32 thoughts on “Bad Things (or Layoffs) Happen to Other People”

  1. What are you saying? That MORE than one out of five people will be laid off? US employment is, according to the chart, 113MM people. (The Bureau of Labor Statistics nonfarm employment number for November is higher, 136MM.) Are you suggesting that 23,000,000 people will lose their jobs in the next six months? That would bring unemployment to levels not seen since the height of the Great Depression (25%). Is that what you are predicting—for the next SIX MONTHS?

    The one out of five who believe they may be laid off in the next six months are, as a group, far too pessimistic, not too optimistic. The 42% who believe their _company_ may lay _someone_ off may, on the other hand, be quite right.

  2. Om, interesting piece. There is a well known cognitive bias, that people just don’t believe they are going to have bad times. The same goes for new business owners.

  3. Andy, I think you’re assuming the American people (or those surveyed) have your level of understanding of statistics. When faced with the loss of about 2 million jobs since July, I find it odd that people aren’t more worried. After all enough people are surprised by the statistical probability that in a room of 23 people there’s more than a 50 percent chance that two of them will have the same birthday that it still makes a decent party trick. http://en.wikipedia.org/wiki/Birthday_paradox

  4. What they say…

    If your neighbor is out of a job, then we’re in a recession. I you’re out a job, then we’re in a depression.

  5. Stacey, I agree with you in part, but the figures Om cites show that people _are_ worried about what they probably should be worried about: that someone, somewhere, in their company will be laid off (42% agree with this). But that’s very different from worrying that they themselves will be laid off (20% or “one in five”) not sometime in their lives, but in the _next six months._ Let’s say the economy has lost 2MM jobs in the last six months. Let’s suppose a bloodbath happens and we lose five times that many in the next six months (nearly inconceivable, but hey, it could happen). That means 10MM jobs would be lost. That _still_ means that more than half of those worried people will have a job at the end of the six-month period. (Well, actually more, because some of the “what, me worry?” people will lose their jobs instead. 🙂 )

    Om is just wrong here. Americans are too pessimistic about their own prospects, and arguably just about right on the prospects of their coworkers. They are not notably optimistic. In fact, what we actually see here is the tendency of uninformed sentiment to swing wildly from extremes of optimism to pessimism and back again, not an incorrigible optimism as Om implies.

  6. andy

    i agree with you. the markets are also behaving irrationally….have to wonder in this case if all the media crying wolf all the time becomes a self fulfilling prophecy….

  7. Andy, I see your point. It seems to be that based on job loss data, Americans shouldn’t worry so much since so far only 6 in 1,000 have lost jobs in December rather than the 1 in 5 who think it might happen to them. Maybe I need to reread my copy of A Mathematician Reads the Newspaper.

  8. @Andy Crouch

    I am trying to follow your logic — if people thing they will have jobs but their co-workers might get laid off — isn’t that being too optimistic about their own prospects?


    I don’t know if you know this — being media and someone who runs his own business, I kinda have a first hand experience to tell you — no one is crying wolf. At least not me. When Intel and Microsoft (read monopolies) start blowing up, then you know we got a massive problem.

    THanks for your comments though guys

  9. Om, think of it this way. Say I work in a company of 100 people. Suppose I think that some of my coworkers might lose their jobs in the next six months. Suppose I’m right and 5 of them lose their jobs. Maybe one of those five happens to be me. Whether or not it happens to me, my fears for the company as a whole came true.

    But 95 of 100 workers still have their job at my company in six months. My “chance” of losing my job was 5 out of 100.

    If 1 out of 5 of my fellow coworkers believe they will lose their job in those six months, that’s 20 out of 100. But only 5 actually lost their jobs. Then at least 15 of them were too pessimistic. At the end of six months *they* still have their own job, even though it is true that somebody in the company got laid off.

    Or put it this way—an extreme example. Ask me whether I believe someone, a single someone!, will get laid off in the US economy as a whole in the next six months. Yes, I do believe that. And the probability of that happening is, we can probably agree, 100%. But that does *not* mean that my chances of being laid off are 100%!

    It’s simple math, really, but math is surprisingly hard, especially on the fly, which is why people do frequently underestimate or overestimate risk. What should have tipped you off, though, is that if those 1 out of 5 are *right,* that would mean the loss of something like 23 MILLION jobs. In six months. Not gonna happen, barring a truly unforeseen catastrophe (nuclear war, etc.). So they are not too optimistic, they are too pessimistic.

  10. @Andy – You make interesting and valid points. With this survey, we were trying to understand people’s perceptions, especially given the broad media coverage surrounding layoffs and the worsening economy.

    The key distinction is that we asked whether people were “concerned” about being laid off in the next 6 months. As such, the question is designed to get to personal perception, not predictability.

    As you rightly point out, 1 in 5 would ultimately be a massive portion of the US employed adult population if those layoffs actually happened, but we are nonetheless surprised to find that only 1 in 5 are “concerned” about being laid off. To a statistician such as yourself, perhaps it’s obvious that one shouldn’t be concerned, but as @Stacey points out, to the layman this sounds pretty low given what we know of earnings and our major employers. We expected more people to be concerned.

