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Mass Layoffs and the Impact on Pay Equity

February 15, 2024

By Aishwarya Sinha, Prevention Specialist at PCADV

Layoffs can have a multifaceted impact on pay equity, potentially exacerbating existing inequalities within the workforce. For survivors of domestic violence, economic security is often intertwined with employment stability. Job losses resulting from layoffs can pose significant challenges, making it harder for survivors to break free from abusive situations. Layoffs can also increase financial dependency on an abusive partner, which can make it harder for survivors to leave and become independent.

For survivors of domestic violence, economic security is often intertwined with employment stability. Job losses resulting from layoffs can pose significant challenges, making it harder for survivors to break free from abusive situations.

According to a 2023 report by Randstad RiseSmart, at least 92% of employers anticipate layoffs in 2024. Organizations have multiple reasons behind layoffs, including navigating the economic aftermath of the COVID-19 pandemic and addressing over-hiring and overstaffing. During economic downturns that include a decline in economic activity, rising unemployment rates, and overall economic hardship, restructuring or layoffs can disproportionately affect certain groups and lead to disparities in pay outcomes. Women, especially women of color, are more vulnerable to job losses during layoffs, partly due to racial and gender biases in decision-making processes and workplace policies. This further stretches the gender wage gap, as the loss of jobs by women may reduce their overall earning potential, which refers to the maximum income that women can expect to earn over a certain period. Earning potential includes current earnings and the capacity for future income growth, career advancement, and overall financial success. 

To avoid mass layoffs, employers and organizations can implement alternative strategies that help retain talent and contribute to promoting pay equity within the organization:  

Flexible Work Arrangements

Implementing flexible work arrangements, including remote work, telecommuting, or job-sharing, allows employees to balance work and personal responsibilities. This reduces turnover and contributes to a more diverse and equitable workforce. 

Redeployment Programs

Establishing redeployment programs or restructuring the organization can enable employees whose roles are affected by layoffs to transition into new positions within the organization. This promotes internal mobility, retains institutional knowledge, and minimizes the impact on individual careers. 

Voluntary buyout packages or early retirement options

Offering voluntary buyout packages or choices to employees willing to step down voluntarily will allow organizations to reduce headcount without resorting to involuntary layoffs, and it also provides individuals with choices regarding their career transitions. 

Salary Adjustments and Furloughs

Employers can also consider temporary salary adjustments or furloughs as alternatives to permanent job cuts. This spreads the economic impact across the workforce and allows organizations to retain talent during economic downturns. 

Cross-Training and Skill Development

Invest in cross-training and upskilling programs at all phases of an employee’s time with the company to enhance their skills and versatility. This helps employees adapt to changing roles, reducing the need for layoffs during organizational shifts. 

By adopting alternative strategies, employers and organizations can navigate economic challenges while minimizing the negative impact on employees and promoting a more equitable workplace. Pay equity involves addressing existing disparities and preventing biases in future employment decisions. The long-term impact of layoffs on pay equity depends on how organizations manage post-layoff recovery. If there is a commitment to fair and transparent compensation practices, including addressing gender and racial pay gaps, the impact on pay equity might be less severe. 

Check out PCADV’s pay equity page for more information on the connections between pay inequity and risk factors of domestic violence. 


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