I can understand why he's in a playpen when you're gone, but when you're home he needs to be out and be with you. Why would you have him if he's in a pen and not with you???? He whines because he wants to be with his pack.
We did the always on a leash thing when we couldn't watch Chester when he was a pup, too. It can slow you down some, but you get to do everything with your best friend! And, yes, I think it could cause emotional damage to him, most likely to manifest in chewing, soiling, etc.