The Holiday Season Brings Anxiety: Impending Layoffs for Some

It is always disheartening for employees to receive news of layoffs, but it is especially difficult when they occur during the holiday season. The anticipation of potential job loss can significantly dampen the enjoyment of family gatherings and festivities during this time.

In November, several prominent companies including Citigroup, Charles Schwab, Vice Media, Continental, and Maersk announced significant layoffs. It's anticipated that more companies will follow suit before the end of the year.

"We have observed a rise in layoffs. At present, we are extremely busy and anticipate remaining so until the end of the year," stated Andrew Challenger, senior vice president of Challenger, Gray & Christmas, a firm that employers engage to assist their laid-off employees in finding new employment.

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Challenger reassured that there is not expected to be a surge of mass layoffs across industries like those witnessed in 2020 due to the pandemic. Layoffs are expected to be more targeted to individual companies' circumstances, as is typical in most years. Additionally, the US labor market remains strong, with 1.5 job openings for every unemployed person in October.

Depending on your position, age, and pay grade, it could take longer than anticipated to secure a similar role. Therefore, it is advisable to strategize a plan to safeguard yourself mentally and financially in the event that this occurs.

What you cant control and what to expect

It's important to remember that you often cannot decrease the likelihood of being laid off. In most cases, the reasons for job cuts are well beyond your influence. Randstad RiseSmart, a career coaching and career transition solutions firm, cites overhiring, automation, business downturns, and mergers as the most common reasons for layoffs.

That being said, according to the federal WARN Act, companies with 100 or more employees planning a specific mass layoff are required to give their staff a minimum of 60 days' notice. Some states have even stricter regulations under mini-WARN laws, mandating employers to provide more notice (usually 90 days) even if they have fewer than 100 employees.

At a Bowery farm in Nottingham, Maryland on April 14, 2023, an employee is seen inspecting packaged leafy greens before they are boxed. Bowery Farming, the largest vertical-farming company in the United States, operates three commercial farms where they manipulate various conditions like light, humidity, and temperature to grow produce. These high-tech systems are designed to produce a clean and safe crop, minimizing the risk of contamination from bacteria. While these farms do not rely on traditional healthy soil for growing, they do consume significant amounts of electricity.

Maryland currently boasts the lowest unemployment rate in American history, sitting at just 1.6%. Moreover, if a company fails to provide the minimum notice required, resulting in an abrupt termination without cause, they are obligated to provide pay and benefits for the mandated warning period.

How does your employers severance policy compare?

The payments received under the WARN Act may not be classified as severance, but the reality is that it provides financial support for paying bills during the job search. Additionally, some employees may also be entitled to receive severance in addition to these payments.

US employers are not legally required to offer severance unless stated in a contract. However, many large employers choose to provide severance as a goodwill gesture and to protect themselves from potential legal claims. It is also important to note that the National Labor Relations Board has recently limited the rights that an employer may request in exchange for severance.

Individual contributors (i.e., non-executives) receive an average of two weeks of pay for every year of service at their employer, according to Challenger. This information is based on an analysis of over 850 severance plans provided by clients last year, with the average tenure of individual contributors being seven years. Additionally, the severance package typically includes health care benefits and outplacement services during the severance period.

Breaking it down even further, 35% of the employees received between one and nine weeks of holiday, while 50% received between 10 and 24 weeks. An additional 12% received between 25 and 51 weeks, with only 2% receiving the full 52 weeks and 0.6% receiving between 54 and 99 weeks.

Three things to do now to protect yourself financially

Since layoffs are a feature, not a bug, in corporate life, planning now for any transition period between jobs can alleviate some of your concerns.

Review your employer's severance policy by accessing it on the company's internal site. Calculate the potential severance amount based on your length of employment and determine if your health insurance will continue to be subsidized during the severance period. It is important to regularly check this policy as it may change at any time.

Estimate your monthly essential expenses such as food, housing, and utilities, then identify non-essential costs that can be cut if necessary. Develop a "noodle budget" with the help of financial educator Tiffany Aliche, which represents the minimum amount needed to cover expenses in a lean month. Also, remember to factor in health costs as essential, especially if you may need to cover the full cost of your health plan through COBRA, which can be up to 102% of the total cost. This is a significant increase from the average amount that employees pay for workplace health coverage, with employers typically covering the remaining portion.

In Washington, DC on October 5, 2023, people strolled by a restaurant displaying a hiring sign. The ADP Research Institute reported that private payrolls increased by 89,000 last month, marking the lowest number of jobs since the beginning of 2021 in September, following a climb of 180,000 in August. (Photo by ANDREW CABALLERO-REYNOLDS / AFP) (Photo by ANDREW CABALLERO-REYNOLDS/AFP via Getty Images)

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Evaluate the amount of financial support required and consider the resources at your disposal. Severance pay might not sustain you until you secure a job with a comparable salary. As author Aliche advises, "Analyze the costs that you need to address."

For instance, while you might anticipate receiving three months' worth of severance pay, it's important to consider that it could realistically take up to six months to secure a comparable job.

Aliche likened the process of financial coverage to preparing a stew, where one must assess the amount of each ingredient available and required. In this scenario, the ingredients comprise severance pay, unemployment benefits, emergency savings, and any income generated from a side hustle.

Visit your state's labor department website to understand the requirements for claiming unemployment benefits, including the application process, payment amounts, and the timeline for receiving your first payment after losing your job.

Additionally, assess your emergency savings to determine if it can support you in the event that severance and unemployment benefits are not enough to cover your expenses. Certified financial planner Ann Minnium recommends having three to six months' worth of your salary saved, with those in senior roles or acting as the sole provider potentially needing up to a year's worth of pay.

Instead of focusing on reaching challenging emergency savings thresholds, consider how you can leverage your existing skill sets to earn money while searching for a new job, according to Aliche. For example, after being laid off from a teaching position during the Great Recession, she found she could make extra income by offering tutoring services. "Ideally, it's best to stick to something you're already familiar with. You don't want to have to start from scratch and learn a whole new set of skills," she advised.

The ultimate goal with all these steps is to have a plan in place should you need it, Aliche explained. "You dont want to be doing the math when youre in a traumatic experience."