Aims The study aimed to investigate time trends in incidence rates in schizophrenic spectrum disorders (ICD-10: F20–F29), bipolar affective disorder (ICD-10: F30, F31), and recurrent depression (ICD-10: F33) and to investigate the rates of employment for all incident cases. Method We used nationwide longitudinal data from 2000 to 2013 on all psychiatric inpatients and outpatients contacts in Denmark. Age-adjusted incidence rate ratios were calculated for the three diagnostic groups, and rates of employment, education, and disability pension were measured 1 year before and 2 years after the diagnosis for all the incident cases. Results The incidence rates increased significantly in all diagnostic groups and both sexes. Comparing the incidence rates in 2013 with 2000 yielded an incidence rate ratio of 1.67 (95% CI 1.51–1.84) for schizophrenic spectrum disorders, 3.82 (95% CI 3.23–4.52) for bipolar affective disorder, and 2.80 (95% CI 2.58–3.04) for recurrent depression. During the same observation period, the employment rates decreased, both 1 year before and 2 years after diagnosis in all three subgroups. In the year 2002, employment rates, 2 years after diagnosis, were 24.6% for schizophrenia spectrum disorder, 35.0% for bipolar affective disorder and 47.1% for recurrent depression. These rates had declined to 15.8%, 26.8%, and 34.7%, respectively, in 2013. Conclusion This study of three severe mental illness subgroups shows significant increasing incidence rates and decreasing employment rates both before and after the diagnosis between 2000 and 2013, highlighting the importance of timely and correct volume of the psychiatric treatment and vocational rehabilitation programs.