As the pandemic drags on, the economic damage in the US is running deep and the unemployment and workforce systems are struggling to support the millions of newly unemployed workers. With our safety net systems on the verge of collapse, companies are continuing to lay off employees in droves. We often talk about the damage mass unemployment is doing to the economy overall and the unfortunate workers who lose their jobs, but what sort of effect do mass layoffs have on the companies themselves?
In major economic downturns, mass layoffs in the US are common and that is especially true this time around. Payroll and benefits are often the biggest expenses for any company and they are often the first place employers turn to cut costs, improve efficiency, and survive during difficult or uncertain economies. In the past, companies have frequently had reason to regret such moves, and permanent COVID layoffs are likely to be no different. In an ironic twist, trying to save a company by cutting staff has actually been shown to damage firms’ competitive standing as economic activity increases.
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