The global economy is going through some changes right now, and although it might be a bit of a bad word to say, a lot of people are a bit spooked about a recession. A recession is a period of time in which the economy slows down it’s growth rate, maybe has a negative growth rate, the stock market falls, and businesses don’t make as much money. Along with all of this may often come the dreaded layoffs. Already in 2023 we’ve seen layoffs happening at many of the big tech firms (Google, Microsoft, Amazon, Facebook, Salesforce, PayPal, etc) as well as many startups. Layoffs.fyi is a pretty nifty site where you can see a ton of detail, but honestly it’s all over the headlines. I think it was like 3 weeks ago that the big tech firms laid off some 40,000 employees – in one week!

I am in my day job employed in tech. I’ve been employed there for 4.5 years and am in good standing there. My company has not been immune to the layoffs and we’ve seen a decent amount laid off (or to be laid off) already this year. It’s a scary proposition and it’s certainly hit home when it happened at my employer. I am now faced with the very real possibility that either myself or some colleagues close to me will be laid off in the nearish future. No one has a crystal ball and I’m hopeful but on some level I am also worried and have been thinking through what that could mean for my family and me.

Truth be told I’ve never personally been laid off, and for many in the young professional generation, all we’ve known is good economic periods where companies grow, hire and give out more money. This is new for many of us and we likely have lots of questions around it. I’m no expert, haven’t been laid off, but I thought it might be interesting for me to put some of the thoughts I’ve been having down on paper.

Here’s how I’m thinking through the very real possibility of layoffs.

How good is my emergency fund?

The very first thing that comes to mind with layoffs is my emergency fund. An emergency fund is a separate savings account that is not touched unless it’s a true emergency. It’s recommend to hold 3-6 months worth of expenses in this account. In the event of an emergency, like losing your job, this would come in handy.

When I started working my first job over a decade ago, I had very little to my name, but that’s not unheard of – I was a fresh college graduate just starting to work. Right away from my first paycheck I prioritized saving up an emergency fund. I diligently set aside a few hundred each paycheck until I hit an amount I felt comfortable with. I hit this number a few years in and stopped contributing to it. It’s currently in a separate high yield savings account where as of today it’s earning 3.3% interest. I’ve actually touched it twice before – both around buying a house and me not factoring in when I could access employee stock to sell. I resisted the urge during the stock market rally of 2020 and 2021 to pull that cash out and put it in lower risk index funds and have kept it all in cash. It’s given me great peace of mind over the years!

Now for the first time in my career I’ve faced with the reality that my income (i.e. my job) might be disrupted via a layoff. Severance packages in tech have been quite generous – ranging from 2-6 months of pay, meaning I would still be getting paid for 2-6 months before the cash income ran out. However we’re currently looking at what appears to maybe be a recession and suddenly there are 83,000 tech people in 2023 that have been laid off looking for a job. That’s a fair amount of competition in what appears to be a slowing hiring environment.

I have sat down and done the math and with where my emergency fund stands today, I have 2.5 months of expenses set aside. That feels good, not great, but I think good enough. Outside of that cash I’ve got money in the stock market which although it’s fallen a bit over the past few months, is not $0. I could easily tap into that money to extend my 2.5 months. Also I imagine if I was laid off I would be a bit more careful spending my money so maybe that 2.5 months would be more like 3 months of true expenses. I’ve had a few friends go through layoffs and all have been able to find a new job within 3 months of looking. Of course there’s no guarantees in the future but that is somewhat reassuring.

So, in summary faced with the idea of layoffs I am a) thankful I’ve been able to set aside an emergency fund and b) comfortable with where it’s at in a way that could sustain me reasonably until I found a new job!

