State-Level Paid Sick Leave Policies and Population Mental Health during the COVID-19 Pandemic in the United States

Financial hardship was pervasive during the COVID-19 pandemic, with adverse consequences for mental health. However, access to state-level paid sick leave during the pandemic had the potential to reduce the mental health burden of financial hardship-a possibility that has not been tested in prior research. Using nationally representative survey data on more than 1.7 million individuals from the Household Pulse Survey (August 2020 to November 2022) merged with state-level data on paid sick leave policies, we estimated a battery of two-way fixed-effects linear probability models to examine whether paid leave policies buffered the association between financial hardship and depression and anxiety risks. Results show that experiencing financial hardship increased depression and anxiety risks but that the mental health consequences of financial hardship were dampened for respondents living in a state with an active paid sick leave policy. Moreover, because racially minoritized adults, women, transgender adults, and less-educated adults were more likely to experience financial hardship over the period, our study highlights the potential for paid leave policies to reduce population inequities in mental health. We point to paid sick leave policies as an important macro-level determinant of mental health with especially salient mental health consequences for marginalized groups.