One of the biggest causes of job insecurity is company unprofitability. When our employers are not turning a profit, our jobs are the biggest at risk because companies may declare bankruptcy soon. The good times never last forever.
I’ve been there before. When I graduated college, I worked for an unprofitable department of the company and every year, I felt like I was on the chopping block. I would get pleasantly surprised during bonus time because the company would hand out 100%+ bonuses some years.
However, even though the money was good, it still didn’t take the unstable feeling out. Then one year, it actually happened. A number of people from my department actually got laid off. That was my first exposure to layoffs.
It’s one thing to read about layoffs on the news. It’s another to witness the layoffs happening in the department that you’re actually working at. Even if you work for a company who has billions of dollars on their balance sheet, it still doesn’t feel good when they’re consistently losing money year after year.
The causes of job insecurity includes company unprofitability. No matter how much we dislike our employer, we still want them to succeed because that’s how we keep our jobs. Yellow, the 3rd largest trucking company, declared bankruptcy because they were losing money.
Therefore, 32k employees just lost their jobs overnight.
Causes of Job Insecurity: 9 Common Causes
Below are the 9 common causes of job insecurity. There are an infinite number of reasons why we do not feel job security but below are the 9 most common causes. The more we understand how job losses happen, the better we can prepare for the future.
Because our careers are not something to be messed around with. If we play our cards right, we can climb to new heights.
1) Company Unprofitability
Companies only employ people when they have the money to employ people. When companies lose money, they’re slowly losing the ability to hire employees. It may not happen this year but if the losses continue, it’s only a matter of time before the company declares bankruptcy.
The biggest causes of job insecurity is company unprofitability. If the company is not financially strong, we don’t feel confident about its future as well. Cash is the lifeblood of any business. When I switched companies working in an unprofitable department to a profitable one, my confidence improved.
It felt so bad to work for an employer who was losing money hand over fist who had to layoff their employees. Furthermore, when my previous company merged, they actually laid off a lot of employees who were working at my department.
As employees, we feel better and more confident the more profitable our employers are.
2) Causes of Job Insecurity: A Bad Manager
Employees don’t leave bad companies, they leave bad managers. Your manager influences your career more than anyone else in the company. Not the CEO, not the CFO, but your direct boss. The second biggest causes of job insecurity is a bad manager.
Some bosses are awful at controlling their emotions, looking at facts objectively, and getting their team to inspire confidence. The worst part is that these managers cannot get rid of because they’re usually good at their jobs. Not to the point where they will become CEO.
But to the point where they have the potential to get promoted in the next cycle of promotions. Therefore, their bosses are happy with their performance and will not do anything to interfere with the current state of affairs.
Whether we like it or not, if we are not in positions of power, there is no one who cares for us.
3) Frequent Layoff Announcements
During the Great Recession of ’08-09, there were multiple rounds of layoff announcements. There were many companies who announced 11 rounds of layoff announcements. During which, the employees had no choice but to wait to see if it was their turn.
Layoffs are one of the biggest causes of job insecurity because it means the company is either not doing well financially or they want to cut costs even though they are doing well financially to service their shareholders. Layoffs are not fun for anyone.
Not for the company initiating the layoffs and not for the employee receiving the layoff news. Thankfully, my employers only had single rounds of layoff announcements but I can’t imagine what getting multiple rounds of layoff announcements feel like.
If the layoffs keep coming for multiple years, it’s even worse for the employee’s mindset.
4) A Looming Recession
Recessions are not fun. Even mild recessions have a profound impact. The 2000 – 2002 tech crash was actually one of the mild recessions. And yet it caused a 50%+ decline in the stock market with rising unemployment. It’s one thing to lose your job.
It’s another to lose your job and your investments lose value. A looming recession is one of the causes of job insecurity because recessions usually come with losses and bankruptcies. The 2020 recession was so sudden and short.
Unemployment spiked to 10%+ in 2020! In just weeks! That’s a significant number of unemployed people. I was afraid that I would lose my job on top of the investment losses I experienced. Thankfully, the call never came to let me know that my services would no longer be required.
However, it still didn’t feel good to go through with the experience. There’s always risks mounting in any economic cycle.
5) Younger Coworkers
Age discrimination is real. Companies generally favor younger employees than older ones. Companies would actually rather pay a 25 year old $100k than a 50 year old $100k because the 50 year olds have other priorities outside of work. Such as a family.
The younger employees do not. Maybe they are starting to get married, but that’s about it. It’s impossible to compete against coworkers based on our biological age. The causes of job insecurity is when we see how we are on a relative basis versus our coworkers.
We do not need to outrun the bear chasing us but we do need to outrun our coworkers that are next to us. Younger employees are generally cheaper and more mentally savvy than older employees. Even if the cost is the same, the company looks at the long term nature of the employees.
The older employee may already have been clocked out and getting ready for retirement, anyway.
6) The Media
The media loves to write fear-based articles because it drives clicks. Mentions of “AI” or “Automation” is on the rise. There are even robots who are automating cleaning now. While that is well and good, that’s no reason to be afraid.
Yes, we have to be smarter now and menial labor jobs have a high likelihood of getting replaced by aI. Therefore, we have to figure out how to provide more value in a smarter way that’s not just through labor and selling our time. Which is more than possible.
The media is one of the causes of job insecurity because it’s in their interest to instill fear because it drives clicks.
Fear sells very well. The headlines talk about how AI will take away millions of jobs but they don’t talk about how AI will create tens of millions of more jobs. The headline is designed to get clicks while the meat of the article tells the full story.
