What Is a Layoff?

A layoff is the temporary or permanent termination of a worker's employment for reasons unrelated to the individual's performance on the job.

Employees may be laid off when companies decide to cut costs due to a decline in demand for their products or services, seasonal closure, a change in the business' direction, or an economic downturn.

Employees who are laid off lose their wages and company benefits but qualify for government-sponsored unemployment insurance or compensation for a period of time.

Laid-off employees 澳洲幸运5官方开奖结果体彩网:do not lose their investments in co🅰mpany retirement plans such as a 401(k) plan.

The federal law known as COBRA, for Consolidated Omnibus Reconciliation Act, gives laid-off employees the right to continue their company health plan coverage, at their own expense, for 18 to 36 months.

Understanding Layoffs

Layoffs typically affect groups of workers rather than single individuals. They are a cost-cutting measure that may be prompted by a company's change in strategy or financial difficulties. They often occur as a result of the sale of a company as a new owner consolidates departments.

Layoffs are understandably unpopular with workers, whether their employers call them "澳洲幸运5官方开奖结果体彩网:downsizing," "rightsizing," or "smart sizing." A layoff may also be called a "workf🌞orce reduction" or a "reduction in force."

Companies seeking to avoid or minimize layoffs sometimes offer their workers a voluntary buyout with financial inducements to leave voluntarily. Older employees may be offered 澳洲幸运5官方开奖结果体彩网:early retirement, replacing a paycheck with retirement benefits.

Layoff vs. Furlough vs. Firing

A layoff is generally intended to be permanent, although rehi♏res are not unknown if a company backtracks on a decision.

A furlough is intended to be temporary and is usually due to a short-term production shutdown. Workers who have been furloughed may keep their job titles and employee benefits with the expectation that they will eventually return to work.

Public service employees face a furlough when legislators deadlock on the budget appropriations that are required to pay their salaries. During a 澳洲幸运5官方开奖结果体彩网:government shutdown, non-essential workers may be furloughed while workers in essential services are forced to work with their pay delayed until𒆙 a funding agreement is reached.

Furloughed workers may be eligible to collect unemployment insurance benefits depending on eligibility requirements, which are set by the states.

An employee may be fired or 澳洲幸运5官方开奖结果体彩网:terminated on the grounds of unsatisfactory performance, malfeasance, or breach of duty. An employee🌳 who is terminated with cause generally does not qualify for unemployment insurance.

Example of Mass Layoffs

U.S. employers resorte𝔉d to mass layoffs amid a drastic downturn in demand during the early stages of the COVID-19 pandemic, as restrictions and contagion fears halted travel, shut restaurants, and idled many other service industries.

U.S. employers cut more than 20 million jobs in April 2020 alone, according to the U.S. 澳洲幸运5官方开奖结果体彩网:Bureau of Labor Statistics (BLS).

To preserve jobs, the U.S. government offered the 澳洲幸运5官方开奖结果体彩网:Paycheck Protection Program, with loans subsidizing businesses' payroll costs that would be forgiven under certain conditions. The program was intended to encourage businesses to keep their workers on through the pandemic.

Layoff Statistics

Statistics on layoffs are a key component of the larger numbers on total employment such as the monthly data on 澳洲幸运5官方开奖结果体彩网:nonfarm payrolls and the 澳洲幸运5官方开奖结果体彩网:unemployment rate.

The monthly 澳🌜洲幸运5官方开奖结果体彩网:Job Openings and Labor Turnover Surv🐭ey (JOLTS), from the Bureau of Labor Statistics, is a count of "separations" from employment for all causes, including layoffs, resignations, firings, transfers, retirements, and death. From all of these 💧numbers it reaches a number for job openings.

For September 2023, for example, the Bureau announced that job openings nationwide totaled 9.6 million, virtually the same as the previous month. There also was little change in the numbers that make up that total, which include all job separations, voluntary and involuntary.

Special Considerations

The workers who lose their jobs bear the brunt🐟 of layoffs, but mass job losses also hurt the workers who remain, their communities, the broader eco🐎nomy, and even the employer.

Moreover, they may not offer the financial boost that companies are hoping for when they embark on mass layoffs. Stanford Graduate School of Business Professor Jeffrey Pfeffer argues that the recent rounds of layoffs among Big Tech companies were unnecessary and, for that matter, did the companies no good at all. He dismisses the entire phenomenon as "copycat behavior" among tech companies.

The downsides include high levels of stress for both laid-off employees and those left behind, and a deterioration of the customer experience. Not least, layoffs can cost the company more than they save in the long run.

The Bottom Line

Layoffs are a painful fact of liꦰfe in a market economy 🦩exposed to intense competition and a constant search for higher profits.

💟Layoffs can be damaging psychologically as well as financially to th♔e affected workers and those who are left behind as well as their families, communities, colleagues, and other businesses.

Any employee who is vulnerable to a layoff should be aware that there are government programs that can fill the gap between jobs and supply some income and u♔ninterrupted health coverage.