For thousands of U.S. workers, it’s shades of 2007-2009 again, as pink slips are turning the Great Resignation into the Great Reduction.
Brand name companies like Netflix (NFLX), PayPal (PYPL), and Klarna are laying off staffers in big numbers this spring. Meanwhile, companies like Microsoft (MSFT), Twitter (TWTR), and Snap (SNAP) are dialing back on hiring, as companies swing into defense mode against rising inflation, lower stock prices, and a slowing economy.
According to the outplacement firm Challenger, Gray & Christmas, U.S.-based employers slashed 24,000 job cuts in April. That’s up 14% from the month before and 6% higher than the same month in 2021.
“It’s actually worse than it seems,” Julie Ramhold, a consumer analyst with DealNews.com told TheStreet. “We're hearing from a lot of big companies that are making these staffing cuts. At the same time, we may not be hearing about the smaller ones doing the same thing, so the job cuts may actually be more severe than it appears."
Focus on Finances a Key for Laid-Off Staffers
For employees whose livelihoods have been derailed, the impulse is to find another job and fast. That’s understandable, but make sure your financial foundation remains as stable as possible before reaching out to new employers.
“Household finance priorities should focus on rent or mortgage payments, utilities, and groceries, among other necessities,” Ramhold said. “Anything that isn't explicitly necessary should be put on the back burner for the time being, as you cut way back on spending in order to stretch your emergency funds as far as possible.
Financial experts advise taking these steps to shore up your household financial picture as you assess your next career move.
Calculate your unemployment benefits. Don’t look at an employment check as a matter of pride.
“It’s actually a matter of financial stability and perhaps even survival,” said Matthew Vitlin, a financial advisor at Austin, Tx.-based Northwestern Mutual. “Every state does it differently, so verify you are looking in the right place.” Vitlin advises using FileUnemployment.org to calculate your unemployment benefits.
Cover your insurance tracks. Make sure to account for COBRA health insurance doubling in cost if you expect to keep it.
“Additionally, it’s also a good time to make sure you have some life insurance not tied to an employer,” Vitlin told TheStreet. “You may already be in a tough spot with no job, so if the worst happened to you or a partner they might have nothing.”
Hit the “pause” button. Corey Noyes, investment advisor and founder at Balanced Capital in Heber City, Ut., advises laid-off clients to “push pause” on all of their financial goals.
“That means turning off automatic contributions to savings accounts, Roth IRA's, stock purchase plans, or anything else like that,” Noyes told TheStreet. “Once the storm passes, and new employment is found, all of those goals can be brought back up to date. In the short-term, focus on having cash on hand, which is vital during a job transition.”
Cancel any unnecessary expenses. When an income stream shuts down, every dollar counts – which is exactly why canceling subscription services like Netflix,
Hulu (HULU) , and HBO Max (T), among others, should be a priority.
“Cancel them all," Ramhold advises. “The one caveat is if you're charged for an annual membership and have already been charged for the current year, you can hold off on canceling those memberships for now.”
“But if you're charged on a monthly basis, or you're coming up on a renewal, it's best to cancel right after you lose your job to help cut back on spending," he said.
Set reasonable expectations. Plan on being out of work for at least three months, and trim back your financial “wants” wants to account for that scenario.
“If you get a job sooner, then turn the wants back on sooner,” Vitlin noted. “It's easier to budget for better results than expected than it is to scramble because it's taking longer than expected to get a job.”
