How to prepare for layoffs: 10 tips for staying ahead in a tough job market

Although the official unemployment rate is stable at 4.2%, many workers believe it is just a matter of time for a major reshuffle. At least one-third of U.S. employees say they are experiencing layoff anxiety.

Last week, the number of people applying for unemployment benefits rose to their highest levels in months. The Trump administration’s cuts between federal agencies, health organizations and nonprofits resulted in about 300,000 layoffs. With employers reducing staff and freezing new workers, there have been massive cuts across the technology industry, entertainment and education.

Preparing for unemployment during active employment can help you avoid scrambling during crisis, says Zipruiter's career expert Sam DeMase.

“If layoffs do occur, being proactive can help you feel at ease,” Demase said.

Think you're about to be fired? The logo of search

Lisa Countryman-Quiroz, CEO of the California vocational training nonprofit JVS Bay, said companies and families are preparing for the recession. “We live in a very radical period of uncertainty,” she said.

Experts warn that a global economic slowdown could challenge the U.S. labor market at all as businesses adjust profit expectations and prune budgets.

According to Demase, while the layoff metrics are not always clear, there are still some clues to be paid attention to.

👀Will your position generate income? Non-benefit generation roles within an organization may be critical to overall operation, but these positions (HR, IT, legal and management) tend to be more vulnerable because they do not generate business revenue directly.

👀Is there any organizational reorganization? Changes and reorganizations in leadership often mean efforts to improve performance or address financial difficulties. Mergers, streamlining or employee acquisitions may indicate that the company is cutting costs or reducing the size.

👀Do your manager communicate regularly? If your supervisor suddenly becomes quiet or cancels a meeting, it may not be arranging a conflict. They may try to minimize contact or deprive communication before company-wide announcements.

👀Are the project cancelled or the budget frozen? If the upcoming fees or travel are not approved, or the recruitment and promotions are suddenly frozen, this could be a warning sign that the company is focusing on financial cuts.

Demase said narrowing to the wider job market, paying attention to the layoffs of competitors in your industry, or the smaller list of jobs within your scope of work, could indicate economic stress. If you notice a decline in entry-level work, it could mean that these roles have been cancelled or replaced by automation.

How to prepare for layoffs

In the context of overall economic uncertainty, employers are retreating from public posts and the level of competition among qualified applicants is high. Demase allegedly, layoffs could put you out of work for three to ten months, on average.

Although layoffs are financially motivated, they are likely to stir your confidence. “It feels horrible, like your value is gone. But that's not the case,” Demase said. “It's very important to remember that layoffs are business decisions.”

In a turbulent job market, preparation is everything. This is the way to make sure you are not caught off guard.

1. Collect your paperwork in advance

Although some employers still send high-level notices when force is reduced, workers are increasingly fired with little notice. You may immediately lock you into your company devices and communications, including email and payroll software.

Demase says to collect your personal information on your work computer and make sure you have proof of employment and tax documents. You will need paid stubs and verification to apply for financial aid or state unemployment benefits. While you should never get confidential company information, you can save copies of your performance reviews and work samples for future reference.

2. Refresh your resume and network now

When you are still employed, take a moment to update your resume and LinkedIn profile. DeMase recommends compiling your achievements, famous projects, and positive feedback from colleagues or clients.

Demase said it was a good idea too. If you have worked in the company for a long time, please contact your former colleagues and clients immediately. “That way, when you do reach out after you get fired, it's not 911.”

3. Understand your severance fee

When a position is eliminated, severance payments may be provided to the layoffs as compensation. The amount varies by employer, but the common formula is the salary for one or two weeks of employment each year. Any payment is taxable as ordinary income.

The company does not need to provide severance payments. If you accept severance payments, you may need to sign an agreement that says you will not sue your former employer.

If you are 40 or older, your employer must give you at least 21 days to decide whether to accept a severance agreement under the Elderly Workers Welfare Protection Act. If this is a group termination (which means multiple employees are out of work), you have at least 45 days to accept the same law agreement.

