How Long Does it Take to Recover from a Reduction in Force?

How Long Does it Take to Recover from a Reduction in Force?

According to an article in today’s New York Times, the difficulty of bouncing back from a layoff turns out to be permanent for many workers.   The article quotes an economist whose longitudinal study of workers laid off in an earlier recession, in and around 1982, proves statistically what many feel: in many cases, the middle-aged, middle income worker loses a job, and never regains his original wage level.  The study concludes that people who stayed in one job the longest were hardest hit, perhaps because they had become such specialists.  Not only that, those who had been laid off once were more likely to face the same fate in the next economic downturn, since their tenure was shorter.

I do not have the economic chops nor remember enough about statistics to evaluate the methodology, though it certainly seems to have been thoroughly considered.  The authors primarily focus on men’s experiences, but decide that women’s experiences track the same way.

The authors of this study do not take on the challenge of suggestions for an individual to escape the 20% long-term earnings reduction that befell the average laid off worker.  From a societal perspective, however, they note the following:

In particular, while the ability to fire ‘at will’ may benefit adjustment in
the labor market as a whole, the costs in terms of lost productivity and earnings of individual
workers may be much higher than typical replacement rates of unemployment insurance or
other programs designed to smooth temporary earnings fluctuations.
(See page 20 of the study).

I haven’t been hearing a groundswell of support for enacting a termination with cause standard, and don’t expect it to begin in Maryland.  So, in the meantime, employees need to keep in mind that loyalty to an employer is largely a one-way street.  Recommendations on avoiding a permanent reduction in a standard of living after a layoff include things that your mother told you, and things your geeky nephew can tell you.  Mom would say live below your means, you never know how long the good times will last.  And Stan the high- tech man can teach you to leverage social networking like LinkedIn (here is my profile) and other sites, and to keep track electronically of your friends and acquaintances, so you can get a great job search going when you need to.

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