What to do if you lose your job
While the U.S. labor market remains strong through mid-2019, that doesn’t mean it will stay that way. Already, economists are whispering about the possibility of a U.S. recession, which would not only crimp hiring, but would also likely lead to firms cutting staff if — and when — their revenues start to decline.
According to the Duke University/CFO Global Business Outlook, 48.6% of U.S. CFOs believe that the U.S. will be in a recession by the end of 2019, and 82% say a recession will occur in 2020.
“The end is near for the near-decade-long burst of global economic growth,” says John Graham, a finance professor at Duke’s Fuqua School of Business and the lead researcher on the CFI survey. “The U.S. outlook has declined, and moreover the outlook is even worse in many other parts of the world, which will lead to softer demand for U.S. goods.”
A job loss survival guide
If that happens — and let’s hope it doesn’t — many Americans will need an action plan in the event a recession slams into the U.S. economy, and they lose their jobs due to layoffs.
Fortunately, other workers who have gone before them have left a blueprint on the specific steps to take in the event of a job layoff. And it’s a blueprint worth checking out — whether you wind up losing your job or not.
“20 years ago, I was laid off from my university when the research grants funding my position ran out,” says Carol Gee, a recently-retired editor at Emory University in Atlanta, Ga. “I immediately signed up for unemployment and I told everyone I knew that I was seeking another position.”
Gee and her husband cut back on the household budget as she scoured the landscape for a new job.
“I took a temp job and contacts from former colleagues and friends kept my spirits up while I went on job interviews,” she says. “All these things got us thru the 18 months I was laid off.”
Ultimately, a job tip from a former colleague led to Gee returning to Emory where she stayed another seven years until retiring.
Gee says she was lucky, but still had to create an action plan on the fly to survive a harrowing job loss.
“We were luckier than most who are laid off, as my husband received a military pension and had started a civilian job with a great salary,” she says. “However, with a car payment and a mortgage, we still needed to tighten our belts.”
“Not wanting to touch my 401(k) funds if possible, as well as concerned with keeping my bills paid and maintaining my good credit, we really had to look for ways to stretch the funds we had.”
A 7 step job loss action plan
Gee worked hard to hang in there financially, and that bought her enough time to land a new job.
For working Americans in her position who face the potential loss of a job, however, the goal is not to wait until a job is lost — it’s well before, while you’re still in a position to make the financial and emotional moves necessary to survive a job loss.
These action steps will enable you to get that job done.
#1 Get a grip – and quickly.
Yes, losing a job is a traumatic experience and does require emotional caretaking — just don’t spend too much time dwelling in the negatives.
The first thing to do is to recognize that losing a job is usually a painful loss regardless of circumstances, experts say.
“In this sense, the process is like moving through grief,” says Mic Fleming, president of YESShr, a human resources firm in Portland, Ore. “Whatever your process — five steps or fifty — get through from deep denial and anger to acceptance as quickly as possible.” That’s because the second thing to do is remember that it can be a full-time job to search for a job. “Consequently, you’ll need all the positive energy you can muster to work at it,” Fleming says.
#2 Don’t be too proud to apply for unemployment benefits.
After all, you’ve been paying into your state’s unemployment fund your entire career, so you might as well access these benefits when you find yourself in need.
“If you use all your state’s unemployment resources, you’ll get a check, access to job postings, and in many places a requirement to keep a job application log, which can be a good incentive to get moving,” adds Fleming.
#3 Check your finances and look to increase income right away.
If you lose a job, you’ll need to immediately cut household spending costs and figure out how long you can sustain your new budget without a job.
“Get unemployment benefits if you qualify and max that out as needed,” advises Daniel Vahab, president of DRV Staffing, an employee recruiting agency based in New York City. “If need be, get a part-time or consulting gig to help pay the day-to-day essential bills while searching for something more permanent. Because the reality is that it can take a while.”
#4 Take a long-term and short-term approach.
You’ll also need put together a strategic plan of action to secure your next great job, notes Vahab.
“Think about where you want to be long-term, five-to-10-to-20 years down the line,” Vahab says. “Ask yourself, what industry, company, position, location, culture, and trajectory do you have in mind? Get specific with the specific job titles you’d want to have.”
While you’re at it, refresh your work history and brush up your employment attributes.
“Put some lipstick on, so to speak,” says Vahab. “Enhance your resume, online profiles, and portfolios. Leverage professional development resources to learn new skills and gain new certifications that you can now plug in with your new job search.” It’s also a good idea to reach out to your sphere of influence and past colleagues and managers for leads on job prospects. “The goal here is to steer yourself to people they can connect you with, and use them for a reference.”
#4 Protect your health insurance.
In many cases, losing your job means losing your health insurance.
“Consequently, one of the first things you should do in this unfortunate circumstance is purchase your own health care plan or apply for coverage under COBRA,” says Jacob Dayan, CEO and co-founder of Community Tax, a financial services firm in Chicago, Il. “If you believe you are the picture of health, it may feel like this extra expense is an unnecessary drain on your depleted income, but your future self will thank you if something unexpected pops up.”
#5 Don’t borrow from your 401(k).
No matter how tempting it is, don’t touch your 401(k) plan funds.
“Hopefully, this is why you have saved up an emergency fund to cover your expenses until you find your next job,” says Dayan. “Taking money out of your account will hurt your retirement planning and you’ll have to pay income taxes on that amount, yet another expense you do not need.”
No matter how much you take out of a 401(k) plan, you’re curbing the power of compound interest, which helps plan proceeds accumulate over time — and that’s free money you don’t want to squander.
“That amount could have increased an incredible amount by the time you retire, so leave it where it belongs,” Dayan adds. “ It’s highly likely that you will be able to roll it over to your next employer anyway.”
#6 Build a strong LinkedIn profile featuring your career summary, keywords, and full work history.
“This serves as your electronic resume,” says Damian Birkel, founder of Professionals In Transition, a nonprofit organization that provides job searching support for the unemployed. “You also need to have a professional looking headshot. Studies show that an employer is 68% more likely to open a LinkedIn profile with a picture on it as a post to not.”
While you’re at it, make sure you have a clear and concise career summary to offer potential employers. “Your career summary is the anchor for your entire job search,” says Birkel. “It’s a forward-looking statement of what, career-wise, you want to do next.”
Your career summary is also the first thing that companies see when they read your resume and it’s the answer to the question “tell me about yourself.”
“It should also appear on your business card,” says Birkel.
#7 Take a deep breath and plan ahead
Nobody wants to contemplate the possibility of losing a job.
But if you take the time to do so ahead of time, you’ll be more than ready to rebound quickly — and even wind up in a better career position than the one you left.