What to Do If You’re Laid Off (You Will Bounce Back!)
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Recent layoffs have affected tens of thousands of workers, with the figure in January outpacing job cuts in December 2022. According to Layoffs Tracker, over 85,000 workers lost their jobs before the end of January 2023, led by household names in the tech sector — Amazon, Microsoft, Google parent Alphabet, and Spotify.
Companies that put the pedal to the metal and poured money on expansion during COVID-19 are now learning that changes wrought by the pandemic haven't hardened as much as they'd have liked. Faced with high interest rates meant to deter spending and a looming recession, employers have started to rein in costs through workforce reduction to protect profits.
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Getting laid off vs. terminated vs. being furloughed
The terms may sound confusing, but there's a big difference between the three.
- Mass layoffs: A company may initiate layoffs to cut high costs. This could take any form. For example, the company bet on a product and invested heavily in talent, but the product doesn't end up being a hit with the intended target audience. As a result, the company may scale down the team working on it or disband it altogether. You're entitled to severance pay, unused vacation, and other benefits if you get laid off. Federal law requires employers to provide 60 days' notice, when wages and benefits remain in force.
- Termination: Being terminated or fired from a job is the direct result of your actions. Each company has its own policies, but a person could be fired for failing to meet productivity targets, displaying poor quality of work, attendance issues or insubordination. A person who is terminated isn't generally entitled to any benefits.
- Furlough: Think of a furlough as an extended leave with the expectation that you will eventually return to the job sometime in the future. Furloughs can take many forms. For example, an employee may be asked to take a certain number of unpaid hours off each week, or they could be asked to take a certain number of unpaid days or hours in a year. Again, the employer's goal is to cut costs through furloughs, and each company will go about it as they deem fit.
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What to do if you're laid off?
Take a breather
Getting laid off is a traumatic experience that can take an emotional toll. It can be scary to think about your future in light of the job loss' financial implications. Instead of immediately looking for open positions elsewhere, you should step back and refrain from making big decisions. It's important to take some time to process the news and allow yourself to come to terms with it. Play a video game. Go hiking. Meet up with old friends. Pick up a hobby. Your goal in these initial days should be to decompress.
Give yourself some time to process your emotions and develop coping strategies. You may also want to talk to a friend or family member about what you’re going through. Having someone to talk to can help you cope with your anxiety.
Perspective matters
Getting laid off feels personal. But if you're harboring any ill feelings towards your employer, you must work through them before beginning to hunt for your next adventure. This can be achieved through having the right perspective. While getting terminated can be viewed as personal (but they're a consequence of your actions), layoffs affect several people simultaneously. And it happens because the company couldn't afford paying salaries to these many individuals.
But a layoff can also be viewed as a fresh start — a hard reset. Perhaps there's something you've always wanted to do but couldn't due to the 9-to-5 grind. This is easier said than done, but it's important that you keep a positive mindset.
Don't bad mouth your employer
Losing a job is a terrible blow! It's natural to feel angry and hurt after a layoff, and it's OK to grieve the loss of your job. Whatever your feelings, you can vent to your closest friends and family. But publicly, you should be mindful of what you say about your former employer. It's important that you project a positive image of your experience there — what you learned, the people you met and how they helped you, and your achievements, for example. In the early days following a job loss, you don't have much going on except the professional class you exhibit to the rest of the world.
Know your rights
If you’re recently laid off from your job, you might be worried about how you'll make ends meet. But anyone who loses a job can collect unemployment insurance benefits from the government. Your eligibility, how much you'll receive, and for how long is mandated by state laws. However, unemployment benefits are partial wage replacement only and will not fully replace all of your lost income. Because of the increase in job cuts across the U.S., the government is encouraging people to apply online.
In addition, you should also inquire about a few things from your employer.
- Severance package: As noted, individuals who get laid off are entitled to benefits, including severance pay. Those with more seniority may get the best package. Depending on how long you've been with the company and your position, you may stand to receive more benefits if you negotiate right. For example, you may be able to negotiate outplacement or ongoing health insurance. And feel free to ask questions if you need more clarification on something.
- Letter of recommendation: A letter of recommendation tells future employers about your work ethic, skills, and character. This letter holds a lot of weight in future salary negotiations, especially if you're coming from a reputable company in your field.
