How Layoffs Undermine Trust

It goes without saying that the “Great Recession” that has impacted much of the world has took a toll on millions of people. But material poverty and subsequent mental hardship have not been the only results of widespread joblessness and underemployment.

According research cited by The Atlanticthe firing of employees may be eroding trust for years to come.

Laurence’s study looked at a sample of nearly 7,000 individuals in the U.K. to investigate the psychological effects of being laid off. The question asked was, “Generally speaking, would you say that most people can be trusted, or that you can’t be too careful in dealing with people?” The answers ranged from “most people can be trusted” to “can’t be too careful” to “depends.” The respondents were asked this question at age 33, and then again 17 years later, at 50.

Laurence found that individuals who experienced a layoff were 4.5 percent less likely to trust even 17 years later. This effect was even stronger for individuals who placed a greater value on work and career, at 7 percent. “One of the striking findings of the research was that how being laid off affected someone’s social trust seemed highly dependent on their level of ‘work-centrality,'” says Laurence.

Perhaps it’s not surprising that those who hold work as important to both identity and self-worth are more sensitive to layoffs, but Laurence also found that being laid off eroded trust much more than being fired, having a contract expire, or quitting a job for personal reasons. “When people are laid off there is a sense of powerlessness about the situation, that it is out of their control, and that it is inherently unjust,” says Laurence.

I imagine this experience is all the more jarring for those who are laid off due to their higher skills or seniority — in other words their value and loyalty — have ironically made them liabilities, as they are “too expensive” to keep on the payroll. It plays into the growing cynicism people have towards businesses, which are increasingly leaning on their beleaguered employees to benefit the corporate bottom line, whether by by underpaying them, slashing benefits, freezing wages, and letting people go.

After all, it was not so much the obviously negative consequences of layoffs — lost revenue, hardship of starting over, etc. — that are the problem, but rather the feeling of “powerless” and unfairness that they imbue in their victims. Such sentiments are no doubt invoked among those who feel they are underpaid, underappreciated, and mistreated by the companies they work for.

Studies like this, which will no doubt need to be replicated, make me wonder what impact so many years of layoffs, underemployment, wage stagnation, and the like will have on societies down the road — especially among the young people who have had the misfortune of coming into the labor force during one of its most tumultuous and pessimistic periods.

What are your thoughts?

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