Recessions & Unemployment: How Can You Prepare?
Recessions & Unemployment: How Can You Prepare?
One of the lingering fears for many Americans is the dreaded R word: recession. Since economic
slowdowns impact the labor market, we turned to Sara Causey, a Staffing & Recruiting SME and owner
of Causey Consulting LLC, to discuss how a recession could drive up unemployment – and what you can
do to prepare.
I read your recent article about the early 1980s recession and its current parallels. What are you
seeing in the job market right now?
In a word: sluggishness. It’s not unusual to see a general malaise after the holiday season. I usually think
of it as a post-holiday hangover when people are getting back to work – like it or not – and everyone is a
little bit brain dead. But this Q1 has been different. The overall number of job postings has slowed down
outside of perhaps healthcare and hospitality. For white collar work, I’m not seeing as many jobs posted
and in looking at what’s available, more ads are asking for hybrid, full RTO, or remote as long as you live
within a certain radius of the office. The pace of hiring has also slowed down. An employer might mark
an ad as “urgent” or indicate they need a person to start ASAP, but candidates are finding hiring
managers who drag their feet and lollygag.
Is this trend the same in the freelancing world?
I’m glad we are talking about this. Some folks think that after a layoff, they can turn to the gig economy
and stir up money quickly. Maybe, maybe not. I am seeing the same sluggishness in the freelancing
world, too. Typically a 1099 consultant can plug in and start work on a project faster than a full-time
employee who undergoes a more extensive pre-employment process and has to be onboarded. But
even with freelance work, I’m seeing companies that are dragging their heels and taking weeks to make
a decision. Or they simply ghost prospects altogether. So I personally would not count on freelancing as
an ironclad guarantee of fast cash.
What is the relationship between this slowness and the overall economy?
In a bust cycle or a recession, as the economy is contracting, individual businesses feel the impact of that
and they usually contract as well. Unfortunately, one way to trim costs is to lay off employees and/or
implement a hiring freeze. There are other ways as well and I remember some of what I experienced
during The Great Recession: no more 401K with a match, less PTO offered, business-approved expenses
severely cut, no more bonuses or holiday pay, etc. There was a clear sense of: if you have a job in this
mess, you’d better be grateful and you’d better do whatever it takes to keep it. So as these companies
make cuts, it ripples across the market. More people are unemployed, often at the same time, and it
creates an imbalance between open jobs and people looking for work.
Speaking of The Great Recession, what about The Great Resignation? How has the slowdown affected
that?
For white collar workers, The Great Resignation is over and has been for a while. I sort of felt like a voice
in the wilderness when I started saying that last year as other commentators were just oh-so-sure that it
was going to go on and on. I’m actually still seeing articles about how we’re in a workers’ market and
employers won’t use a recession to demand RTO and I wonder what planet they are on. Are they
studying the job market on Mars because here on Planet Earth, we have to be more practical.
What do you make of reports that say the job market is still hot and there are many open jobs to
choose from?
I can only speak my opinion on the matter which is: baloney! Go talk to job seekers who have been stuck
on the market for months and ask them how “hot” this market is. I’d also like to know where all of these
supposed job openings are. My guess is that they are for fast food, hospitality, and healthcare. If
someone has been earning $100K in a finance or tech job, it’s unrealistic to assume they can take a parttime job in fast food and make ends meet. They are also not likely to be qualified for an ER doctor or
registered nurse position at a hospital or a clinic. So . . . I think it’s vital to use good critical thinking when
reading these so-called happy reports about the labor market. The economy is not structured in such a
way that every employment-aged person can be in healthcare or work as a barista. Let’s be honest here.
In light of this information, how can someone prepare?
If you have not already roughed out a job loss survival plan, I’d recommend doing so as soon as possible.
I think a good starting point is knowing your first 5 job related phone calls after a layoff or company
closure. In other words, who are the first 5 individuals you can call who might be able to help you
become employed again quickly. I can’t give anyone financial advice, so please speak with a credit
counselor or a financial planner for that. In general, can you live beneath your means? Are you in debt?
Have you been living paycheck-to-paycheck and a job loss would hit you immediately and hard? These
are uncomfortable questions, yes, but better to think about them ahead of time than to be blindsided
later.
For more job market insights, you can visit Sara at https://causeyconsultingllc.com/.
Sujan Pariyar is the founder of Think 7 Figures magazine.