Are Layoffs Making You Nervous?

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Oh boy, am I glad I’m not an engineer anymore. Layoff announcements are coming fast and furious now. If I was working in the tech sector, I’d be very nervous. Luckily, I retired from my engineering career more than 10 years ago. I’m totally out of it and I don’t have any sense of how things are really going. I’ll check with friends who are still in tech and see what they think.

This round of layoffs seems like a big deal from the outside. It reminds me of the 1999 Dot Com bubble. Back then, many companies were slimming down at the same time. It was nerve-racking to go through these rounds of layoffs.

It wasn’t bad news for everyone. Some people knew the rainy days will come and they were prepared. Engineers are a resilient breed. In 2008, many of my old coworkers used the layoff as an opportunity to change their lives. My friend, David, left the tech sector and moved to the Midwest. He became self-employed and makes extra money as a landlord. My old manager, Tom, became a professor at a local community college. Others were able to find tech jobs as the industry recovered. Recessions are tough, but engineers are adaptable. We can survive them.

Also, the uncertainties gave me the push to think unconventionally. I became disillusioned with tech companies and the spark for FIRE was ignited. In 2012, I retired from my engineering career and became a SAHD/blogger. Life has been fantastic ever since. Layoffs are scary, but you can make lemonade out of whatever life throws at you.


Nobody likes layoffs. The loss of income is devastating to a household. A layoff can be especially tough during a recession because it is harder to find a new job. Companies can pick and choose from many qualified candidates. If you’re older or have some other issues, it will be even harder. Tech companies discriminate against anyone over 40. Young engineers work way harder for less money.

This is why you need an emergency fund to cover 3-6 months of living expenses. The stock market usually goes down during a recession. It’s a bad time to sell. 2022 is a particularly tough year to raise money because both stocks and bonds are down significantly. Cash is king in a recession.

It isn’t all gloomy, though. Most laid-off workers will get some severance pay. Although, you might be out of luck if your company goes bankrupt, like FTX. You can also file for unemployment if you’re laid off. These two things should help while workers look for a new job.

An anecdote from the tech world

Ok, I heard from one of my brothers. Chris is still working in the tech industry. He told me his company laid off about 15% of their workers a few months ago. Yikes! He survived that round, but nobody knows if there will be more layoffs. Morale is low and people are trying to find new jobs. Oh man, that’s scary. He has two little kids and he needs a stable income. Hopefully, he can hang on to the job.

Also, I read that the layoffs might not be as bad as the news made it sound. Tech companies hired too many new workers during the recovery in 2021. People were spending a lot of time online and companies made a lot of profit. They thought the income would continue to grow, but that prediction was wrong. The pandemic is over and people are spending money on restaurants, travel, and other IRL endeavors. Now, tech companies have to slim down to improve their numbers. Stock usually goes up as soon as a company announces a big round of layoffs. These layoffs reduce expenses and improve profitability. Great for executives and investors, but rough on the employees.

From what I understand, many companies are still looking for tech workers. Finding a new job should be manageable for now. However, it will become a lot more difficult if there is a prolonged recession next year. Things changed quickly, didn’t they? Earlier this year, everyone was talking about quiet quitting. Now, everyone wants to hang on to their job. I knew that was a bad idea. The employers always come out on top.

My advice is to aim for financial independence and get off the treadmill ASAP. Life sounds miserable in tech. right now. Those Twitter employees are having a rough time with the new boss.

Charts from FRED

Alright, let’s wrap up with some interesting charts from FRED (Federal Reserve Economic Data.) These charts are interactive at the FRED blog.

This first chart shows hires (red) vs separations (blue). During recessions, hires drop below separations. It’s pretty interesting to see how the data tracks recessions so closely. That spike in 2020 was crazy.

This second chart is really neat too. It shows the different kinds of separations – quits, layoffs, and others (retirement for example.) In a normal recession, layoffs gradually increase as the recession deepens. It tapers off as the economy improves. 2020 was a bit different because of the pandemic. Anyway, the current layoffs are very low compared to the historical level. Employers have a hard time filling jobs. The labor market still favors the workers for now. We’ll have to wait and see what happens in 2023. Hopefully, any recession will be a short one.

How are you feeling? Are you nervous about layoffs in your company?

Passive income is the key to early retirement. These days, I’m investing in commercial properties with CrowdStreet. They have many projects across the United States. It’s been working so well that I’m planning to sell our rental condo so I can invest more. Go check them out!

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image credit: Elisa Ventur

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Joe started Retire by 40 in 2010 to figure out how to retire early. After 16 years of investing and saving, he achieved financial independence and retired at 38.

Passive income is the key to early retirement. This year, Joe is investing in commercial real estate with CrowdStreet. They have many projects across the USA so check them out!

Joe also highly recommends Personal Capital for DIY investors. They have many useful tools that will help you reach financial independence.

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