A few months ago my employer announced some pretty big news. It wasn’t quite a layoff but basically 75% of the jobs at our facility would be moving to another region of the country(1,000 miles away). Fortunately, my job was one that would be staying but 3 out of every 4 employees would be forced to pick up and move or find work elsewhere.
The company released this big long statement full of BS but everyone knows the real reason why they’re doing this: to save money. To be honest, it’s actually a pretty savvy business move by my employer since instead of having to lay people off they’re giving everyone that was displaced “the opportunity” to apply for new jobs at the other facility. We have a lot of union workers here with 20-30 years experience and they make a lot of money. And even though they are good at their job and have a lot of knowledge and lessons learned, from a business stand point, they’re just not worth it anymore.
Although people are pissed, I think there’s a lot less hostility than there would have been had the company just laid them off. Everyone that doesn’t get relocated will still get a nice severance package so don’t feel too bad for them, I don’t.
Nothing is Secure
I grew up watching a lot of sports so from an early age I saw just how callous businesses could be. Franchise players can be swept out the door once they’re no longer useful and the fans will quickly forget about them once a new star is on the field. Some of my favorite players growing up were either traded away or not re-signed because they were too old or expensive. It’s as if all the money and success they brought in prior years had been forgotten once they got too old.
Similarly, I’ve known for a while that there’s no loyalty in the corporate world. No matter what your employer tells you, they can and will get rid of you in a heart beat if it suits their business plan. It’s easy for workers to get comfortable doing the same routine day in and day out but that’s when you become most vulnerable. The marketplace is changing and there aren’t as many lifelong jobs as there used to be.
Technology and computers have replaced a lot of the more menial labor type positions and new industries are popping up and old ones are falling every single day. If you’re not evolving with the times, you’re going to get left behind.
Prepare for the Worst
Whether you realize it or not, we’re all at will employees. If an employer wants to get rid of you, they’ll find a way. Don’t think that the law or your track record will save you. The people at the top of your company are there for a reason, they know what they’re doing. But that doesn’t mean you don’t know what you’re doing either.
Business competition is more fierce than ever. Nearly every company in the US is being challenged by domestic and international rivals who are leveraging outsourced workforces, new technology and more to attract new business. The biggest cost for any business though will always be salary for employees. So naturally when a business needs to save money where are they going to look first?
Don’t Depend on Anyone
Knowing all that, doesn’t it make sense to become less dependent on your day job income? The first way to lessen your dependence is pretty easy and all it involves is just spending less. If you make $100,000, don’t spend all that money. Save 25% of your income, pay taxes and spend the rest. It seems like a pretty simple plan but a lot of high income earners are still living paycheck to paycheck and they don’t even realize it until the money stops flowing in. You should always have a solid emergency fund of 6-12 months or more depending on how stable your job is. Hint: Always go for a higher emergency fund since most people tend to have huge biases when it comes to how stable ‘they think’ their job is.
Income Diversification is Better Than Making More Money
The second way to become less dependent is to create multiple sources of income. If you have a high paying job in the first place, it should be easy for you to save up enough money to invest in some income producing assets. In my opinion, real estate is one of the best ways to accumulate wealth and build side income since you’re able to use borrowed money to invest.
Real estate and investing in stocks are generally thought of more as passive income sources than anything else. In order to be fully prepared for a layoff-ageddon you should have other sources of active income. It doesn’t have to be a lot but it’s way easier to ramp up a business that’s already in existence than it is to start one from scratch. Find a hobby that aligns with a viable business and see what you can do with it. It doesn’t have to bring in thousands of dollars but if there’s potential it might be the perfect back up plan.
Ultimately the reason for all this is to avoid what is happening to a lot of my co-workers. Right now they are being forced to choose between looking for work in a now saturated job market or relocating their whole family to a new city 1,000 miles away. I feel bad for them but at the same time they have no one to blame but themselves. They got so used to making X amount of money that once it dried up there was no way they could stick it out.
I’m not saying you need to find a way to equal your day job income(although that is my goal eventually) but have a back up plan in place. Spend less than you make so that if you lose that income, you can use a combination of an emergency fund and small business income to tide you over for a few months or even a few years. You never know when your company is going to turn its back on you and leave you to fend for yourself. So why not be prepared?
Readers, what do you think about the situation that is happening to my co-workers? Is my employer to blame or do the employees share some of the responsibility for being so unprepared for a layoff?