People are Getting Laid Off! What Could This Possibly Mean for the Economy?
Layoffs, pink slips, thinning payroll…whatever you want to call it, mass firings of employees are a financial nightmare for hardworking individuals and companies alike. These surprise decisions take families by storm, leading to uncertainty regarding monthly bills, mortgages, and more. The first months of 2023 have been gripped by sudden layoffs as tech giants, more than other industries, find themselves with apparent “unforeseen gaps” in their budgets.
So, while the effects of layoffs are seemingly obvious, what do mass layoffs mean for the rest of us? These events cause many people to wonder if the worst is yet to come due to the poor planning of large companies. Will people struggle to pay off their debt? What about bills and mortgages to pay off every month? Is there even enough money in savings? The answer to this question is a little bit more complicated. Let's dive right into the specifics of the effects of mass layoffs on the American economy!
Why Are People Getting Laid Off?
As a society, people have grown accustomed to layoffs and have been trained to associate layoffs with times of general financial hardship. This is perhaps why people see pink slips at one company and begin to fear for their own job security. However, on the whole, layoffs can happen for various reasons that have nothing to do with the rest of us.
Budget pitfalls, poor financial planning, and sudden pullouts of investors are reasons businesses may need to slash salaries for a quick financial rescue. In the case of the tech industry in late 2022 and early 2023, copycat behavior is the major theory on why the industry seems to be especially plagued by layoffs. According to Stanford scholar Professor Jeffery Pfeffer, copycat behavior, or “social contagion,” is the root of the mass firings.
There seems to be no apparent evidence to support layoffs in this lucrative industry, and there is plenty of money in the coffers of these firms to retain their staff. However, these companies continue to piggyback on each other, with Microsoft, Google, Meta (Facebook), IBM, Salesforce, and Amazon making sweeping cuts, according to UNSW Newsroom.
Where to Look for a New Job?
Finding out what companies are trying to offset these layoffs is important to understand these issues. However, with so many skilled professionals receiving the chop in the past few months, it's hard to help to wonder where they all will land. Tech professionals who cannot find new jobs among tech companies and smaller startup options leave the tech world altogether. You can start job hunting on LinkedIn, Indeed, FlexOffers, Zippia, Facebook, and more.
The best of the best from the industry fill quickly find new homes at other similar companies. Despite the big layoffs, top tech companies are still hiring, as their concerns are not budgetary. Additionally, other industries need tech professionals. Financial institutions, health care, engineering, and manufacturing all need skilled IT staff for the development of IT infrastructure and the security of their data. According to Dice, hiring postings for December 2022 were consistent with the past four years of hiring statistics.
How Did the Economy Become Like This?
It's difficult to say. For business scholars like Professor Jeffery Pfeffer, it's difficult to watch mass layoffs occur due to the widespread evidence against layoffs and their effectiveness. He cites that layoffs signal economic difficulty have no positive effect on productivity, and have disastrous impacts on employees' mental health.
When asked about the mass layoffs in early 2023, Professor Pfeffer said, “We ought to place a higher priority on human life.” But unfortunately, the strategy of copying other layoffs continues and can be dubbed “contagious layoffs.”
The problem gets worse, too. Analytics on human behavior show that the contagious nature of layoffs has more impact on employee exodus than just firings from the higher-ups. The Viser Turnover Contagion Report states that any company's employees are 7.7% more likely to leave the company after terminations or layoffs occur on their team at work. So, the result of copycat layouts is a continued departure from companies that employ this strategy.
What Are the Effects on Everyone Else?
Luckily, due to the copycat nature of the big layoffs that have been making global headlines, there isn't a signal of an incoming recession. While these layoffs seem massive, with tens of thousands of employees suddenly axed, they pale in comparison to the number of workers in the labor market. Fortunately for most, the national unemployment rate is steady, and unemployment claims were lower in January 2023 than in December 2022, according to the Department of Labor.
Stay Calm and Ignore Silly Business Strategies
It might be better said than done, but ignoring the big layoffs of early 2023 is the best course of action for the labor market. As employees that were wronged by their employers seek new employment, the best thing to come of this event is to urge employers to stop using copycat layoff tactics. Let's leave unnecessarily terminating hardworking employees in 2023.
She started her blog, The Money Dreamer, when she realized the 9-5 job was not the lifestyle she wanted anymore. After designing for a while, she wanted a more meaningful life, which was freedom, so she decided to venture out. She took action so that she can live her dream life and decided to help people to live theirs by helping them how to save, budget, and invest.