8 Steps to Take if You’re Laid Off

It can happen to anyone: You have a steady job, a solid budget and you’re even saving a little money. The future looks rosy! Then, your boss delivers some unexpected news: “Sorry, but we have to lay you off.”

With unemployment in the U.S. at a record low of 3.5% in February 20201, more than 1 in 10 people experienced that exact scenario when the COVID-19 pandemic hit. Unemployment numbers rose to 14.7% in April, a number comparable to the jobless rate at the height of the Great Depression. Some people were furloughed, which meant that they were technically still employees and expected to return to work in the future, but no longer received a paycheck.

It doesn’t always take a worldwide crisis to prompt layoffs. Downsizing, restructuring, closings or even automating jobs can cut down the workforce. So, what do you do if you get laid off, furloughed or your hours are reduced? There’s plenty of hope if you take these 8 steps:

1. File for Unemployment

Unemployment benefits and requirements vary from state to state. In Arizona, the eligibility requirements include being unemployed through no fault of your own (layoff, furlough, etc.) and meeting the state’s minimum wage requirements. See the Arizona Department of Economic Security website for unemployment insurance details.

Your unemployment benefit amount is based on a percentage of your earnings, but the total weekly amount you can receive is capped. Under the CARES Act (Coronavirus Aid Relief and Economic Security), workers were eligible for up to an additional $600 per week through July 25, 2020.

2. Make a New Budget

Already have a budget in place? Give yourself a checkmark for adulting like a pro! Without a regular income, you’ll likely need to make some adjustments to that budget. And if you don’t have a set budget planned out, now’s the time — without money flowing in, it’s more important than ever to plan out every dollar you spend. First, drill your budget down to the bare-bones essentials: food, shelter, utilities, transportation, etc.

With extra time on your hands, it might be tempting to keep those Netflix and Hulu subscriptions alive. But if your emergency fund isn’t exactly overflowing, consider cutting down on subscription services and other non-essentials in categories like clothing, entertainment and dining. The average American dines out about six times per week2. Looking at Arizona’s average amount spent, that’s $2,795 a year you could be saving by not eating at restaurants!

3. Call Your Creditors

Next, look at the monthly payments that would typically appear in your budget — for example, car loans, student loans, medical bills and even your mortgage. Each of these bills comes from a creditor you financed the loan or transaction with. When you’re laid off, you may struggle to pay some of these recurring transactions.

Like your mother, your creditors want to hear from you. If your income changes, contact them as soon as possible — before you miss a payment. If you’ve been paying on-time and have built a good relationship with a lender, they are more likely to work with you on alternatives such as deferments, forbearance or temporarily reducing your monthly payment. Keep in mind that these options are temporary, and you are still responsible for the loan amounts as well as interest you accrue during this time. Check out our blog on skipping a loan payment for more info on how it works.

4. Work Out Your Benefits

Nationally, nearly half of people get benefits through an employer.3 Here in Arizona, that number is slightly lower. If you’re on Medicaid, Medicare, military insurance or a personal plan, you can continue to use that coverage during your period of unemployment. If you’re in the 44% who have medical insurance, dental and/or vision coverage through your workplace (or your spouse/significant other’s), you’ll need to find coverage elsewhere after a layoff. Note that furloughed employees may retain benefits, and some employers will continue coverage for a short period as part of a layoff severance package.

If you lose benefits after a layoff, options include:

  • COBRA (Consolidated Omnibus Budget Reconciliation Act): Under COBRA, you may be eligible to continue your current plan for a cost if you lose your job.
  • Purchase an individual or family plan through a private insurer.
  • Find and purchase a plan through the national Health Insurance Marketplace: These are options provided under the Affordable Care Act.

5. Check in with Your Network

When you’re looking for a new job, look beyond job boards. Studies show that as much as 85% of job hires are made through networking!4 So, if you find yourself out of work and looking for a new gig, start connecting with people in your close and extended networks. Give former colleagues a call. Dust off your LinkedIn profile and add some new posts. Follow companies and brands you admire on social, so you’ll be the first to see their job-related posts.

Don’t limit yourself to business contacts, either. A friend or family member may have connections outside your circle, and as someone who knows you well, they may be more motivated to send job info your way. The bottom line is that reaching out to others who know your work well can only help your chances of landing the perfect new position. While expert opinions differ on how big a role networking plays in hiring practices, there’s one thing they all agree on: networking is important!

6. Find Out Who’s Hiring

Ideally, you may want to find a similar position to the one you were laid off from, or one that’s even better! But in lean times or when jobless rates are high, the desire for a “great fit” may need to be kicked down to “good enough for now.” Remember that you can always move up within a company if you take a slight downgrade in position. And taking a temporary job, or one that’s not the best fit, doesn’t have to end your search for the perfect position.

Also consider how your skill set could translate to another industry. For example, if you were a data analyst for a construction business, those skills could be equally useful in the banking industry (hint: they can!). If you are having difficulty finding something within your career choice, look at the companies that are hiring right now. Tip: Finance expert Dave Ramsey’s blog has some info on industries that have been hiring during the coronavirus pandemic.

7. Consider a Side or Temp Gig

If your hours have been cut, or if you were let go and haven’t landed your dream job yet, think outside the full-time, 9-to-5 box. Could you put some of your skills to use at a temp job? How about a freelance gig?

Sites like Fiverr, Upwork and Toptal connect people with paid freelance opportunities in a variety of industries. While many sites cater to tech and creative professionals, there’s literally a site out there for every type of paid gig from dog walking to furniture assembly. Also, tap into that network of yours for side work while you’re on the hunt for a new job — you just might be surprised who will pay you to grocery shop or pull their weeds!

8. Be Patient

Try not to get frustrated if you don’t get a job quickly. According to Indeed.com, it takes an average of nine weeks to find a new job.5 That includes time submitting resumes, applying to job postings, reaching out to your network, sending interest letters, doing interviews and eventually landing a job offer. Keep in mind that time frame is in a healthy economy! If unemployment is high and hiring is more competitive, or if you are at a higher level or in an industry where jobs are scarce, it may take much longer.

Moving Ahead After a Layoff

Getting laid off isn’t anyone’s ideal, but sometimes it’s inevitable. And it isn’t your fault! Our eight steps can help guide you along the transition from layoff through getting unemployment, avoiding financial fallout, job searching and more.

Be patient with the process, be kind to yourself, and understand that it takes time to recover after a layoff. Let yourself feel the frustrations as much as you do the joy of getting a response from a potential new employer. Remember that chances are excellent that you’ll eventually get a new job — and things will get better when you do!

1https://abcnews.go.com/Business/us-economy-lost-205-million-jobs-april-unemployment/story?id=70558779
2https://www.businessinsider.com/what-people-spend-on-dining-out-2019-8
3https://www.kff.org/other/state-indicator/total-population/
4https://www.linkedin.com/pulse/new-survey-reveals-85-all-jobs-filled-via-networking-lou-adler/
5https://www.indeed.com/career-advice/finding-a-job/how-long-does-it-take-to-find-a-job#

The material presented here is for educational purposes only, and is not intended to be used as financial, investment, or legal advice.