This paper examines the interaction between the effects of industrial
unemployment and job conditions on workers' levels of psychological di
stress. Previous research finds that economic stress, defined as conte
xts of high unemployment, mainly affects distress indirectly, through
deteriorating job conditions. However, adaptive cost and identity, sal
ience hypotheses predict that the effects of industrial- andjob-level
conditions interact. I test for cross-level interactions between indus
trial unemployment and job demands and complexity using hierarchical l
inear modeling, individual data for 7,095 workers from the 1987-1988 N
ational Survey of Families and Households, and industry data from the
Bureau of Labor Statistics' 1986-1988 Current Population Surveys. Econ
omic stress at the industrial level has a direct positive effect on wo
rker distress, and economic stress is more distressing to workers in r
ewarding, complex jobs. In contrast, job demands increase distress, bu
t this effect does not interact with industrial employment conditions.