Why Layoffs Ultimately Backfire

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There's no getting around it: Things are dire, and no one is certain how to course-correct. American job losses are hurtling toward numbers not seen since the Great Depression, and we've officially been in a recession since February. Throw in a global pandemic and a contentious political climate and it's easy to see why everyone's got the jitters.

All this usually spells a further complication for workers — the inevitable specter of layoffs. Businesses have to respond somehow to an economic contraction combined with public health hazards, and unfortunately, it's usually the least senior and most vulnerable who get the boot first.

Over the weekend, however, New York Times opinion columnist Jennifer Senior pointed out a strange finding in who benefits most and least from cutting staff. According to a longitudinal study of publicly traded businesses, she writes, "The companies that delayed layoffs as long as they could — whether by cutting salaries, furloughing employees, or even running in the red — saw higher stock returns, two years later, than comparable companies that fired people from the start."

There are all kinds of reasons to avoid or minimize cutting down on staff, from the cost of replacing already trained workers to the widespread blows to morale when layoffs do sweep through. Some states allow for a harm-reduction concept called work-sharing, in which all employees accept a small cut in hours and pay to ensure everyone around them maintains access to their job. COVID has already left 1 in 3 Americans financially stranded, so if there's a way around that, we all might strive to get there.