integrating them into a comprehensive model that explicitly advocates a multilevel perspective and acknowledges that employees are embedded in multiple intersecting and influential contexts (e.g., socioeconomic conditions). Although a vast body of research suggests that the consequences of job insecurity are largely negative, this chapter also explores organizational- and societal-level interventions to attenuate these negative consequences.

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This study examines how organizational context affects employee reactions to perceived psychological contract breach. Using Conservation of Resources and Social Comparison theories, the authors develop competing hypotheses regarding the potential exacerbating vs. buffering effects of organizational context on the relationships between psychological contract breach and job security satisfaction, job satisfaction, work–family conflict, and burnout. They collected a multi-source, multilevel data set composed of faculty and departmental administrators at a university experiencing repeated budget reductions. It was found that psychological contract breach was related to detrimental job outcomes (i.e., decreased job security satisfaction and job satisfaction, increased work–family conflict, and burnout). However, this relationship was stronger among faculty in departments reporting low rather than high departmental budget cuts, thus supporting Social Comparison theory rather than Conservation of Resources theory. Social comparison matters when it comes to psychological contract breach.

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Despite unprecedented cuts to public funding of state universities, little research has examined economic stressors in academia. This study addresses this gap in research by examining the direct and indirect relationships of pay stagnation and job insecurity to performance among a sample of 355 faculty members from a public university in the United States undergoing major budget cuts. In line with job stress and psychological contract breach theories, among tenured faculty, both job insecurity and pay stagnation were indirectly related to lower performance via job satisfaction. Among non-tenured faculty, only pay stagnation had a significant adverse relationship with job satisfaction. Given the difficulty of guaranteed job security or pay raises during times of austerity, organizational interventions designed to improve job satisfaction may be more efficacious. Such interventions might help ameliorate the negative impact of economic stressors on the performance of tenured faculty.