By Kevin Nix | Managing Director, External Affairs and Communications, Mind Share Partners
C-Suite and HR leaders should be hoping for the best, but planning for the worst, regarding the looming debt ceiling deadline of June 5th.
If our elected officials can’t figure out how to pay the federal government’s bills, economic hardship is on the horizon, particularly for small businesses (analysts and government officials use some version of the word “catastrophic” to describe the impact). A default on U.S. debt, or even the threat of default, would erode confidence among investors and businesses, causing them to freeze hiring (and spending).
Moody’s Analytics estimates, in a worst-case scenario, more than 7 million jobs could be lost, with the hardest hit sectors being financial services, leisure, hospitality, and retail. Other “better-case” scenarios forecast job loss at 1-2 million.
News over the weekend showed progress on raising the debt ceiling and spending cuts, but Congress still has to vote on the proposal. Of course, the hope is catastrophe will be averted, policymakers will reach a deal soon, and we all can breathe a sigh of relief. But given the state of American politics, companies need to prepare now, and they should think through the entire impact on their workforce.
Mass layoffs—and how employers choose to navigate the situation–will inevitably take a toll on the mental health of those impacted. This includes those workers laid off and those left at work to pick up the pieces. Research shows these decisions can cause anxiety, depression, rumination, alcohol misuse, problematic eating habits, and overwork in remaining workers. Layoffs shock the system, fueling grief, distrust, and disengagement as Mind Share Partners’ Principal Bill Greene wrote in March amid the ongoing waves of layoffs in tech and financial services sectors.
“‘Employment at will’ isn’t abstract anymore,’ Greene writes. ‘Workers have seen how this idea plays out in real-time. All features designed to attract and keep employees—catered lunches, good coffee, on-site gyms, and other amenities—now look like window dressings. The remaining employees will be wary and look for new evidence about the ‘real deal’ with the organization going forward.’” For the leftover employees, Greene advises managers to follow three ways to invest in their wellbeing meaningfully.
How leaders choose to navigate economic uncertainty and cost-cutting measures comes amid an ongoing shift in workers’ relationship with work and their employers. In our research, 50% of workers have left roles due, at least in part, to mental health reasons, and a third did so voluntarily, and job-seekers are increasingly expecting employers to support mental health.
Should layoffs be necessary in the coming weeks due to our country’s self-inflicted damage, individual companies can and should mitigate the fallout on their workforce.