New Research Reveals Growing Layoff Anxiety and Ways to Combat It

Perceptyx conducted two studies examining how rising layoffs affect employee experience and well-being, and what organizations can do to support employees who remain.

Both studies confirmed a pervasive state of anxiety among workers, with measurable effects on business performance, well-being, and personal relationships. Here are the key findings from this research, along with strategies and recommended actions for HR leaders.

How widespread have layoffs become?

Layoffs have swept across tech, retail, government, and nonprofit sectors, sparking layoff anxiety in many moreindustries. More than 197,000 tech jobs have been lost since January 2023, with 687 companies reporting layoffs.

Overall job openings, a key indicator of labor demand, fell by 384,000 to reach 9.59 million at the end of March, marking the lowest level seen since April of 2022. The professional and business services sector reported a decrease of 135,000 job openings, while retailers noted a decline of 84,000 vacancies. At least for the time being, layoffs appear to be here to stay. Nevertheless, the labor market remains tight with 1.6 open roles for every unemployed person, and the projected labor shortage due to shifting demographics continues to be a concern.

How widespread is layoff anxiety in the workplace?

Layoff exposure has increased significantly between December 2022 and May 2023:

• Organizational Layoffs: Increased from 27% to nearly 40% (4 in 10).

• Personal Job Loss: Increased from 13% to 18%.

• Loss of Direct Supervisor: Doubled from 1 in 8 to 1 in 4.

Job loss jitters were present in more than half of the employees in nearly every subgroup studied, with the most prominent concerns among young, white-collar fathers. Subsequent research has also shown that layoff anxiety is more than double among remote workers compared to in-office employees, and that younger workers, particularly Gen Z, report some of the highest levels of concern.

Open, clear communication is one strategy to mitigate layoff anxiety. One notable finding was that employees display higher levels of worry when there was speculation about layoffs versus when their organization had issued official communication about actual cuts. Ninety percent of employees who heard reduction-in-force rumors had some layoff anxiety. That's 8 points higher than those working in organizations that had actually executed layoff actions, highlighting the importance of communicating not just frequently, but authentically to limit rumor-mongering.

How does layoff anxiety affect business performance?

Overall, U.S. employees are increasing their job-seeking behavior. In December, 56% of employees reported at least one job-seeking behavior in the 30 days prior to the survey. That number has increased to 64% in May.

Anxiety compounds this problem. Nearly 2x as many employees say that recent layoff news has increased their desire to look for a new job versus decreasing it. This number jumps to nearly 3x for employees working in organizations that have had recent layoffs.

Employees with layoff anxiety are 50% more likely to indicate that they don’t intend to be with the organization this time next year. While it makes sense when layoffs are occurring that employees will be looking elsewhere, those employees with anxiety are the ones most likely to look. Among employees with no anxiety, 62% exhibited no job-seeking behavior in the past 30 days, and 2 in 3 plan to do even less in the next 60 days. Meanwhile, among those with high anxiety, 79% exhibited job-seeking behavior in the past 30 days, and more than 7 in 10 plan to increase their efforts over the next 60 days. This behavior tracks with anxiety level, with more anxious employees being more likely to seek new jobs.

How does layoff anxiety affect employee well-being?

The presence of anxiety also relates to increased mental or physical exhaustion at the end of the working day. Employees experiencing layoff anxiety are 1.5x as likely to feel physically exhausted and 1.3x as likely to feel mentally exhausted. These differences double when people report high anxiety. Whether an employee has been exposed to layoffs at their own company, or just heard about recent job cuts in the news, they report negative effects on their well-being. 1 out of every 4 employees reports periods of anxiety, low energy, and bouts of sadness.

Unfortunately, these same employees have also had trouble maintaining healthy behaviors that may help to mitigate some of the negative effects of anxiety. Among the employees studied:

• Nearly 15% have reduced or stopped exercising.

• 1 in 4 has experienced a new onset of sleep disruption.

• Even employees reporting no job loss worries have engaged in negative coping behaviors such as substance abuse or overeating, with about half having engaged in one such behavior and 18% engaging in two or more.