Companies don’t really care

In a bit of a debbie downer vibe, faced with layoffs I have been brutally made aware that ultimately companies don’t care about me or you. There’s so much talk of a ‘corporate family’ and at least in tech I really bought into that and felt that my company was different. We wouldn’t have layoffs, we would continue growing and if we couldn’t grow as fast we would find a way to make it work without broad cuts. They valued loyalty and would take care of us (is what I thought). In reality, as we’ve seen over the past month or so; new employees, long-tenured employees, good employees, low-performer employees, employees from all departments, really at the end of the day no job is safe and can be brought onto the chopping block. I’ve seen stories from the big tech firms and their layoffs how the cuts were cold, non-transparent, sudden and seemingly unfair. Many of us have valid questions like “how were the layoffs determined, how was laid off employees evaluated, what thought was given to tenure”, and my personal favorite, “ok you Mr/Mrs CEO, you say you take responsibility but how are you actually taking responsibility for this? (i.e. financially). I did some crude math on the day my company’s layoffs were announced and when the stock jumped on the news (Wall Street likes layoffs because that means cutting costs which hopefully will improve profits) and our CEO THAT DAY made $133 million dollars. That’s nearly $20,000 per employee that was (or will be) laid off. I know that’s not the most fair calculation as I own stock too and profited that day, but I didn’t say I was taking responsibility and also make $133 million that day.

At the end of the day the old adage rings true that you have to look out for #1. No one else is really looking out for you like you’ll look out for yourself and even if you have a good boss and good colleague, at the end of the day you’re just a number that carries a salary. I’ve also come to the conclusion that this isn’t a bad thing – a business is neither a charity nor a social club and exists to make money for it’s shareholders. Businesses go through periods of growth and contraction so layoffs are unfortunately a part of life. However realizing that you need to look out for #1 will help keep your side of the bargain – a business exists to maximize it’s value for shareholders and you exist to maximize the value for the values you care about (money might be one of them).

So, remembering that it’s not personal it’s just business and I’m also going to mind my own business makes me feel better.

What skills can I transfer?

I’ve often said that I don’t really know what I want to be when I grow up and that for now I’m just looking to continue growing, developing and learning in my job. I value jobs that will help me grow and advance my career. I think a lot about what I can put on my resume and how I’m working to maximize what I’m learning and doing in my job. What skills will other companies value and how do I measure up against them? Another thought that I’ve had is that the ‘nail that sticks out gets hammered’ and how maybe it’s a fine balance between being a specialist vs. a really good generalist. I also think about things like how valuable it is to be a great people leader vs. a great individual contributor and what could I more easily find a job in.

During my time at my job I’ve focused on developing skills that I could transfer. I’ve tried to take on more responsibility and gain more experiences. I’ve had the chance to co-plan events, I’ve mentored new employees, I’ve developed assets that have been reused time and time again. I’ve gotten certifications and have internally specialized where I can. The story that I hope to convey is that I am an employee that is always teaching, learning and working to make the organization a better place!

Always be, on some level, looking

This one is a tough one because job hunting can often be a full-time job that takes both a lot of time and energy. A wise boss once told me that it’s definitely ok to be in a season of looking and exploring but it’s also just as valuable to then be in a time of re-committing and growing internally. At several points in my career I’ve entered into times that I was very actively looking for a new job. Some times it paid off and I made a great career move, other times it didn’t go anywhere.

I do think there is merit in looking because you not only learn more about what’s out there but also more about yourself. You can learn what stands out on your resume, where you fall short and also what types of jobs you are more interested in actually doing. Interviewing is a skill that you can practice and going through the motions although a lot of work, I’ve personally found have helped me develop.

To the earlier point about having time to look and time to be content, I think that’s accurate. To unpack that a bit more, I do think it’s valuable to on some level be looking. Even if you’re not actively interviewing or applying, you can still be aware of what’s going on in the market, who’s hiring, what are they hiring for and how you might stack up. Basically, to my earlier point of looking out for #1, don’t live under a rock!

Why this isn’t the end of the world

The last thing that I’ve been thinking about a lot is how even if I got laid off how it wouldn’t be the end of the world. It’s a bit clique but ‘when one door closes another opens’, and life is a journey that may take a few wandering turns that you may have not been expecting but ultimately things find a way of working themselves out for the best. I’ve had some highs in my career but also some lows and have been turned down for many a job that I thought at the time I really wanted, only to end up in a really happy spot where I am right now. I’ve got an emergency fund and hopefully some severance that would sustain me and even if it’s a tough market I have worked hard to continue growing and developing skills to make me a competitive candidate. Something would work out sooner or later and ultimately a layoff wouldn’t be the end of the world!

TLDR

Layoffs are scary, layoffs are happening and layoffs may happen to you. Have an emergency fund, always work to continue learning and developing yourself and ultimately things will be ok!