The Trauma of Job Loss

Feb 07, 2023

I grew up in the times of re-engineering where companies learned that a great way to increase profits was regular layoffs. A family friend lost his job during this time. His wife did not have a job and their daughter was getting married. Rather than worry his family over the job loss, the man got up every morning at the regular time, got dressed in a suit, drove into town and pretended to be at work. He did this every day until he found a new job. 

Today, much of the stigma of job loss is behind us since it's become such a regular thing. Every time there is a mass layoff, people take to Twitter, TikTok and LinkedIn almost instantly, sharing what is happening in real time. Just because we are more open about the process, however, does not mean that it's not as damaging as in the days when that family friend pretended to be employed, so as not to upset his family. 

Every layoff number represents a human being and a family impacted by the news. Every time someone is called into HR, gets a phone call, or -even worse - receives an email letting them know that they their services are no longer needed, they immediately think about what they are going to tell family and friends, when they will get another job, and how they will pay the bills. HR can help organizations understand that people don't simply represent a budgetary line item. 

Sadly, HR folks are being let go since companies are not on the hiring spree they were in the past, Unfortunately, this means that there are fewer people who understand the far-reaching implications of layoffs. And those HR folks who remain behind are likely too busy and too scared for their own jobs to flag this as an issue. As a results, a lot of these layoffs are being mishandled. People should never learn about job loss on social media. 

Here are some of the traumatic effects of layoffs that will impact workforces for years to come:

Changing the Employment Relationship

2023 has seen a lot of layoffs, particularly in the tech space. Overhiring during COVID, as well as a shift from cloud based everything to AI, has meant that companies are laying off thousands of employees at once in some cases, while hiring others in other areas. None of the massive layoffs are "necessary": there are indicator that we are pulling out of recession, these companies are not facing insolvency, there is cash on the balance sheets. It's simply cheaper and easier to fire and hire than to identify good people to reskill. When companies make layoffs a go-to strategy to solve problems, employees notice. Many of these company claim to have a people first approach with employees and customers which come across as false. People will work for these companies as long as they provide a pay check but they will not be as engaged or as loyal. If a company sees people as disposable, folks will work accordingly. 


Heath and Mental Wellness

Job loss causes poor mental health. Folks who have suffered job loss are less likely to have healthy marriages and a good family life. Experiencing a layoff increases rates of suicide, especially among younger workers. Losing a job increased the odds of poor health by 54%, and among respondents with good heath before the layoff, it increased the odds developing an illness by 83%. Safe Work Australia found that workers in less psychologically safe work environments - such as ones with the threat of layoffs - take 43% more sick days and are more subject to workplace injury. Insight Globals' November 22 survey showerd that 70% of US workers fear layoffs. Fear is never a great place to create critical thinkers and creative ideas. Living with the threat of a job loss creates trauma, particularly for those who have experienced job loss before. When people are ill and stressed, they do not do their best thinking at work. It's very hard to innovate under these conditions. 

Employee Turnover

Employees who are laid off tend to leave subsequent jobs sooner. Part of this is fear based and they leave at the first sign of trouble. In other cases, the loyalty contract is broken and they will leave for a modest pay raise The dialogue around the recent tech layoffs is troubling. They are laying off certain technical employees and then hiring others who have training in specific areas. Smart tech workers who have cloud experience could likely be trained in more in-demand other areas like AI. We are becoming too specialized in our approach to recruiting and career pathing people. A good employee with strong transferable skills can be reskilled and it sends a message that folks are not disposable. It's not as easy as hiring and rehiring but it creates more sustainable success. 

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