The number one rule in a recession is just don’t get fired. It’s the most important thing you can do. You want to hold on to whatever job you have as long as possible. And this is because there is a little thing economists talk about called unemployment scarring.
The longer you’re unemployed, the longer it’ll impact your earnings even long into the future. It actually sets your career trajectory to a lower level. So if you can avoid becoming unemployed, that will prevent unemployment scarring, it’ll prevent long-term negative impacts of having ever been unemployed. But the longer you are unemployed, the longer that negative impact will be there, potentially for your entire career. One of the most important things you could do if you think you’re about to lose your job is to try to be one of the first rats off the ship. You want to make sure that if you think layoffs are coming, you can try to jump to another lily pad and make sure you land there. You want to make sure there’s something else waiting for you if you can get it. So trying to preemptively cut off the period of unemployment can help also prevent the unemployment scarring and can prevent the big downside that could impact your long-term wages or career. Of course, if you are looking around for another job, you want to make sure that you don’t leave a job you have until you have an ironclad agreement. The worst thing you could do was leave a company where you think you might be laid off to go to yet another company who might rescind on your offer and then you end up unemployed. And that happens during a downturn. It happened in 2001, it happened during the recession 2007 to 2009, and it will continue to happen in the future, where people are given offers and the companies rescind those offers, they essentially take them back. So you want to be very careful if you are switching companies to a new job that you make sure the job is really there.
Now if you do become unemployed, I have some somewhat controversial advice for you. And that is, take a job as soon as you can, even if it means you get paid less. The reason is, the quicker you get a new job, the quicker you can begin building a reputation there and be getting valuable experience. Your biggest asset is you. And making sure you’re continuing to build new skills maintains your value as a potential worker, as an employee. The sooner you can get reemployed, the higher the chances that you won’t have a long-term negative career impact from unemployment scarring.