4. Research health insurance coverage

Some employers will allow you to retain employer-based medical, dental and vision coverage for a specified period at no additional cost. You may also consider seeking coverage under a family member or spouse.

If there is no option, make sure you know about federal laws called the Consolidated Comprehensive Budget Settlement Act. Cobra allows workers leaving their jobs to continue their health insurance if the company has 20 or more employees, usually between 18 and 36 months. Usually, you pay the whole premium, plus a 2% surcharge, which gets expensive when you just lose your job.

Another option is to buy a plan in the health insurance market. If you lose employer-based coverage, you may be eligible for a special enrollment term if you register within 60 days of the loss of coverage.

5. Confirm other company benefits

Expenditures for unused rest time, including leave and sick leave. Some states require employers to leave their jobs for any reason to pay workers an unused PTO.

Company stock or retirement plan: Due to an account like 401(k) or 403(b) sponsored by the employer, please make sure you can leave it in place or aggregate it to another investment account.

Company Equipment. If you have a corporate laptop or phone, you can allow you to keep the device or buy it at a lower price.

Other benefits. Some companies help declining workers find their next job by providing career counseling or recovery assistance.

6. Check unemployment qualifications

If you are fired and unemployed without your own fault, you are usually eligible for unemployment benefits, although the rules vary by state. Usually, you apply for benefits in the state where you work.

Immediately after learning that your job has been laid off, contact the state’s unemployment office. You can expect to wait about two to three weeks from the time you submit until you receive your first unemployment check.

Read more: How to apply for unemployment benefits

7. Build your emergency fund as soon as possible

If you can find savings areas in your budget, make building an emergency fund a top priority. A high yield savings account is a wise place to hide your emergency funds as you can earn interest and get your funds without penalty.

Experts usually recommend an emergency fund that can cover living expenses for at least six months, although this is not possible for most families living on paychecks.

“Everything you can combine, even a month's rent, will help,” Countryman-Quiroz said. Even having some emergency reserves will not only protect you, but also give you peace of mind. “From the position of power and choice, not one of scarcity, despair and necessity,” she said.

8.Don't liquidate your retirement account

If you suspect that layoffs are coming, don't cash out 401(k) or any other retirement account in a panic. In addition to income tax, you may also owe a 10% early withdrawal penalty.

However, if you are currently providing additional contributions to your retirement account, DeMase recommends rescheduling some of these expenses into emergency savings so that if you lose your job, it may be liquid.

9. Review your expenditures and debts

Creating a currency-free budget that covers only essentials will give you a clear plan of action in case you lose your job. Or, if you lack savings, you can now implement a bare budget so that if your income takes a hit, you will get a safety mat.

If you have any debt, try paying off what you can now pay off so that you won't get stuck in a growing interest cycle without paycheck.

Demase said it is a good idea to start scaling down any unnecessary spending now. Take a closer look at your budget to understand the necessary (housing, groceries, debt, utilities, etc.) compared to the optional (subscription, dining, vacation, etc.). Use a budget app to help find the expenses you can cut.

10. Find other jobs and training

If you are worried about unemployment coming, you can look for alternative sources of income. Demase is said to consider having a busy busy schedule while you are still employed, such as free work or part-time performances. Having an additional revenue stream now can help you save money and pay off your debt faster.

This is also a great opportunity to improve your expertise and qualifications. Countryman-Quiroz said that “preventing the future” your employability means building interpersonal communication and collaboration as well as technical skills, especially in the AI ​​field.

Local nonprofits and workforce development organizations often provide free resources to build skills in new areas.

Free and low-cost resources for job seekers

• Cal Jobs: Cal Jobs provides a complete set of employment tools for job seekers in California.

• American Job Center Finder: Thousands of job centers across the country help people find jobs, find training and answer other employment-related questions.

• LinkedIn Learning: LinkedIn offers video courses taught by industry experts in business, creativity, technology and certification fields.

• Goodwill Industry: Goodwill Career Center provides vocational training and placement services.