It’s so common for high-profile CEOs to receive gigantic payouts as they exit a company that we have a term for it: “golden parachute.” For most employees, however, a layoff or termination means not a financial windfall, but a financial hardship. CNBC reports only 40% of Americans have enough emergency savings to cover an unexpected $1,000 expense. In 2016, the Federal Reserve found 44% couldn’t cover a $400 emergency expense. Missing just one paycheck would spell money trouble for a high percentage of US workers.
Considering that statistic, it’s unsurprising that nearly half of US workers feel they are ill-prepared for a potential layoff. CareerArc’s Layoff Anxiety Study conducted last summer by The Harris Poll found 47% of American employees fell unprepared for a layoff. Younger employees are especially at risk; 51% of employees aged 18-34 feel unprepared, compared to 30% of employed Boomers ages 55 and older.
Nearly a majority (48%) of those in the survey actively fear they will be laid off. Since worries about losing a job can have a major impact on employee productivity and loyalty, HR leaders need to take steps to manage layoff anxiety in their workforce, especially among millennials and Gen Zers.
Young workers fear layoff more
The high rates of layoff anxiety among younger employees in many ways reflect the higher likelihood of layoffs for these employees. Younger workers generally have fewer marketable skills and less work experience, and thus hold less organizational knowledge and seniority. This means that in the case of a layoff, these workers are more likely to find themselves on the termination list — especially if their company has a last-hired, first-fired policy.
Unfortunately, these younger employees are also less likely to have adequate emergency savings than their older counterparts. Smaller paychecks for entry and lower-level positions, combined with bigger student loan debts, make it tougher to save for a rainy day. Younger employees are more likely to make less than $50,000, rent instead of own, and be unmarried — all factors correlated with lack of preparation for a potential layoff.
On top of that, because the amount of severance pay companies offer laid-off workers is often tied to an employee’s salary, job level, and years of service, younger employees generally receive less monetary or other severance support on their way out. Younger employees also tend to have a harder time landing new jobs. According to the Layoff Anxiety Study, employed survey respondents 34 years-old or younger and those 35-44 were about twice as likely to have experienced difficulty in finding or switching jobs during the Great Recession (26% and 20% respectively) compared to those ages 45-54 and 55-64 (11% and 10% respectively).
In short, younger employees are more likely to be laid off, experience financial hardship due to a layoff, and struggle to find a new job after a layoff.
Ways to alleviate layoff anxiety
While layoff anxiety is a nationwide problem, you can mitigate its effects on your organization. One way to ease layoff-related fears is by helping young workers build their emergency savings. A simple payroll deduction emergency savings program, which automatically directs a portion of employees’ earnings to a rainy day fund, can support better financial habits, especially if employees are enrolled into such a program by default. You can sweeten the deal by offering an employer match. A study by the AARP Public Policy Institute found 71% of employees would likely participate in a payroll-deduction emergency savings program — 81% if the employer matched the contributions.
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Assistance with managing and paying college debt can also help ease the financial burden on younger employees. Your organization could offer debt consolidation or refinancing services, or go a step further and institute a student-loan benefit program, providing an employer match for some or all student loan repayments.
Download our special briefing report on employer student loan repayment programs.
In addition, you can make outplacement services — career transition support to help displaced employees find new jobs more quickly and easily — a standard benefit available to all members of your organization. In the past, only executives and senior-level employees typically received outplacement services, getting free access to a professional career coach to help revamp resumes, find suitable job openings, and prepare for interviews. But today, growing concern about employer brand, combined with the cost-effectiveness of virtual outplacement programs, have encouraged many companies to offer this benefit to employees at all levels. If your young employees know they are guaranteed professional career services to help them further their careers in the case of a layoff, they will be less fearful of worst-case scenarios and better able to focus on their current jobs.
While it’s true many of the big factors that make layoff anxiety so acute for younger workers — soaring student loan debt, growing income-rent gap, plummeting marriage rates — are trends individual company leaders have little control over, each of us can still play a significant role in alleviating those anxieties in our organizations. By taking steps to manage layoff anxiety, you’ll not only encourage higher work productivity but also support a more positive workplace culture young employees will want to become and remain part of.