Could This Group of Workers Be Hit Hardest by a Recession?

What could a coming recession mean for your job?

A period of economic downturn throughout the United States seems all but inevitable. In fact, many business leaders and financial experts are warning of a coming recession or are arguing that we may be in one already.

Recessions are marked by a decline in gross domestic product, but they often lead to job losses as companies cut back on employees to go through hard times. Some workers, however, may be more likely than others to lose their positions if and when a recession arrives. Here's who is at risk.

These workers could be more likely to see job losses, according to some experts

Surprisingly, there's evidence to suggest that white collar workers could be the most at risk of job losses in an upcoming downturn, rather than blue collar workers. In particular, the Chief Economist at the Milken Institute believes lower-skilled white collar workers in certain industries could bear the brunt of layoffs.

"Covid shifted things around,” Lee told CNN. "In this post-Covid environment, businesses are restructuring themselves. They’re changing the way they operate, they need to get more efficient. And what they’ve done is buy more software, deploy more technology, where they’re thinking 'I need better-skilled people who work for me.'"

Unfortunately, early evidence suggests Lee may be right and professional workers could find themselves seeing more job losses in the coming months. In fact, the tech industry in particular has started to let workers go.

Meta, the parent company of Facebook, cut 11,000 jobs in November, and Amazon has begun the process of letting 10,000 workers go. Challenger, Gray & Christmas, an outplacement firm, also indicated a total of 31,200 jobs would be cut in the tech industry in November alone.

This could be just the start of a trend that accelerates as companies in the tech sector and beyond are left making hard choices about how to sustain their business and cut costs when an economic slowdown occurs.

How to prepare for a possible recession

Whether you're in an industry likely to be hit hard by a recession or not, the sad reality is that more people are let go from work during economic downturns -- and others see a reduction in income from reduced hours or a slowdown in promotions and raises.

It's important to get ready for the very real possibility of your income being cut or paychecks stopping altogether. And there are a few key ways to do that, including:

• Saving more money for emergencies in a high-yield savings account so you have the cash to pay the bills for several months if you lose your job and it takes time to find another one.
• Putting off big purchases. You may not want to commit to a large purchase only to find you regret spending the money later.
• Paying off debt. If you already have a large emergency fund, making extra payments on your debt can be helpful. If you can pay off a loan or credit card and eliminate that monthly payment, this could make it easier for you to cover your costs through a recession.
• Build your professional network. Don't wait for a job loss to get your resume in order, keep up with your professional contacts, and join professional organizations that could help you establish new relationships within the community.

By following these tips, hopefully even if the worst happens and you lose your job, you'll be able to protect yourself so the layoff doesn't have a long-term impact on your finances.