This new working paper by Columbia University economist Till von Wachter and two other economists found that from 1984 to 2004:
- most workers do not return to their pre-layoff salary within 15 to 20 years;
- starting over with a new employer and/or a new industry reduces your salary;
- largest long-term income losses happened to those with the longest tenures at their previous employers;
- stability at a company may lead to over-specialization of skills, making it less likely those skills can transfer to another company;
- workers who are laid off are more likely to be laid off again;
- older workers suffer more income decline than younger workers;
- workers with college degrees do slightly better than those without them.
What can we learn? It's a reminder that getting too comfortable in your career can damage your ability to survive a layoff with your income level intact.
Our article "The Free Agent Outlook on Work" has a number of suggestions on how to avoid, when possible, the outcomes described in this research. I also wrote a blog series earlier this year on each of the 6 principles guiding the Free Agent Worker. And finally, a few more ideas:
- avoid too much specialization, locking yourself into work with one employer;
- continue updating your education throughout your career; even if it's part-time; and
- take advantage of employer-provided training.