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The Disadvantages of Workplace Layoffs

The Disadvantages of Workplace Layoffs thumbnail
Coworkers have the advantage of friendship to help deal with layoffs.

American residents generally have some legal protection from unexpected workplace layoffs, though the loss of full-time income still puts many of the affected at a financial disadvantage. The U.S. Department of Labor helps the business community fully understand and effectively use the Worker Adjustment and Retraining Notification Act (WARN), which encourages giving soon-to-be laid-off workers 60 days of advance notice. However, even after two full months to accept the reality and make preparations for the impending layoff, there are additional disadvantages and ramifications that can still occur.

  1. Individuals

    • For many people, a job is more than just a means of supporting a lifestyle. Some workers dedicate years of service to businesses -- and customers -- to the point where it becomes a part of the everyday mental psyche. Losing a job could be akin to ending a marriage or other type of long-term relationship. Affected workers might suffer a mental disorder, such as depression, as well as question self-identity and purpose -- "Was all my hard work for nothing?"

    Organizations

    • As the other unlucky workers are laid off, unaffected management and employees generally continue with business as usual. However, a reduced workforce might have a harder time keeping up with business demand. Layoffs are a cost-cutting measure, but this financial tool can unexpectedly cut into revenue, from not being able to make products or offer service at levels prior to the layoffs. In addition to the increased pressure to perform, employees might constantly worry about who is next to be laid off, instead of concentrating on the task at hand.

    Communities

    • Employees pay taxes on a local, state and federal level, which in turn pays for governmental programs, such as law enforcement and public education in the community. Layoffs can result in a loss of valuable tax revenue and a cutback in vital services. Also, nearby small businesses commonly feed off the customer foot traffic from a larger company's employees, and local consumers in general. For example, a small sandwich shop might get the bulk of the day's business from when a nearby large factory goes on lunch break. Laid-off people may no longer need to frequent smaller businesses near a previous job location, hurting sales.

    Economy

    • Economies exist on a local, state, national, international, intercontinental and global level -- and these realms are increasingly dependent and inseparable. Many U.S. companies have a global market presence with access to more customers, increasing the bottom line. However, if your company is publicly traded, its quarterly earnings and financial results can adversely and unexpectedly suffer losses if another region's economic woes, such as shuttering factories and entire industries, result in massive layoffs. The middle class is growing in developed and emerging economies, but if those countries suffer layoffs, then there is no demand for your business's products and services.

    Ethos

    • Stock traders, economists, financial regulators and sovereign nations are just a few of the many entities that make the money machine run efficiently and smoothly. Where a business begins laying off workers, it will make news headlines, including local and international newspapers. As people read about layoffs, the mind pauses and ponders the impact that has on the broader business market. People might use layoffs as just one of many economic indicators and the ethos, or spirit, of the business community might sour, which has far-reaching implications, around the world and into the future.

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