When Does Your Salary Become a Threat to Your Job Security?
While there have been massive recent layoffs — especially in the tech industry — inflation, a potential recession and an uncertain economic landscape are also affecting other industries, making many employees anxious about what 2023 holds for them.
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The data certainly gives pause: In 2023, 61% of business leaders say their organizations likely will have layoffs, and 57% of those people also estimate that 30% or more of the workforce will be laid off, according to a ResumeBuilder report.
The report also found that 70% of companies are likely to implement hiring freezes in 2023, 79% of business leaders say they’re likely to fire “quiet quitters” and a whopping 74% of business leaders said it will be easier to fire poor performers due to employees losing bargaining power.
But are there specific age brackets, salaries or positions that are most likely to be affected?
Plus, other than losing your job, how does a layoff hurt you?
High Pay Can Make You a Layoff Target
According to some experts, layoffs, which can be devastating to employees, often come with seemingly no warning or rationale. In some cases, entire units are shut down and jobs are cut with no consideration of job performance, talent or tenure at the company, said Bobbi Rebell, CFP, founder of Financial Wellness Strategies and author of “Launching Financial Grownups.”
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“In some cases, higher compensation, regardless of performance, can make an employee more likely to be targeted in a layoff,” Rebell said. “While there are laws protecting workers based on age and other factors, if a job is eliminated as part of a larger workforce reduction, it can be harder to prove discrimination.”
Yet, because layoffs have impacted such a wide range of industries in 2023, it’s difficult to identify a specific salary range that would put the average American worker at risk, said Cody Harker, head of data and insights at Bayard Advertising.
For example, arts, entertainment and recreation workers, with an average salary of about $55,000, are historically the first to be let go when times are tough, Harker said.
“Meanwhile,” Harker said, “the tech layoffs that continue to generate headlines are primarily impacting roles with average salaries closer to $150,000 — software engineers and computer service workers.”
According to Harker, the sectors most likely to suffer large-scale layoffs are the ones that tend to offer nonessential services, which historically have included:
- Arts, entertainment and recreation — average salary of $55,000
- Construction — average salary of $75,000
- Professional and business services — average salary of $82,000
- Information — average salary of $100,000
- Other services — average salary of $62,000
When employers do need to make cuts, Harker added, they often do so with tenure in mind.
“Typically this puts the newest hires at the highest risk, as well as longtime employees who might be considered overcompensated for their role after years of pay raises,” he said. “Generally speaking, the newer you are or the farther your salary deviates upward from the average, the higher the risk of separation.”
How To Prepare for a Layoff
In terms of how workers can prepare themselves for potential layoffs and alleviate anxiety, Rebell said everyone should always be updating and upgrading their skills.
“That gives decision makers more options to move the employee to other areas of the company that may have openings,” she said. “It also gives the employee more options in terms of having prospects for new job opportunities.
Rebell added that it can also be beneficial to nurture relationships both at your current company and with anyone you have worked with in your career, including past and current clients and former classmates.
“Facetime can be a huge advantage with so many people working remotely, so take the time to make plans in person if the opportunity presents itself,” she said. “While layoffs and hirings should be driven primarily by the business’ needs, decisions are made by humans, and having that personal connection can often make a difference.”
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