Career Key

Author: Career Key's President and CEO, Juliet Wehr Jones, GCDF, J.D.

Tuesday, August 4, 2009

Increase Your Chances of Keeping your Salary Post Layoff

Want to land on your feet post-layoff? You might want to take the "lessons learned" approach to some new sobering statistics. According to new research discussed in this New York Times article, many laid off workers take years to recover and get back to their previous salary and most, on average, will not return to their pre-layoff incomes.

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.
These statistics don't apply to everyone - the research was done with companies laying off at least 30% of their workforce and the laid-off workers had been with the employer at least 3 years. And most employees were men. I would also say that this research included more of the old style, cradle to grave type of career paths that no longer exist (except in government, perhaps).

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.

1 comment:

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