The Hidden Toll of Surviving Layoffs

The workers who remain deal with stress, guilt, and a changed workplace.

Latest Mar 14, 2024 0 47 Add to Reading List

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Workers who keep their jobs after layoffs are considered the lucky ones. Still, dealing with the stress and guilt of a changed workplace can be harrowing for those unsure if they will be next.

First, here are three new stories from The Atlantic:

Those Who Remain

Being marched out of an office (or, in our hybrid age, being locked out of a corporate email account) is, for many workers, a worst-case scenario. But another, less visible slice of the workforce also struggles when layoffs happen: those who keep their job and have to navigate the emotional and logistical turmoil of carrying on in a slimmed-down company, all while wondering if they will be next.

Workers who survive job cuts are likely to feel grief and shock, of course, but also remorse. They may feel relieved to keep their job—but then guilty about it, Sandra Sucher, a professor at Harvard Business School who researches the hidden costs of layoffs, told me. Workers usually operate under the assumption that if they do good work, they can keep their job. Layoffs erode trust by putting “a wedge” in that compact, Sucher explained, injecting uncertainty into one’s career—and making employees wonder whether their companies are treating them fairly.

Those who keep their jobs frequently deal with the logistical fallout, too, which can mean taking on former colleagues’ responsibilities. “If managed poorly, [layoffs] mean that not only am I feeling emotionally distraught and at risk personally, but also I have a changed work environment,” Sucher said.

How well companies handle layoffs varies widely—and, in general, they have gotten less humane, Peter Cappelli, a professor and the director of the Center for Human Resources at the University of Pennsylvania’s Wharton School, told me. The era of mass layoffs as we know it began in the 1980s, when deregulation of several major industries and a weakening labor movement collided with the rise of more cutthroat corporate leaders. As executives slashed jobs, though, many companies went to great lengths to set up smooth transitions for laid-off workers with the help of outplacement companies, which provided resources and job leads for white-collar workers who had been axed, Capelli explained. That industry contracted during the Great Recession, he added. Now some companies reassign employees or offer generous severance packages, but others just pull the plug on people’s email accounts and send them on their way.

Adding to the stress of looming layoffs is that many firms lately, especially tech companies, have cut people in multiple rounds—leading workers to feel like they could be next at any moment. Rather than pulling the Band-Aid off, as Cappelli put it, companies are laying off smaller groups so they can wait to see how their financial situation unfolds. While this flexible approach may appeal to shareholders, it can also damage morale. “It’s an optimization answer rather than a human answer,” Cappelli said.

The long-term effects of layoffs on the health of a company can be stark. In general, Sucher said, the resulting slump in morale can contribute to significant declines in job performance and satisfaction. Slashing jobs may not even help a company’s stock price, because layoffs signal to the market that a company is facing trouble. And severance and other layoffs expenses can add up.

So why do companies, especially tech firms sitting on piles of cash, keep letting people go? Because everyone else is, Jeffrey Pfeffer, a management professor at Stanford University, argues. Tech companies are “rolling in dough, and in many instances their stock prices are at or near an all-time high,” Pfeffer told me. So the idea that the layoffs are fundamentally driven by financial necessity is “not true at all”—he sees it more as a case of “social contagion.”

Executives are not calculation machines, Capelli added. They’re human, and subject to pressure from both investors and peers. After the tech giants overhired in 2021 and 2022, they seemed to get spooked by more recent changes in the economy, including the interest-rate hikes that made borrowing more expensive. No executive wants to be seen as a laggard, so when layoffs began at some companies, others followed suit.

It used to be that letting go of workers en masse would puncture an employer’s reputation. But now a tech worker looking for a job would be hard-pressed to find a large company that hasn’t done major layoffs over the past two years. (Apple has so far been an outlier in this regard.) As Pfeffer put it: “You have to work for somebody.” Still, the drumbeat of cuts may make the industry overall less appealing to ambitious young people entering the workforce, Cappelli said.

What amazes Cappelli is that many executives seem to have learned little from previous periods of layoffs—and continue to fumble the communication and execution of such cuts: “We just don’t have any sense of history.”

Related:

Today’s News

Less than two weeks before the scheduled start of Donald Trump’s Manhattan criminal trial, the district attorney’s office requested a delay of up to 30 days to review a batch of recently obtained records.
Senate Majority Leader Chuck Schumer criticized Israeli Prime Minister Benjamin Netanyahu’s coalition, suggesting that there should be a “new election” in Israel and expressing “anguish” for the Palestinians killed in Gaza.
The Biden administration announced new sanctions against three settlers and two Israeli outposts in the West Bank that it said were used as bases for attacks against Palestinian civilians; this is the first time the U.S. has sanctioned such outposts, not just extremist settlers themselves.

Dispatches

Atlantic Intelligence: Artificial intelligence can have a corrosive effect on reality, as evidenced by the recent slew of Kate Middleton conspiracy theories, Damon Beres writes.
Time-Travel Thursdays: People didn’t know how much protein they should eat a century ago, Andrea Valdez writes. It’s a mystery that has persisted.

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Evening Read

A blurred image shows one person's hand clasping another's. — Illustration by Matteo Giuseppe Pani. Source: Getty.

I’m Disabled. Please Help Me.

By Michael Schuman

One cold November morning, I was on Seventh Avenue and 50th Street in Manhattan, on my way to a Dunkin’ Donuts. For most people, such an excursion is not a particularly exciting part of the day. But when you are almost blind, as I am, the expedition has a certain complexity.
I knew the shop was somewhere just past the northeast corner on 50th, but when I got there, I could not identify the correct storefront. The cane I walk with can prevent me from slamming into a wall or tumbling down a staircase, but it can’t distinguish a donut shop from an Indian restaurant or a dry cleaner. I wandered back and forth, hoping a whiff of chocolate would guide me to the right doorway. No luck. I was stranded on the street, unable to find my way but also unwilling to return to my hotel sans latte.
Obviously, I had to seek help. But doing so has always made me feel uncomfortable, embarrassed, and vulnerable—potential quarry of the unscrupulous and uncaring.

Read the full article.