COVID-19 has been hammering the U.S. economy since domestic cases started multiplying in March, and struggling companies are facing some very hard choices as a result. One such decision is how to cut costs, and unfortunately, layoffs are often the answer.
But those layoffs don't necessarily need to be painful from both an employer and employee perspective. That's because some workers may be willing to voluntarily get laid off right now. But is that the right decision for you?
The upside of voluntary layoffs
There's a reason companies tend to offer voluntary layoffs, or buyout offers, even if doing so costs them more money than regular chopping block-style layoffs: They're better for morale. Workers who don't have to live in fear of losing their jobs may be better able to focus and maintain productivity, all the while staying motivated to perform well.
Furthermore, voluntary layoffs eliminate much of the unpleasantness associated with letting people go out of necessity. If workers are willing to part ways amicably, it saves HR professionals a world of stress.
Of course, voluntary layoffs can be costly in their own right. Usually, in exchange for being let go, employees are offered some sort of financial incentive -- say, several months' pay or a certain parting bonus. But in some cases, those costs can be recouped over time, especially if senior or high-level employees agree to a buyout and are then replaced with lower-cost labor.
Should you agree to a voluntary layoff?
It's one thing to accept a buyout package at a time when the economy is thriving. But right now, U.S. unemployment is at 13.3%, and the job market is not looking good. As such, volunteering for a layoff may not be the smartest move.
But it's also not the worst move, either, under the right circumstances. If you've been struggling to balance work and child care responsibilities, giving up your job but retaining some pay could buy you a near-term reprieve, allowing you to focus on personal needs without the stress of looming deadlines.
Granted, this probably only works if you're not the sole breadwinner in your household and you don't have to worry about health insurance. But say you're the non-health insurance source in a dual-income household and are offered a buyout package worth five months of salary plus accrued vacation time. That could be enough to largely get you through the end of the year, at which point the economy may be in much better shape. Meanwhile, not having to work could help you better perform your parental and household duties at a time when summer programs have been canceled left and right and it's still unclear as to whether school will be in session come fall.
Furthermore, if you're on the cusp of retirement and have been contemplating pulling the trigger, accepting a buyout could make it possible for you to leave the workforce with less financial stress. And if you're miserable at work for reasons having nothing to do with COVID-19, a voluntary layoff could be just the thing that allows you to make a fresh start -- again, provided the financial circumstances are right.
Ultimately, agreeing to a layoff during a period laden with recession-level unemployment is a risky move, but it's also one that might pay off. If you're offered a buyout and aren't sure what to do, ask yourself how likely you are to wind up being let go regardless of whether you volunteer or not. If your employer is clearly struggling and you're in an industry that's been hard-hit by COVID-19, like travel or entertainment, you may be better off accepting a package now than waiting for your company to run out of money and lay you off out of absolute necessity. Unfortunately, that's a reality a lot of businesses might face this year.