In times of economic downturns, layoffs become an unfortunate reality for many. However, the burden of these layoffs is not borne equally across all demographic groups. Historical data and studies have consistently shown that certain populations are more vulnerable to job losses than others.
Disproportionate impact of layoffs by demographic group
- Race and Ethnicity: Systemic discrimination and workplace biases can lead qualified individuals to be overlooked and unfairly let go during economic downturns. This is especially true for Black and Hispanic populations, who have historically faced higher unemployment rates compared to their White and Asian counterparts. In 2023, these disparities continue to exist as Black and Hispanic adults face unemployment rates of 5.8% and 4.6%, respectively, while White and Asian adults have unemployment rates of 3.4% and 2.9% (U.S. Bureau of Labor Statistics).
- Gender: Women, especially those in certain age groups or with caregiving responsibilities, often bear the brunt of layoffs. Those who take on primary caregiving responsibilities may opt for more flexible part-time jobs or roles that might be deemed “non-essential” during downturns. In the tech industry, the disparity in layoffs is especially prominent as women make up nearly half of those laid off in recent cuts, despite women holding only about a quarter of tech jobs.
- Disability Status: In 2022, unemployment rates for individuals with disabilities was as high as 7.6% as compared to 3.5% for individuals without a disability (U.S. Bureau of Labor Statistics). Misconceptions and biases about the capabilities of individuals with disabilities often lead to many qualified candidates being overlooked for positions or laid off more readily. Further, when organizations fail to provide appropriate accommodations, employees with disabilities may be hindered from performing their best, which can unfairly place them at a higher risk for layoffs.
The disproportionate impact of layoffs on certain demographic groups underscores the need for more equitable policies and practices. Below are some strategies companies can adopt to ensure fairness during the layoff process.
Strategies for fair and equitable layoffs
- Use objective data for decision-making: To reduce the impact of subjective judgments and bias, use documented performance evaluations, productivity metrics, impact data, and other objective metrics to make informed decisions. Clearly communicate the criteria used for determining layoffs to foster transparency, trust, and accountability for fair practices.
- Consider diversity ratios: Before making final layoff decisions, examine whether certain groups of employees are disproportionately affected over others. For example, to determine whether layoffs are equitable by gender, compare the percentage of women scheduled for layoff to the percentage of women in your workforce. If the percentage scheduled for layoff exceeds the percentage within your workforce, consider whether this might be the result of unintended bias. If so, consider ways to adjust your layoff criteria to limit the impact on women while also meeting your organization’s needs.
- Diversify decision-making teams: Establish diverse decision-making teams to reduce biases and ensure multiple perspectives are heard. Managers and others involved in the layoff process should be trained in unconscious biases, labor laws, and regulations related to layoffs to ensure fairness and compliance. Organizations may also consider involving a third-party consultant or legal counsel to assist in the process.
- Support affected employees: Getting laid off can cause a great deal of stress and anxiety. To help affected employees navigate this difficult transition process, organizations should offer fair severance packages that include compensation, benefits continuation, and outplacement services. Providing access to counseling services or support groups is also valuable for helping employees cope with the emotional toll of layoffs.
- Check for trends: During the layoff process, consider taking proactive measures to collect data on who is being laid off and how layoffs impact team demographics. Regularly review this data to search for any patterns that may indicate inequities. Obtaining employee feedback about the layoff process is another valuable way to gain perspective and identify areas for improvement. Based on the data and feedback, organizations can make necessary adjustments to ensure layoffs remain fair and in line with company values.
During seasons of layoffs, diversity, equity, and inclusion (DEI) efforts are often pushed to the side and ignored. Using data as the foundation for people decisions is critical to ensure fair and equitable layoffs. Without data-driven processes, many organizations inadvertently make layoff decisions that ultimately exacerbate existing inequalities in the workplace. Layoffs can have a significant impact on your company culture, affecting those who were laid off as well as those who remain at the company. In these times, it’s more important than ever to prioritize company culture, employee engagement, and data-driven DEI and people strategy.
Arbor enables leaders to easily capture, analyze, and benchmark DEI outcomes. Through integrations into existing HR and applicant tracking systems, Arbor’s dashboard helps employers easily visualize workforce trends to ensure fair practices. Arbor enables leaders to compliantly capture employee-disclosed demographic data through self-ID surveys, benchmark outcomes against industry averages, and easily export into reports for shareholders.