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Who Gets Laid Off First in a Recession?

Published in Recession Layoffs 3 mins read

During a recession, employees in industries highly sensitive to economic downturns and those in less critical or redundant roles are often among the first to face layoffs.

Recessions prompt companies to cut costs, and workforce reductions are a primary method. While no employee is entirely immune, certain sectors and positions are demonstrably more vulnerable to job cuts.

Industries Most Affected by Layoffs

Economic shifts disproportionately impact industries reliant on discretionary spending, capital investments, or fluctuating demand. These sectors typically experience immediate and significant workforce reductions when the economy contracts.

  • Retail: As consumer spending decreases, retailers face lower sales volumes, leading to store closures and reduced staffing.
  • Manufacturing: Reduced demand for goods, supply chain disruptions, and deferred investments often hit manufacturing hard, causing production cuts and associated layoffs.
  • Technology: While often seen as growth-oriented, the tech sector can be vulnerable due to its reliance on venture capital, advertising revenue, and businesses scaling back on new software or hardware investments.
  • Hospitality: Travel, leisure, and entertainment industries are directly impacted by reduced consumer travel and discretionary spending, leading to significant drops in hotel occupancy, restaurant patronage, and event bookings.

In contrast, certain industries demonstrate greater resilience during economic downturns due to the essential nature of their services or stable funding sources.

  • Healthcare: Healthcare services remain essential regardless of economic conditions, leading to relative stability in employment.
  • Education: Educational institutions, particularly public ones, often have stable funding mechanisms and consistent demand, making them less susceptible to immediate widespread layoffs.
  • Government Services: Government entities typically maintain consistent operations to provide public services, resulting in more stable employment compared to the private sector.

Factors Influencing Individual Layoffs

Beyond industry-specific vulnerabilities, several factors determine which specific individuals or roles within a company might be targeted during layoffs:

  • Role Criticality: Positions deemed non-essential to core operations or revenue generation are often prioritized for cuts. This can include administrative support, non-revenue-generating marketing, or roles whose functions can be absorbed by others.
  • Performance: Underperforming employees are generally more susceptible to layoffs, as companies aim to retain their highest-value contributors.
  • Cost-Benefit Analysis: Highly compensated employees might be targeted if their cost outweighs their perceived immediate value, especially if less expensive options exist or their responsibilities can be distributed.
  • Redundancy and Automation: Roles that become redundant due to organizational restructuring, technological advancements, or process improvements are often eliminated.
  • Departmental Impact: Departments facing budget cuts, declining project loads, or those not directly linked to critical business recovery efforts may see more significant layoffs.
  • Tenure: While not a universal rule, some companies may choose to lay off newer employees first ("last in, first out") due to lower severance costs or to retain more experienced staff. Conversely, some may target highly tenured, higher-salaried employees to save more significant costs.

Navigating Potential Layoffs

Understanding these dynamics can help individuals assess their personal risk during an economic downturn. Focusing on developing critical skills, demonstrating high performance, and understanding your industry's economic sensitivity can be beneficial strategies for career resilience.


More Vulnerable Industries/Roles Less Vulnerable Industries/Roles
Retail, Manufacturing, Technology, Hospitality Healthcare, Education, Government Services
Roles not directly tied to revenue generation Essential services, core operations
Roles easily outsourced or automated Highly specialized, critical roles
Underperforming employees High-performing, indispensable employees
New hires (sometimes) Long-tenured employees (sometimes)


Layoff and Recession Readiness
Understanding Job Market Trends