Layoff to Liftoff: Surviving Downsizing in the Tech Industry

Feel Neither Stigma, Nor Shame

The U.S. is seeing the largest reduction in jobs since the dot-com crash of 2001, when my first layoff happened. Over 250,000 tech workers were laid off in 2023 in the U.S. alone. In the first two months of 2024, nearly 50,000 more (myself included; this is my fifth layoff) joined their number. That means that a total of 300,000 out the estimated 4.2 million U.S. IT workers have been laid off over a period of 14 months. That’s one out of every 14 techies!

The primary goal of a layoff isn’t to remove the lowest performers; it’s to cut costs so that the company can continue existing. Instead of focusing on individual employees doing sub-par work, layoffs target whole departments or job categories in order to reduce spending. If you’re expensive, you’re a candidate to be cut. Worse still, the stock market rewards this behavior with increased share prices. On the day I was laid off, shares at my former employer went up nearly 4%; their price has since grown by over 20 dollars.

(My cover letters say that my last act at my last job was to significantly increase shareholder value.)

This is why a lot of people who were good at their jobs and even people who were considered to be superstars in their organization get laid off. Extreme performance, diligence, and loyalty won’t protect you. Consider the case of the former director at X (formerly Twitter) who was so dedicated that she slept at the office and even posted a photo — even she was laid off.

There’s a hidden blessing that comes with the layoff statistics and the daily drumbeat of dismal news: At this point, most people in tech personally know at least one person who’s been laid off. More people now see layoffs as something that eventually happens to everyone rather than something to be ashamed of. When you’re asked why you left your previous job in an interview, you can simply and truthfully say that you’re part of the current layoff trend.

Manage Your Money

You’ve been cut off from your source of income, and the current job market is extremely competitive. Consider the following steps and strategies to add financial certainty to an uncertain time.

Assess Your Financial Situation

Many people don’t like looking at their finances while they’re jobless, but you need up-to-date information on them. To borrow a term from the startup world, you’re trying to determine your runway — the amount of time you have (typically in months) before you run out of cash without additional funding. This involves doing the following:

• Review your savings: See how long it can carry you if you don’t change your spending patterns. If it’s less than six months, you’ll have to make some changes (see “Reduce or defer spending” below).
• If you have a designated emergency fund, draw from it first: After all, you’re now facing the emergency that you created the fund for (and by the way, congratulate yourself for having one — nearly one in four U.S. adults don’t). Your goal is to make it through your unemployment period with as little impact on your savings as possible.
• Review your expenses: Look at your bank and credit card records and identify your expenses, especially recurring ones. Separate them into two groups:
  • Essential: This includes things such as rent or mortgage, utilities, groceries, health insurance, prescriptions — in other words, the things you need to maintain life and health. This also includes payments for non-mortgage loans, such as your car loan, credit cards, and student loans.
  • Nonessential: This is everything else — dining out, entertainment, travel, and other discretionary spending. You should review any subscriptions you have; you might even find that you’ve been spending money on services you’ve forgotten about!

Reduce or Defer Expenses

Once you’ve assessed your financial situation, it’s time to take appropriate action. To continue with the startup runway metaphor, your mission is to extend your runway — that is, make your funds last longer:

• File for unemployment benefits if you are eligible. Do this as soon as possible! Some places (such as where I live) intentionally make the application process difficult, and it often takes time for your application to pass through the system and for your benefits to arrive. These benefits, in combination with an emergency fund, can drastically change your layoff experience.
• If you rent…
  • Talk to your landlord or property manager: Explain your situation and ask if they’d consider deferring rent, accepting partial rent payments for a limited time, or using your security deposit.
  • See if there’s rental assistance in your area: Check your local resources. Here in the U.S., for example, you might be able to find rental assistance at the U.S. Government’s Benefits.gov site, as well as through charities such as the United Way.
• If you have a mortgage, look into…
  • Forbearance: Mortgage forbearance is an agreement that you make with your lender to temporarily make smaller monthly mortgage payments or suspend those payments entirely. Forbearance is not forgiveness; you will eventually pay what you owe, including accrued interest. However, you will avoid missing a mortgage payment and the associated late fees. More importantly, the bank won’t foreclose upon your home.
  • Loan modification: Like forbearance, loan modification is an agreement that you make with your lender, but the agreement is to do something like lowering the interest rate or extending the term of the loan.
• Talk to your other creditors: Contact any creditors (organizations you owe money) and see if they are open to arrangements such as deferred payments.
• Drop nonessential expenses: This is the simplest way to extend your runway. Cancel subscriptions, see if you can put any gym or club memberships on hold, and consider downgrading your internet, cable, and mobile phone packages.
• Practice frugality: After dropping nonessential expenses, the next simplest way to extend your runway is to reduce your costs by living more frugally while you’re laid off. The suggestions in Nerdwallet’s frugal living guide are a good starting point.