what is a layoff 
a layoff is the temporary or permanent termination of a worker s employment for reasons unrelated to the individual s performance on the job employees may be laid off when companies decide to cut costs due to a decline in demand for their products or services seasonal closure a change in the business direction or an economic downturn 1employees who are laid off lose their wages and company benefits but qualify for government sponsored unemployment insurance or compensation for a period of time laid off employees do not lose their investments in company retirement plans such as a 401 k plan the federal law known as cobra for consolidated omnibus reconciliation act gives laid off employees the right to continue their company health plan coverage at their own expense for 18 to 36 months 2understanding layoffslayoffs typically affect groups of workers rather than single individuals they are a cost cutting measure that may be prompted by a company s change in strategy or financial difficulties they often occur as a result of the sale of a company as a new owner consolidates departments layoffs are understandably unpopular with workers whether their employers call them downsizing rightsizing or smart sizing a layoff may also be called a workforce reduction or a reduction in force companies seeking to avoid or minimize layoffs sometimes offer their workers a voluntary buyout with financial inducements to leave voluntarily older employees may be offered early retirement replacing a paycheck with retirement benefits in some cases employers conduct layoffs even when their businesses are thriving either to increase their profits or as part of a shift in operations layoff vs furlough vs firinga layoff is generally intended to be permanent although rehires are not unknown if a company backtracks on a decision a furlough is intended to be temporary and is usually due to a short term production shutdown workers who have been furloughed may keep their job titles and employee benefits with the expectation that they will eventually return to work 1public service employees face a furlough when legislators deadlock on the budget appropriations that are required to pay their salaries during a government shutdown non essential workers may be furloughed while workers in essential services are forced to work with their pay delayed until a funding agreement is reached furloughed workers may be eligible to collect unemployment insurance benefits depending on eligibility requirements which are set by the states 3an employee may be fired or terminated on the grounds of unsatisfactory performance malfeasance or breach of duty an employee who is terminated with cause generally does not qualify for unemployment insurance example of mass layoffsu s employers resorted to mass layoffs amid a drastic downturn in demand during the early stages of the covid 19 pandemic as restrictions and contagion fears halted travel shut restaurants and idled many other service industries u s employers cut more than 20 million jobs in april 2020 alone according to the u s bureau of labor statistics bls 4to preserve jobs the u s government offered the paycheck protection program with loans subsidizing businesses payroll costs that would be forgiven under certain conditions the program was intended to encourage businesses to keep their workers on through the pandemic 5layoff statisticsstatistics on layoffs are a key component of the larger numbers on total employment such as the monthly data on nonfarm payrolls and the unemployment rate the monthly job openings and labor turnover survey jolts from the bureau of labor statistics is a count of separations from employment for all causes including layoffs resignations firings transfers retirements and death from all of these numbers it reaches a number for job openings for september 2023 for example the bureau announced that job openings nationwide totaled 9 6 million virtually the same as the previous month there also was little change in the numbers that make up that total which include all job separations voluntary and involuntary 6special considerationsthe workers who lose their jobs bear the brunt of layoffs but mass job losses also hurt the workers who remain their communities the broader economy and even the employer moreover they may not offer the financial boost that companies are hoping for when they embark on mass layoffs stanford graduate school of business professor jeffrey pfeffer argues that the recent rounds of layoffs among big tech companies were unnecessary and for that matter did the companies no good at all he dismisses the entire phenomenon as copycat behavior among tech companies 7the downsides include high levels of stress for both laid off employees and those left behind and a deterioration of the customer experience not least layoffs can cost the company more than they save in the long run 