Is this a Recession or a Correction?
Conversations have surrounded the topic of a recession since the middle of last year. Countless theories and predictions have insinuated that we are on the brink of one. With the fear of recession comes the undeniable fear of job security. The news of mass layoffs at companies like Meta, Amazon, Google, etc., may make it seem that this fear has already come to fruition.
Let’s think about what a recession is. The formal definition for recession is, a period of reduced economic activity. We also know that leading into a recession, there are indicators. Some indicators of a recession include:
- A decline in real income
- Negative real GDP (Gross Domestic Product)
- A high rate of unemployment
Yes, we are seeing some mass layoffs, and yes, we are currently experiencing inflation. But, we need to think which industries these layoffs are happening in and why. As compensation consulting experts, we want to dive into what is happening and why this could be a correction and not a recession.
The mass layoffs so far seem to be isolated to certain companies and industries. What we’re seeing is mostly tech companies that over-hired during the pandemic while people were stuck at home. Now that people are returning to pre-pandemic routines, these companies are correcting and winding back.
That being said, layoffs are not an issue for every industry. Some industries, such as healthcare, are still struggling to find workers. This industry still has more open positions than qualified workers. So, if the thought of a recession made you think that employers will gain their power back in this market, that’s not necessarily true. Employees have come to the realization that commitment is a two way street, and the threat of a recession will not change that.
Is the possibility of a recession giving employers false confidence?
Once again, employers need to accept that this era of employees knowing their worth is not going anywhere, even with a looming recession. So, please don’t hold onto the belief that a recession inevitably means that the labor market will return to “normal”.
Why employee power will survive a possible recession
Even with uncertainty in the economy’s future, an employee does not owe you their commitment. Commitment has to be earned. Employees want to work where:
- They are fairly and properly compensated
- They are trained and set up for success
- They can have a healthy work/life balance
The mindset of employees has shifted and that is something that is not going to be undone. People want to work somewhere that values them, and not where they get a pizza party instead of a raise. So, employers, we ask you not to look for a recession as a possible get out of jail free card.
Whether there is a looming recession or we are seeing corrections from decisions that were made during the pandemic, one thing remains constant; employees are no longer settling for less.