Microsoft Makes Biggest Layoffs in Years. Take These Steps if You're Worried About Your Job

If job loss headlines are keeping you up at night, taking action might help.

Microsoft is the latest tech giant to announce significant job cuts, with plans to lay off 10,000 workers in the coming months. The cuts represent about 5% of the workforce, and, according to the New York Times, it's the biggest round of layoffs the company has made in eight years.

What's driving Microsoft's layoffs

In a note to staff, Microsoft Chairman and Chief Executive Officer Satya Nadella said, "We’re living through times of significant change." He explained there were several factors behind the layoffs, one being economic uncertainty -- parts of the world are already in a recession and others are preparing for one. Plus, customers who spent more during the pandemic are now cutting back. Finally, on a positive note, he said that advances in AI mean a new wave of computing is emerging.

The job loss announcement comes as other tech and banking companies shed jobs. Amazon, Meta, and Twitter have all cut back on staff recently, as have Goldman Sachs and Morgan Stanley. As of yet, other sectors have not been so affected. But the fear is that cost-cutting measures will spread to other industries, particularly if the U.S. enters a recession.

What to do if you're worried about your job

News of job cuts is always difficult, and it's not surprising people are worried about their jobs. The more prepared you are financially and career wise, the more able you'll be to handle changes in your job situation. Here are some steps to take.

1. Check in on your career

It's always easier to take stock when you're still in a job as there's less pressure. The last few years have seen a lot of shifts in the way people view their careers, so take some time to think about what you actually want. Do you want to stay in your current job? Have you been considering switching to something new?

If you want to stay in your job, it might be worth talking to your manager to see if you can take on any extra responsibilities, or simply stress your commitment to staying in the role. They may not be able to reassure you about the future, as none of us know what might happen. But at least they'll know you're not planning on leaving.

If you want to change jobs, think about what you want to do and what steps you'd need to take. Perhaps you want to make your side hustle into a main source of income. Make a plan for how that might happen and what milestones you'd need to achieve along the way. If you're looking to move to a different company or a different career altogether, what skills will you need and how might you get them? Who could help you with advice or contacts?

2. Dust off your resume

Like career planning, resume writing is easier to do when you're still in a job. Even if you don't want to leave your existing position, there's no harm in updating your resume. While you're at it, see if there's any new information you can add to your LinkedIn profile. Think about transferable skills that might make you attractive to potential employers. It's also worth reaching out to your professional network, as those connections can prove invaluable in a job hunt.

3. Understand any health and retirement benefits you're receiving

If you have a work 401(k) plan, there are a couple of things you can do with your retirement money if you leave the company. You can leave it where it is, switch it to your new company's plan, or roll it over to your own individual retirement account (IRA). You can also cash out completely, but that can be costly.

If you have health insurance through your company, something called COBRA can entitle you to stay on the plan you're on after a job loss, but it can be expensive. Look into what options are available on both fronts. You don't need to make any decisions now, but it's good to have these things on your radar.

4. Stock up your emergency fund and pay down debt

An emergency fund with three to six months' worth of living expenses can be an excellent cushion against any financial emergency, including job loss. Some advise to sock away even more, especially with a potential recession looming. If you don't have as much in your savings account as you'd like, make this a priority.

If you're carrying high interest debt, such as a credit card balance, it can eat into your living costs. Even more so if you stop earning as much as you used to. Check out some of the different ways to pay down debt and see what steps you can take today to reduce your balance.

Whether it's your emergency fund or debt payments, you may need to reduce your current expenses to put more cash toward building financial security. Take a look at how much comes into your bank account each month compared to how much you spend. The gap between the two is the money you can use for saving or debt, so look for ways to spend less or earn more. A budgeting app might help you identify areas you can cut back a little.

Bottom line

It's normal to worry when big companies are laying people off. Try to remind yourself that economic downturns are a normal part of every cycle and they do pass. Plus, for all the doom mongering, the U.S. may still be able to avoid a recession. And even if we do enter troubled economic waters, it will have been one of the most anticipated downturns ever. That means a lot of businesses are as ready as they'll ever be. Try not to panic -- you made it through the chaos of the pandemic and last year's price hikes, and you'll get through whatever 2023 brings, too.