It’s a scary situation, but you can make a plan.
- Many economists fear a recession is looming.
- It can lead to widespread layoffs, and workers should protect themselves by taking some key steps.
- Start building emergency funds and job skills, and consider getting a side hustle to mitigate the financial impact of layoffs.
The US labor market is doing very well right now. Unemployment remains low and employment is plentiful. But that could change if a recession hits. And that’s what many experts predict.
The Federal Reserve is trying to slow the pace of inflation by raising interest rates. This should make borrowing more costly for consumers, leading to lower spending. This drop is necessary to close the gap between supply and demand that caused the price rise in the first place.
But a significant drop in consumer spending could lead to a recession. Also, if a company faces declining revenues, it may be forced to lay off employees.
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A recent PwC survey found that 50% of companies are laying off staff due to economic concerns. And about the same number have implemented employment freezes.
While we cannot say for certain that we will have a full-blown recession anytime soon, it is important for workers to prepare for it. Method is as follows.
1. Increase your savings
One of the best ways to prepare for layoffs is to increase your emergency fund. That way, if you lose your job and need a way to pay your bills, you’ll have more savings available.
Remember, unemployment benefits are not a full replacement for your missing salary. Also, if you’re a high-income earner, you may find that your weekly benefits are only a small fraction of your total salary due to state-imposed caps.
2. Start networking
You may be happy with your job and things may be relatively stable. But if you’re worried about layoffs, now is a good time to start talking and building relationships with people from different companies. You can find someone who can provide leads.
3. Improve your job skills
When economic conditions deteriorate, even the most talented workers can be laid off. But a good way to potentially secure your job is to hone your skills and make yourself an employee too valuable to let go. Focus on building skills that no one else at our company has.
4. Line up side jobs
If you are in paid employment, you may not feel the need to take another job right now. But that second stream of income can be your lifeline during a layoff, so even if you don’t need that much money right now, it’s worth the effort. Plus, if you want to bolster your emergency savings, a second job might allow you to do so without drastically cutting your spending.
The thought of being laid off is terrifying, especially during a recession. The more you prepare in advance, the better positioned you will be to survive layoffs and come out financially unscathed.