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Help My Career: Does the ‘last hired, first fired’ rule still hold true? Read this if you’ve just landed a new job amid fears of a looming recession

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Julian Hurst was ready for a change after more than a decade of work as a lawyer. After months of networking, the 44-year-old Austin, Texas resident pulled off a career pivot to a software startup in the legal technology sector.

“For me, it was like an answer to a prayer,” said Hurst, noting that he’s always been drawn to innovation.

His new job, a contract position in product engagement, began around early spring, just before worries about slowdowns intensified across the country, and in the tech sector specifically. But roughly a month ago, as the broader economic mood soured, Hurst was told his current contract was on pause for an undetermined period.

Now Hurst is figuring out his next move. He’s confident he’ll land just fine, either back at the company or elsewhere.

In the current job market, Julian Hurst is confident, but ‘my optimism is a little bit dampened.’

Courtesy Julian Hurst

Still, he said, “my optimism is a little bit dampened as result of my experience, plus what’s in the news, taken together.”

For approximately two years, the job market has had monikers incorporating ‘re-’ words: The Great Resignation, The Great Reshuffle and The Great Return.

So is “recession” included in the next labor market label? And where does that leave people like Hurst and others who are breaking into new lines of work?

Here’s good news for the new hire. Even if there is a recession lurking, experts say it’s not necessarily true that the last person hired is the first one fired.

“Recessions are often a way that employers try to strengthen themselves for the future,” said Erica Groshen, senior economics advisor at the Cornell University School of Industrial and Labor Relations.

“Instead of shrinking all their operations, they might shut down operations in the least efficient, least productive part of the operation,” she said. “The people who should feel most vulnerable are the people who work in the least productive part of the operation.”

For example, that could be people working a third shift that was tacked on to meet customer demand, Groshen said. Or it could be people in a part of the business operation that’s been held over, even as a new method takes preeminence.

Make no mistake, it’s still a job seeker’s market. There were 11.3 million job openings in May and the economy added a stronger-than-expected 372,000 jobs in June.

But there are downbeat data points. For example, Apple
AAPL,
-0.74%

is reportedly slowing its hiring and spending plans amid the economic uncertainty, Bloomberg said last week. That’s on top of rescinded job offers at the cryptocurrency exchange Coinbase
COIN,
-5.30%
.
There’s also Netflix
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-0.88%

trimming back its staff and other tech sector companies doing the same.

Read also: It’s the end of ‘fantasyland’ for Big Tech and its workers

“We do see some clear cooling in certain sectors in the economy. But it doesn’t look like overall that is happening economy-wide,” said AnnElizabeth Konkel, Senior Economist at Indeed Hiring Lab.

The tech companies are providing the clearest signs of that “cooling,” she noted. It shows with the number of job postings in tech-heavy areas like Austin, San Francisco and Seattle declining 6% in recent weeks compared to other big city job hubs, Konkel said.

It also shows with specific roles. In late February, the number of software development job postings on Indeed were more than 130% above pre-pandemic levels. In the last four weeks, the amount has fallen by 12.5% from that peak. So demand is still strong, but “that frothiness is abating,” said Konkel.

Konkel doubts a recession is here, but she says it’s hard to glean answers from recent history about whether the “last hired, first fired” maxim holds. 

The short, sharp COVID-19 recession and the Great Recession from 2007 to 2009 “are really poor estimators on what that theory means today, because both of those recessions were so severe, that the logic just goes out the window,” she said.

It’s doubtful tech companies will let go of the people they just hired, said Brad Frank, senior client partner in Korn Ferry’s technology practice, where he helps firms find personnel. “Tech companies are always hiring what the next skill is, and where the company is going. Not where it’s been.”

Sure, there may be isolated reports of companies slowing hiring or trimming staff — but that doesn’t mean that companies are making hasty across-the-board job cuts, Frank said. “Those initiatives are well thought out. They have been funded and they are not easily moved around or moved away from.”

Temporary workers vs. permanent employees

Hiring temporary workers can offer an easy way for companies to quickly ramp up or slash workforce, Groshen said. So one key divide is between people with temporary, contract jobs and people with salaried jobs with no formal end date. “When you start to see temp help jobs decline, that often predicts other subsequent declines in other jobs,” she said.

Temporary jobs slipped in the preceding six months to a year before the last three recessions, excluding the COVID-19 recession, Bureau of Labor Statistics researchers said. During the Great Recession, “temps experienced a larger share of job losses — 34% decline for temps compared with 8-percent decline for all private employment and during the recovery,  a larger share of the job gains—75% growth for temps, 19% growth for all private jobs,” they noted.

So how’s contract and temporary employment looking now? These types of jobs increased 9.2% year-over-year for the four-week average ending on July 10, according to an ongoing index from the American Staffing Association, a professional organization with member companies offering services like temporary employment.

Job exits can also hinge on unionization, Groshen said. Seniority rules may have more junior workers leaving first, she noted. (Of course, unions may also have more protections insulating all workers from sudden pink slips.) Despite a noticeable spurt in unionization bids recently, most of the American private sector workforce is not a part of organized labor. Unionization rates have been slipping for decades.

One tip: focus on ‘what you can control’

The big question is how the economy holds up amid high inflation, uncertain consumer demand and rising interest rates. But big questions about market forces are of course beyond the control of any one person.

That’s why it’s important to focus on what you can within your professional responsibilities to enhance your job security, Frank said. “What you can control is your output from your intelligence, your work and your efforts.”

People should focus on meeting the job performance metrics they know they are being measured by, Frank noted. For example, that means a person in sales should stay laser-focused on gauges like the sales revenue they produce or the leads they generate, he said.

This strategy to stick around also applies when there’s internal change like a merger or a new corporate leadership, Frank said. But suppose a downturn occurs and work slows. Keep staying focused on core duties — but then also ask how to pitch in elsewhere on down time.

For the hypothetical sales person, that could mean staying on top of their book of business and then asking managers if there are ways to support other sales markets during lulls. “In that process, you are gaining new skills, improving your reputation in the company, being seen by more leaders and you are being seen as someone who is contributing and trying to help,” Frank said.

Regrettably, dedicated and capable workers can be laid off in spite of their efforts and track record, Konkel notes. Nonetheless, a person’s best potential protection is their focus on their own job performance, she added.

“It’s a small fraction of a much bigger equation” when companies resort to layoffs, Konkel said. “But then at least a worker knows ‘Hey, I gave it my all’ rather than a Monday morning quarterback of ‘Well, if I worked harder.’”

For his part, Hurst is staying focused on his job skills and staying confident his professional experience can reap rewards in a part of the tech industry with room to grow — whether that’s back at the same place or elsewhere. “I’m passionate in what I’m doing. I know what I want to do,” he said.

Hear from Ray Dalio at the Best New Ideas in Money Festival on Sept. 21 and Sept. 22 in New York. The hedge-fund pioneer has strong views on where the economy is headed. 

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