Changes in the economy definitely have an impact on employment. The fact is, when the economy contracts, companies need to shed costs to keep themselves viable. One way to do this is to cut the number of people they employ. If customers are not there because people are not spending money, then businesses need to cut positions they no longer need. In short, in a recession, fewer jobs are available.
Recession-Related Job Loss Affects Everyone
The cycle is very specific when it comes to recessionary cuts in employees. Something causes the individuals in a country to stop spending money. In most recent times, the starting point was the bust in the housing market. People lost their homes and investors lost money, causing the stock market to sink. Concerned people stop spending money, sometimes pulling it out of their investments, further worsening the situation.
With less money being spent by consumers, businesses of all types are affected by the crunch. For example, if you stop spending money, such as by not buying a new vehicle this year that you otherwise would have, the car salesman, the dealer and the manufacturer lose money. In turn, the parts company, the administrative staff and even the company delivering paper to the manufacturer lose money. Those businesses cut their losses by letting people go, removing their jobs since they no longer need them. This further worsens as now, even fewer people are spending money. As you can see, jobs are often lost when there are recession conditions.
Where Jobs are Lost
Jobs are lost in virtually every sector during a recession since the entire U.S. economy is dependent on each other. Some of the affected categories are:
- Manufacturing and factory jobs often are first, since companies start making fewer products since they are not selling enough.
- Service jobs go since employees are not necessary because people do not need their services, such as restaurants, department store personnel, and travel industry positions.
- Sales positions drop significantly since people are not purchasing, including car salespeople, real estate agents, and other sales oriented positions, even telemarketers.
- Inner office people are cut, especially those that are not necessary for the business to function. For example, a business executive may go and a freelancer hired for one of or more projects, which will substantially cut losses in salary and benefits.
- Government service positions are cut. In the current economic conditions, many home's have dropped in value alongside drops in tax revenue for cities, leading to the forcing of police and fire personnel losing their positions.
There are very few positions that are actually safe when it comes to US recession affecting job loss. The businesses may not close their doors altogether, but they are more likely to drop any extra positions they can so they do not have to pay salaries and benefits to those individuals. They may add these positions back on as the business grows again when the economy strengthens.
Learning if Your Job Is at Risk
During a recession, it's common for people to become concerned that their jobs might be cut. If this is you, there are things you can do to add some protection for yourself (in some cases.)
- Become indispensable to the company: be there whenever and for whatever needs the boss has. Be the person that brings in leads and getting higher sales.
- Ensure your industry and company are stable. Talk with your boss and upper management about the realities within the company.
- Be flexible. Work in the off hours or open up your availability to the times, positions, and types of work you are willing to do, making it less likely that you will be among the first people to be cut.
- Further your education. Getting a better education may help you to advance your career, making you more essential to the business.
- Be willing to lose some hours rather than losing your job. Some businesses are working towards cutting back on hours, even scaling back to four day work weeks, so that employees don't lose their jobs. Part time jobs are better than no jobs.
Most importantly, speak with your employer about your position to ensure that it is there for you. Recessions may cause job loss, but economic growth will spur new positions to open up in the future.