Anxiety took center stage over the past two years as we collectively wrestled with loneliness and the stress of the COVID-19 pandemic. We worried about how the virus would impact our families, health, and careers.
But with restrictions lifted across the country, pandemic anxiety has given way to economic anxiety. With experts speculating about struggling stock markets and climbing inflation, Americans are falling into a scarcity mindset — as many as 69% are worried about an impending recession.
You might be one of them. If you’re a millennial or older, you’ll remember the CNN headlines from the Great Recession of 2008, which caused 2.6 million job losses, pushing unemployment rates to record highs.
And now, as experts speculate that we might be heading for another slowdown, you may wonder: “Will I lose my job in a recession?”
With technology, most industries are changing. Technology even changes our historical models of how economic ups and downs work through the the business environment and the job market, making it hard to predict where the effects of a recession will hit. Some jobs do carry more risk than others. The answer depends in part on your industry and the type of job you have. And there’s still no guarantee you won’t lose your job during an economic downturn.
You aren’t helpless, though. You can do a few things to protect yourself and prepare to adapt. Here’s what you need to know.
What is a recession, and what can cause one?
Economists at the National Bureau of Economic Research (NBER) usually declare a recession after two consecutive quarters of decline in the gross domestic product (GDP). The GDP is how the government measures the overall health of a country’s economy.
Recessions are a normal part of any country’s economic cycle, but they’re difficult to predict. They usually occur due to a web of interconnected factors, such as:
- Economic shocks. These are unpredictable events that disrupt the regular functions of an economy, like natural disasters, terrorist attacks, or pandemics.
- High-interest rates. This makes it more difficult for the average consumer to borrow money and use their credit cards, making them less likely to spend. Companies also depend on borrowing money to grow their business. If interest rates are too high, they borrow less and reduce their spending on things like labor, leading to job losses.
- Loss of consumer confidence. Most economic activity depends on people spending their cash. But when they’re worried about the state of the economy, they tend to spend less and save more — thus slowing everything down.
Recessions are unpredictable by nature, so no one can say with full confidence how long one will last. But based on the past 70 years, the average downturn lasts around 11 months.
Who loses jobs in a recession?
Your vulnerability to a recession hinges on the nature of your work. When the economy goes south, most people scale back their spending. If your job depends on the sale of non-essential goods and services or high-cost products that require financing, you may be more at risk than others.
The following workers are at risk of losing their jobs during a recession:
- Hospitality and tourism. With less money to spend, you’ll receive fewer vacationers in your area. If you work in a hotel and people aren’t booking rooms, you may experience layoffs or reduced hours.
- Restaurants and bars. A similar rule applies if you’re a waiter or bartender. With less money to spend, people won’t be as inclined to go out for food and drinks. You’ll probably see fewer tips, too.
- Leisure and entertainment. Movie theatres, concert venues, sporting events, and other forms of entertainment will experience less traffic than usual. Whether you work at the snack bar or the corporate HQ, your job in this sector may be at risk.
- Real estate and automotive sales. Hig-interest rates will deter prospective home buyers from seeking a mortgage. This could spell bad news if you’re a real estate agent or money lender.
- Other retail goods. Shoes, clothing, and cosmetics will enjoy fewer sales during a recession. That means jobs in this sector are particularly vulnerable during an economic downturn.
If you’re wondering which of the following workers is most likely to lose his/her job during a recession, it’s tough to say for sure. All of these industries will likely take hits from the downturn.
What are the best jobs during a recession?
- Accounting and finance. When the economy takes a hit, everyone from California to New York will be trying to maximize every dollar. As an accountant, auditor, or another kind of money expert, you can help others navigate their finances.
- Healthcare. Society will always need well-trained medical professionals, making the healthcare industry a safer place to work during a recession. Even if you’re not a nurse or a doctor, you can support them in a bureaucratic role.
- Education. Salaries vary depending on whether you’re an elementary school teacher or a university professor. But, for the most part, educators experience fewer layoffs than other industries.
