One of the most curious things about the stock market is that it’s slow to rise and FAST to fall. This phenomenon simply points to the human condition of being cautiously optimistic when times are good. And then people absolutely freak the freak out when times are not! Scared that your job is at risk? Don’t panic. By the end of this post you will know how to protect yourself from a mass layoff.
Mass Layoffs Hurt Millions
The government forced shutdowns in 2020 due to the coronavirus has led to many a company having a RIF through a mass layoff. RIF stands for reduction in force.
Unemployment levels in the US and around the world skyrocketed. Over 44 million Americans filed for unemployment as a result of the lockdowns. Take a look at the chart below.
Lucky employees have managed to escape a mass layoff, but still fear losing their jobs. Others, have been temporarily furloughed and anxiously await news on if and when they can return to work.
Laid Off Versus Furloughed
Getting furloughed is different from getting laid off. When an employee is furloughed, they must take an unpaid leave of absence. The leave of absence may be short-term or long-term. It all depends on the employer and the state of its financial hardship.
However, furloughed employees can typically retain employee sponsored health insurance and retirement benefits. In addition, furloughed employees are eligible to receive unemployment benefits.
In contrast, when an employee is laid off they lose all ties to the employer. They are not able to return to their jobs in the future. They also lose employer sponsored benefits as well. However, some benefits may still be available for a short-term period after their last day of employment.
Employees who are able to negotiate a severance package, leave with the most. They can receive severance money, retain health insurance for a short time, collect unemployment, get paid unused vacation days, get paid deferred compensation, etc.
Managers Overreact On The Way Down
Hiring managers are just as bad as investors. Not only do they tend to over-hire on the way up because it’s not their money they’re spending, but they also tend to over-fire on the way down because it’s not their lives they’re hurting.
They selfishly think that the more people they let go, the better their chances are of keeping their own jobs! Stock market corrections of 10-20% are enough to make managers wig out, even if the markets are still up 50% since the day they started.