    Now, the interesting thing is that IF a company does have layoffs, then its employees get really worried. So for companies that have had layoffs, the percentage of people that think there could be more future layoffs jumps to 87%. From the statisticians viewpoint this might be horribly pessimistic, but on some intuitive level it makes sense because (a) people get a “dose of reality”, and (b) they feel if it happened once, the company is hurting and it could happen again.

    This clearly shows that people who have been closer to layoffs have greater concerns, swinging more wildly than I would have thought. With the predictions for further layoffs, we thought more employees would be concerned about their own jobs but we expect as layoffs hit closer to home this sentiment will change and we intend to track it.

  11. The problem is, people like myself would LOVE to get laid off. If I get laid off, I can find a job making comparable money writing comparable software in 2 days. We have ideas to start our own business and modern/desirable software skills, in which a 2 month paid break would be a perfect incubating point. People like me are not worried if we get laid off.

    I guess the people that are interviewed believe that the software/management/administration that they do actually contributes to the company’s bottom line and is invaluable. Most likely true, but in some cases there are sponges. Companies are using the talk of “recession” to get rid of the cruft that accumulates in staffing.

  12. Actually, worrying accomplishes nothing.
    Doing your job to your best ability and being wise with your money is about the best anyone can do.
    I know we are a nation of borrowers; but, do we have to borrow trouble too?

  13. 1 in 5 is 20%, that’d be a massive massive hit to the work force. This is not at all unreasonable. A good chunk of the people worried about layoffs will keep there job. A small chunk of people not worried about layoffs will lose their jobs.

  14. Uh, even with 20% unemployment, thats 80% employment.

    4 out of 5 don’t expect to be laid off is amusing?? Isn’t that 80%?

    I guess everyone can’t respond “correctly” to the fear-mongering press.

  15. The impact of the Crunch on society offers a welcome stage for many who normally you would not expect to meet together on a birthday party. But combined they well may prove to become quite a nuisance for a ‘civilised’ return to the good old days.

    Russia Strikes Back
    Happily ignoring the lessons of the Weimar Republic, the West has at best ignored but de facto humiliated the ex-Soviet state after losing the Cold War, and basically drove them in the arms of their former arch-rival China. So far so good, if it wasn’t for the natural gas reserves that we want to buy from them so badly. How badly, the Russians remind us of every winter, like in this example. Now, today energy costs are more or less affordable again, but we all know this will not last. Russia will be back on the global stage with gas as a carrot and still some nuclear moral pressure as a back-up stick.

    The ‘violent left’
    History (R.A.F., Red Brigades, Action Directe) also repeats itself here. With Seattle in the back of our heads and Athens still smouldering, attentive web surfers have probably come across this unsettling document, which has caused considerable alarm in Paris national security headquarters. It is very well possible that we are underestimating the potential danger of a well organised group of young educated middle class subversive zealots, operating in a secretive global network. Google ‘Tarnac’ and start reading and shivering. (We understand that so far they have not been spotted sipping tea with Al-Qaida.)

    The Web Industry
    Yes, the web industry. And yourself, most likely, as a willing collaborator. Crunchreport sees the development of a Big Hairy Scary Government as unavoidable. National debts will skyrocket to so far unimaginable heights, requiring governments to order new money presses and you to figure out how to stay afloat (you won’t). In order to implement increasingly unpopular decisions, governments will seek to grow control over its citizens. And technologies to do so are either already available or you are helping them with testing prototypes. You are backing up your harddisk and passwords on line. It’s free, isn’t it? You think it is justified for the state to limit your internet access today (well, who can defend child pornography?) and screening web traffic between computers tomorrow (the technology is already available). As if it is not enough to be traceable with your mobile phone every second, you now admire RFID technology and are volunteering for chip implants, having your personal data readable for all authorities involved (resulting in shorter waiting lines at the airport security gate for sure). Anything else would be less than ‘patriotic’ would it not? If you are innocent, what do you have to hide in the first place?
    Global political relations will deteriorate due to energy and commodity scarcity and price volatility, leading to a further lack of trust and increased tensions between nations. Hyperinflation will rapidly create weak spots in the social fabric, which will be countered by the political elite with further reduction of checks and balances in a web-based version of the ‘Patriot’ Act? This then will in turn prepare a natural breeding ground for insurgency movements.

    Meanwhile count your blessings and start following the reco’s from the Escape List on Crunchreport.com.

  16. More layoffs. $@%^#!

    I’ve been covering the Google, Pfizer and Oracle layoffs on The Daily Anchor, and as a follow up today I wrote an article on tips for finding a job in a recession. Don’t get me wrong, there’s no magic trick for finding a job right now, but there are some things you can do to at least increase your chances of finding an opportunity and landing an interview…

    “What to Do if You’ve Been Laid Off: Finding a Job in a Recession”

  17. this isn’t just an american problem its universal. nobody ever wants to down-size. government only grows bigger, corporations only grow bigger, nations only grow bigger. its just how it is really nothing we can do to stop it or counter act it. It just has to be accounted for. Why do you think most economists don’t really believe 0% inflation is possible / good? that is why

  18. I really don’t agree that American are optimistic. They tend to seem that way but really they are being fake. Anyway I don’t know, but layoffs are bad for people, and I wish everyone well.

  19. Anon ; i agree with you. the markets are also behaving irrationally….have to wonder in this case if all the media crying wolf all the time becomes a self fulfilling prophecy….


    I agree 😉

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