Three ways to reduce layoff anxiety

If your organization has conducted layoffs this year, is considering them in the near term, or just attempting to maintain business in the face of tough economic news around you, what strategies can you use to mitigate the layoff anxiety of your employees?

1. Regularly communicate information about the health of your business. Layoff survivors who reported open communication about layoffs and furloughs were more than twice as likely to be fully engaged than those whose organizations did not communicate openly. The same was true for employees who were able to ask questions to fully understand the changes and resulting impacts on the organization. Keep in mind that layoff anxiety persists even in stable organizations because employees absorb news about cuts happening elsewhere. Proactive communication about your organization's health can counter external signals that fuel worry. This continuous conversation with employees is equally important when layoffs aren’t on your radar. Opening a dialogue creates an environment where difficult conversations are not only OK, but encouraged. According to earlier Perceptyx research, employees are 2.5x as likely to be fully engaged if their workplace is a safe place to ask questions when they don’t understand a decision, and twice as likely to be fully engaged if they can speak up about things with which they don’t agree.

2. Lay the foundation for employee and organizational resiliency now, not just when stress is high. If you're currently reducing the size of your workforce, it’s not too late. Organizations can take specific steps to support employees and ensure you're not further decreasing employee well-being by overloading your layoff survivors. Of those “survivors” of recent workplace layoffs, 61% say team members are taking on increased workloads to compensate for those who were cut and the same percentage have additional worries about being able to hit their goals for the year. For organizations not currently contemplating layoffs, doing the work to support employees before they are stressed will help mitigate negative health effects when stress comes, whether in the form of a layoff or something else. Pacing work appropriately, offering flexible schedules, and providing tools and support to help employees handle stressful situations are all keys to minimizing a harmful impact on health and well-being. Equipping managers to encourage proven coping strategies, such as maintaining supportive relationships, prioritizing physical health, and practicing self-care during periods of uncertainty, can further protect employee well-being before a crisis arrives.

3. Listening is even more important in tough times. Employees have important perceptions about their workplace experience, and not just during a planned survey period. A recent Perceptyx study of HR professionals confirmed this: more than 60% said they would survey and formally listen to employees more during a recession, not less. That’s why it’s important for organizations to have a comprehensive yet adaptable listening strategy that reaches employees in a variety of ways. However, listening alone isn’t enough — organizations must also use that data to act and make decisions. When employees report action, they are nearly twice as likely to want to stay, want to be an advocate, and feel pride and motivation to do good work. As reaffirmed by our latest research on employee listening, organizations that listen and act well can see around corners and adapt rapidly to change. A mature listening strategy, supported by a world-class listening platform and people analytics expertise, allows for a rapid organizational response to important topics as they occur, without waiting for scheduled survey events.

How Should HR Leaders Prioritize These Actions?

Layoff anxiety remains a persistent force in the modern workplace, with research showing that 1 in 4 employees feel insecure about their job due to the current economic climate. Organizations that commit to open, transparent communication, build employee and organizational resilience before stress peaks, and maintain a consistent listening cadence will be better positioned to protect employee well-being, workplace relationships, and overall performance.

Frequently asked questions

How do you cope with layoff anxiety?

Perceptyx research found that 90% of employees who heard reduction-in-force rumors reported some layoff anxiety. To cope with layoff anxiety:

• Maintain exercise and sleep routines.

• Lean on social support.

• Limit passive news consumption.

• Focus on controllable actions.

• Seek professional help when needed.

For HR leaders, frequent, authentic communication remains the highest-impact organizational lever for reducing layoff anxiety.

Is being laid off traumatic?

It can be. A layoff can remove income, structure, relationships, and identity. Perceptyx data shows that employees with layoff anxiety are 1.5x as likely to feel physically exhausted and 1.3x as likely to feel mentally exhausted, 1 in 4 reported anxiety, low energy, and sadness, 1 in 4 experienced new sleep disruption, and about half engaged in at least one negative coping behavior. The emotional impact does not require a personal layoff, and employees may need professional help if these reactions persist.