- Utilities and infrastructure. From electrical power to sewage removal, utility workers keep the lights on — sometimes, quite literally. Jobs in this sector are often insulated from the worst impacts of a recession.
What can you do to protect yourself against a recession?
Even if you work in a high-risk industry, you can reduce your chances of being laid off. Here are some tips that can keep you employed.
1. Be adaptable
Adaptability is one of the top skills valued by employers. And it’s especially valuable during times of uncertainty, like during a pandemic or on the cusp of a recession. Becoming more resilient helps you embrace challenges, become a better leader, and stay relevant in your industry — all of which could protect you in the event of layoffs.
2. Make yourself visible
If you’re not one for socializing with co-workers, it might be time to change that. Try attending more social functions and interacting with your boss and colleagues. This will help people remember you and makes your job more enjoyable.
3. Spread positivity
The uncertainty associated with recessions can take a toll on your mood. But it’s important to remember that everyone else feels it, too — including your leaders. If you can spread joy and positivity, you’ll set yourself up as a beacon of hope in an otherwise difficult time. Sometimes, this is just as valuable as the hard skills you offer.
4. Improve on your weaknesses
Nobody is a perfect worker. Develop your self-awareness and be mindful of the areas you struggle with. Once you identify the gaps in your abilities, you can take steps to address and improve them. Develop your skills and earn new certifications. The more well-rounded you become as an employee, the less susceptible you are to losing your job.
5. Adopt a survivor mindset
If you want to be a survivor, act like one. This means refusing to play the victim and taking ownership of your situation. You can do this by:
- Accepting the uncertainty
- Making moves to protect yourself
- Trusting in your ability to survive whatever comes next
6. Pay attention to your savings account
While you might not consider a recession a time for financial wellness, you can plan to save a little extra to save you some worries. As non-essential spending trends downward, your extra income should go straight to low-risk investments or your savings account.
The rule of thumb is to save 3–6 months of living expenses in an emergency fund. If you’re worried about a potential layoff, try to push that amount to a year’s worth of expenses for added breathing room. If you stay employed through the downturn, you can devote that extra cash to another of your financial goals, like a new roof or a family vacation.
What to do if you’re laid off
No job is recession-proof. Despite your best efforts, you might fall victim to job cuts and find yourself in an unfavorable situation.
Re-joining the labor market during an economic slowdown is difficult, but it’s possible to find your footing after losing your job. Here are some of your options.
1. Apply for unemployment benefits
Your first step should be to make sure you can meet your needs. Federal and state governments offer social safety nets for people in your exact situation. These programs can tide you over until you find your next opportunity.
2. Look for job openings in a less affected industry
Not all industries are equal in the U.S. economy. As you begin your job search, you might consider changing careers to something more stable. The healthcare, education, and utility industries are less likely to experience shortages and can offer you better job security.
3. Start freelancing
Depending on your skill set, working as a freelancer might be an option for you. It’s less expensive for organizations to hire you for short-term projects than as a permanent employee. If you can scrape together enough work, you might discover you don’t need a new job — at least, for now.
4. Expand your skills
If you’re unemployed during the next recession, it could be a perfect time for you to go back to school or take professional development courses. You could also explore free resources to learn new skills like Khan Academy or LinkedIn Learning.
By the end of next year, you’ll be surprised by the new sections filling your LinkedIn profile. This will position you nicely for when the job market improves.
Don’t lose hope
Asking yourself, “Will I lose my job in a recession” can fill you with anxiety. But it doesn’t have to. Information is power, and the more you learn about recessions, the easier it will be to adapt to a slowing economy.
Your best bet is to make yourself invaluable to your employer. Project a positive attitude, expand your skill set, and be adaptable. If your company decides to proceed with layoffs, these steps can help protect you.
And even if things don’t turn out the way you hoped, it’s not over. You’re a strong worker with many different skills and the ability to improve them.