Layoff Impact

Most of the millions of people laid off in the past 30 years have gone on to other jobs, says Paul Davis, assistant professor at the ILR School and human resource management expert.

Yet, virtually no research has examined the consequences of these layoffs on their victims’ future work behaviors, he said.

In his research, Davis examines victims’ reactions to layoffs, hoping to shed light on the long-term labor market impacts of an economy in which layoffs have seemingly become status quo.

In a first step toward unpacking how layoffs impact the broader American labor pool, Davis, along with colleagues Charlie Trevor of Wisconsin and Jie Feng of Rutgers, studied the employment patterns of a national sample of U.S. layoff victims.

Their conclusion? Layoffs encourage quitting.

Individuals are 65 percent more likely to quit a job that follows a layoff, according to their research. And, for those who have been laid off multiple times, quitting can be up to six times more likely.

Although workers often face lower pay, fewer hours and depressed job satisfaction in post-layoff employment, it is not declining job quality spurring victims’ quits. Davis, instead, points to an altered sense of loyalty.

Layoffs weaken the psychological tethers that bind individuals to future employers, freeing an otherwise contented employee to pursue better job opportunities, he said.

Conceding that employee replacement costs can be significant, Davis nevertheless cautions executives and other managers against shunning job applicants who have layoffs in their past.

To do so not only ignores an increasingly substantial segment of the national labor pool, it discounts a group expected to seek new skills and improve on past performance as a measure of protection against the trauma of additional layoffs, he said.

The study, published in the “Journal of Applied Psychology” in 2015, sampled 2,439 individuals working 12,035 jobs between 1978 and 2010. The number were collected as part of the National Longitudinal of Youth, a panel maintained by the Bureau of Labor Statistics.