When stable jobs begin to feel unstable
The labor market continues to be tumultuous.
Words I used to associate with self-employment: risky, variable income, stressful.
Words I now associate with 9-5 jobs: risky, layoffs, stressful.
Over the past year, I've known hundreds of people who've been laid off. Some knew their employer was struggling. Some were caught completely off guard. Some saw their entire department eliminated because the company was "going in another direction." Some worked at companies that had seen record profits.
It's gotten so bad that I log onto LinkedIn and see posts like, "I guess it was my turn to be impacted by layoffs." Some people are in complete shock, thinking it could never happen to them. They'd done good work; been loyal employees.
What started as an overcorrection in early 2022 now feels cruel. In the beginning, companies (particularly venture capital-backed tech companies) had massively overhired in a growth-at-all-costs mode in 2021. They'd been flush with cash, and suddenly that cash dried up. Layoffs were necessary(ish) to survive.
Yet here we are, more than 18 months later, still watching layoffs happen right and left. With no end in sight.
Layoffs for no reason
According to Standford Graduate School of Business Professor Jeffrey Pfeffer, the tech industry layoffs are an instance of social contagion:
If you look for reasons for why companies do layoffs, the reason is that everybody else is doing it. Layoffs are the result of imitative behavior and are not particularly evidence-based.
I've had people say to me that they know layoffs are harmful to company well-being, let alone the well-being of employees, and don't accomplish much, but everybody is doing layoffs and their board is asking why they aren't doing layoffs also.
It explains why layoffs have persisted, even as tech companies have stabilized after their record-breaking post-pandemic years followed by a slump. The contagion hasn't subsided either, except now it's a way to simply cut costs rather than a business imperative.
A recent Wall Street Journal article reveals a bit more as it quotes some executives. Apparently, companies expect a certain level of attrition. But with a tightening labor market, fewer employees are on the move. Wells Fargo's CFO Mike Santomassimo told investors that because of lower attrition, the bank planned to record higher severance expenses to reduce headcount.
The article goes on to say:
In periods of low turnover, veteran HR leaders said they typically follow a different playbook before resorting to broader job cuts. When too few employees leave, companies will often get tougher in performance appraisals, pushing employees to quit.
There's also a suggestion that companies feel they are regaining control of the job market. I wrote back in December of 2021 that a worker movement was growing, propelled by The Great Resignation. Employees could demand higher salaries, better working conditions, and if they didn't like an employer, they could simply leave. (I also want to make very clear that I don't think higher salaries were inflated salaries. They were a catch-up from years of wage stagnation.)
According to CNBC, 60% of CFOs say that it has become easier to find and hire qualified workers. Just one quarter ago, only 35% of CFOs held that view — an astonishing increase in such a short time. The on-fire job market has cooled., considerably.
And companies are seizing the opportunity to remind employees that they, ultimately have the upper hand. Layoffs are terrible for morale and also send a strong message: stay in line, or this could be you.
Not only do companies have the upper hand, but there's no transparency. At least in the early days of tech layoffs there may have been some inkling internally that things weren't going well. But for companies that lay people off because of contagion or to assert their power? Employees have no warning and no way of knowing if they're a target.
A prior employer of mine collapsed earlier this year. Employee headcount went down to almost nothing. But then the company was hiring freelancers, just a short time later. A permanent solution to a temporary cash flow problem? A strategic business decision to change the business model? Who knows. But some friends of mine -- people I care about — suffered, a lot.
At this point in time, a 9-5 job feels like a bigger risk than my solopreneur life. If I lose a client, I lose a portion of my income but not all of my income. I can easily find a new client. But losing a 9-5 job? Takes you from a full salary to no salary. I know some people who have been job hunting for so long that their unemployment is about to run out.
I've written that people need to protect themselves, but what does that mean? I don't believe a solopreneur life is for everyone. Even side hustles aren't right for everyone, since people may not have time, energy, or the particular skills needed to run a side business along their 9-5. "Have a six-month emergency fund" is terrible advice amid rampant inflation, exorbident student loan debt, and a world where 57% of Americans can't afford a $1,000 emergency expense.
But I think the best advice out there is to start networking. Now. Today. And maintain your network all the time.
I met Chris Cicconi through LinkedIn. He was recently on the job hunt, having lost his job (right before the holidays, with a baby at home). He has been sharing updates of his experiences applying and interviewing.
Out of 42 cold job applications (where he had no connection to the company), he only got 1 response. But he's also had 11 coffee chats and gotten 14 referrals, so other applications have been moving along swiftly.
I cannot stress enough that you NEED to build relationships, network and brand before you need them.
Literally all but 1 of my applications have fallen on deaf ears, so blind applications are likely not going to get you to where you need to go.
Protect yourself. Build those relationships. In a world where your 9-5 is remarkably unstable, you'll never know when you need those connections — and they'll help you stand out in a sea of applicants.
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