- Laid-off letter: This letter is typically part of your farewell package. It simply outlines that your job has been eliminated for reasons outside of your control. If, for whatever reason, the latter isn't furnished to you, you should ask your human resources department that they hand one to you.
- Pension: Depending on your plan, you can withdraw your 401(k) without a penalty. It's best to talk to your finance department to see if you can access a lump sum payment when you leave the organization.
Take stock of your finances
Knowing how much you spend each month and where that money is going is important. Add a layoff into the mix, and it becomes imperative that you have an in-depth knowledge of your finances. You should pay off any high-interest debt, such as credit cards, and reduce your expenses to essentials. Any significant purchases can wait. Your goal should be to sustain yourself and meet your payments until you have another job. Cancel any subscriptions you haven't used in a while to ensure not even an extra cent is spent.
Start your job hunt
Once you've given yourself ample time to move on from being made redundant, it's time to start looking for new opportunities. Here are a few things to keep in mind.
- Tell your story: You can start by crafting your layoff story for future employers. Short and upbeat is the goal, not a sob story. Layoffs are common in the corporate sector and wouldn't ruin your chances of landing your next job. Remember: you have the layoff letter as proof.
- Rework that resume: No one reinvigorates their resume when they're employed, but your resume must reflect all your accomplishments. Need help figuring out where to start? Just look up "resume builder" online, and you'll have many choices. While you're there, it's also a good idea to prepare for a job interview and prepare answers to a few questions about the layoff. You can also talk to co-workers and former bosses for an honest evaluation. Who knows, maybe you've overlooked a few personal traits they see.
- Network through the internet: Being digitally savvy has become an important tool for networking and securing a job. Social media like LinkedIn, is a great tool to make yourself visible to the right people like recruiters and hiring managers. Don't be shy about sending requests, although sending a personalized message to each person you want to connect with would be a good idea.
- Start applying: Paint your layoff in the most positive way possible. It's also recommended that you tell friends, co-workers or former bosses that you're looking for a new job . In addition to looking up job boards, you can also visit career fairs where you should be prepared to answer questions about your work history and experience. If you need help, you can contact recruiting agencies, which are the go-between between job seekers and employers.
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Steps to take before you're laid off
It's important to have a plan even before you unexpectedly lose a job.
Have an emergency fund
As soon as you join the workforce and earn money, you should immediately open an emergency fund. This rainy day fund should have enough money to sustain you for at least six months. Take stock of your finances, do some budgeting and arrive at a number you think is your monthly expense. It's best to open high-yield savings account and treat that as an emergency fund. For one, it accrues interest, meaning your money increases, but more importantly, it's separate from your main checking account.
To keep yourself on track, you should also turn on auto-deposit from your checking account to the savings account. As soon as you get paid, a specific amount is automatically deposited to your emergency fund. It's important that you keep the money in this fund untouched and use it only for emergencies. If, for any reason, you have to dip your hand into it, be sure to replenish it later.
Have a support system
It's important to have people in your circle you can trust. Family and friends can be great sounding boards whether you need guidance or vent a little. After all, moral support is as important as financial support immediately after a layoff. This is not the time for negativity; you should surround yourself with positivity. In addition to friends and family, you may also have a group of mentors and former colleagues who can help you cope with the anxiety of a job loss and guide you to a better place mentally.
Don't let unpaid debts linger
This is personal finance 101, but if you have unpaid debts, pay them off immediately. And in full. If you fall on hard times financially, such as losing a job, the last thing you want is to make credit card payments. Think of it like this: You're not earning anything, but you're making payments each month nevertheless. High-interest debt can soon balloon if you let it linger, especially if you make the minimum monthly payment. You should always aim to repay any debts as soon as you can.
Related: Get Out of Debt Guide
The bottom line
Layoffs can be an emotionally draining experience, so surround yourself with the right people. You may vent in front of close confidantes, but you must project your expertise in a positive light publicly. It's important that you decompress after you've been handed the so-called "pink slip" instead of immediately beginning a job search. Take a few days off for yourself.
And if you're not ready for a long commitment, you can also explore a part-time job. But once you're prepared to go all in, don’t limit yourself to your current industry. Expand your network to include people who work in other industries or have different skill sets. They may know about job openings at other companies to help you find a job.
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Writer
Jasir Jawaid is Joy Wallet's Assistant Editor. He has more than 13 years of experience as a journalist covering Wall Street, equities, financial policy and regulation, and cryptocurrency and blockchain.
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