I personally pick and curate my media very carefully because I know which media generally writes which type of articles. It’s been tremendous to my mental health.
7) Not Having Multiple Sources of Income
The system is the most hypocritical system ever designed. Employers can have multiple employees but employees cannot have multiple sources of income or are very limited in the multiple income sources they can pursue. No wonder Americans have financial stress.
It doesn’t feel good when our only source of income is our 9-5 job. The causes of job insecurity includes not having multiple sources of income. It’s more important than ever before to work during weekends for our side hustles or working another job.
Our jobs only provide us with limited upside. We can never make more than our salary in the year. Creating multiple sources of income when we have almost risk free money coming in from our job is a great wealth building move.
Even though it’s been grueling to work every single weekend and even though I’d rather be doing something else, it was worth it. Income diversification is too important to ignore.
8) Mergers and Acquisitions
When there are mergers and acquisitions and both companies mention this one word, employees should be scared. That word is “synergies”. It’s a fancy way of saying the combined company has the ability to generate more revenues with less employees.
When we find out our employer is getting acquired, that’s one of the causes of job insecurity. We don’t know what will happen and what the new employer’s culture will be like. There will definitely likely be layoffs where employees will be forced out.
One of my prior employers got acquired and with it came numerous layoffs and job cuts. Some employees were even offered severance packages to quit the company. Many had to even move departments and work a completely new job than they were used to due to the acquisition.
Whether we like it or not, M&A happens and it’s beyond our control that causes us to question our job security.
9) Industry Changes
Blockbuster is a prime example. They never thought people would switch to streaming movies digitally and thought physical media was never going to go away. So they never adapted to the consumers preferences and paid a hefty price as a result.
A company has to be at the forefront of change and have to adapt to their customer’s tastes. Or they will go away. Consumer preferences change at the drop of a hat and either a company figures out what the customer wants or the customer moves to another company who figures out what they want.
Therefore, if the employer is incapable of recognizing change and seeing what the customers want, then it is one of the causes of job insecurity because there’s less likelihood of the company existing down the road. Industries change often and quickly.
A company who doesn’t recognize change coming is not a safe company to be working for.
Causes of Job Insecurity is More Widespread Than Ever
2022 – 2023 was one of the most unsure job markets in the past decade. There were layoff news after layoff news with no end in sight. Even worse, companies were then declaring bankruptcy. Which comes with forced layoffs. Companies can’t have employees if they don’t have money in the first place.
The causes of job security are infinite but it is more recently applicable than ever before. No job is safe. It’s even worse when consumers face high inflation, investment losses, and everything else in between. It’s one thing to lose investment income.
However, it’s another to lose 9-5 income. Studies show employees feel more loyal to their employer during times of economic distress. They have no other choice. It’s becoming much more common for employees to be worried about their jobs if they are not a part of the executive group.
The causes of job insecurity are real and it can happen to anyone. I’ve seen many of my friends who I worked with across the years get laid off. High performers. Some companies even preferred to layoff high performers because they cost so much.
The causes of job insecurity are not logical. Everyone will feel it at some point given that we can expect to go through 11 recessions in an 80 year span, on average. That is a lot of times to feel it. It’s more important than ever before to create multiple income streams to prepare for layoffs.
We think they can’t happen to us until they do.
Causes of Job Insecurity: My Story
I was feeling the causes of job insecurity at a heightened level in 2022 and 2023. I was getting paid the most I ever got paid in my life ($200k). And for a person in his 20s to be making that salary is nothing short of a miracle.
Therefore, I did everything I could to prepare myself for the impending result. If I over-prepare for the worst case scenario and the worst case scenario doesn’t end up happening, then I’m at a better spot than if I underprepared and the worst does happen.
I created multiple streams of income and worked on side businesses during the weekends. I added as much value as I could to my employer and saved them as much money as I could. No matter what I needed to do, I did because I did not want to let this opportunity go.
My performance reviews came out stellar. But I didn’t stop there. I saved as much money as I could and lowered my spending to lower than the bare bones budget. Although the quality of my life suffered, I didn’t care. I knew that if I played my cards right, I could come out of this recession stronger than ever before.
The ones who know how to navigate through the tough and complex waters of a recessionary environment will come out better than they ever thought imaginable at the end of it all. The real wealth is built during recessions and not during bull markets.
We do what we have to do to survive and come out stronger.
It’s Possible to Overcome the Causes of Job Insecurity
Although there’s an infinite number of the causes of job insecurity, that doesn’t mean that we still can’t put in effort that we control ourselves. We can tackle the problem beforehand so that we come out of the tough situations stronger than ever before.
Our careers are a long term project that we complete. There will be many bumps along the road and some may even be harder than others. However, it’s more than possible as long as we put in the effort to take charge of our own lives.
All we can do is take care of our effort, which is what we control 100%, and let the outside factors that we don’t control fall into place. If we try our best and the worst case scenario happens anyway, then that’s completely fine.
Although it seems difficult and even impossible to overcome the causes of job insecurity, it’s more than possible. One of my friends left a stable job to work for an unstable small company to get laid off six months later.
Then it took her another year to find a great opportunity but it still happened. It is more than possible to overcome the causes of job insecurity as long as we have the long term mindset. There’s a reason patient people always win in the day against impatient people.
Our careers is something we control and that’s what’s amazing.
Causes of Job Insecurity: 9 Causes Shortlist
- Company unprofitability
- Causes of job insecurity: a bad manager
- Frequent layoff announcements
- A looming recession
- Younger coworkers
- The media
- Not having multiple sources of income
- Mergers and acquisitions
- Industry changes
