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The Future of Work

4 Warning Signs Of The Next Recession—And How To Tell If Your Job Is Safe

Recessions are cyclical, and there are some foreboding signs to watch. Now's the time to hash out how much you're worth to your employer.

4 Warning Signs Of The Next Recession--And How To Tell If Your Job Is Safe

[Photo: Flickr user Lauren Irons

The U.S. economy may have added more jobs last month than experts had predicted, but while that's something to cheer, it isn't cause for getting too cozy. A recent J.P. Morgan economic model, based on a broader range of indicators, puts the chances of a recession occurring within the next 12 months at roughly one in three.

Recessions, after all, are cyclical. So the question is less whether we're in for another one than when. I'm not an economist, but my many years in the staffing industry have taught me that there are some warning signs. Here are four potential pressures to pay attention to.

1. An Aging Workforce Could Slow The Economy

A report published last month by the National Bureau of Economic Research (NBER) claims that, based on historical trends, a 10% increase in the number of Americans over 60 slows per capita GDP growth by around 5.5%. In the last 20 years, census data shows that the U.S.’s older population grew by 16.8%, putting us on track for slower growth over the next two decades. (Just last week the New York Times noted that slower economic growth seems to have become the new normal across the developed world.)

"This dramatic shift in the age structure of the U.S. population," the NBER study's authors write, "has the potential to negatively impact the performance of the economy as well as the sustainability of government entitlement programs, and could result in a decline in consumption for the population as a whole."

2. The Underemployment Rate Is Still At 10%

It's usually fluctuations in the unemployment rate that get the most press, but the underemployment rate—which describes those working part-time but who want full-time work, plus people who've stopped searching but still want a job—remains at 10%, according to the Bureau of Labor Statistics (BLS). That suggests there's a significant chunk of recent college grads and experienced professionals out there who are still finding it tough to land jobs that meet their skill levels.

3. The Temporary Job Market Is Leveling Off

Temporary staffing companies are typically the first to see growth after a recession. So when hiring rates in that market start to slow down—or, as happened this June, when hires actually decline—it can be a sign of a downshift in the economy. The decrease in the use of temporary workers is usually related to cost-cutting measures, since these are more expendable workers than full-time employees for companies that need to tighten their belts.

4. Automation Is No Longer A Distant Possibility—It's Here

Surely by now you've heard the premonitions about robots taking your job—and you may not know quite what to make of them. But according to a 2013 University of Oxford study, nearly half of current U.S. workers are at risk of being put out of work by automation within the next two decades. It's true that forecasts like these can sound overblown or just too distant to do anything about. Yet nearer-term estimates suggest they're worth thinking about now. Some experts say 5 million jobs are due to be automated within just the next five years. And it's conceivable that rising layoffs across multiple roles and sectors, thanks to advances in artificial intelligence, could contribute to a recession sooner than we may imagine.

Three Questions To Figure Out Whether Your Job's At Risk

So what can you do about it? It's normal to feel anxious or even helpless in the face of economic forces you can't personally control. But there are a few things you can do right now to weather the next downturn, whenever it arrives.

It starts by getting a handle on how competitive you might be in a job market that's suddenly a lot tighter than it is today. To help you do that, ask yourself these three questions:

1. Does your job tie directly to how the company makes money?
In order to keep you on the payroll in hard times, your employer will need to validate that you either save or make the company enough money to justify your cost. If you can’t explain how your work impacts profitability, you could be deemed expendable.

So spend some time quantifying your accomplishments, and tie some facts and figures to what you do. The average employee usually costs a company 130% to 140% of their salary. So if you make $60,000 a year, the real cost to your employer is $78,000 to $84,000 year. It's much easier for an HR rep to do that math—factoring in benefits and other expenses—than it is for the average employee to estimate their own value to their company. But you can still get a rough sense of it.

Keep track of the number of customers your work supports (directly or indirectly) and estimate how much revenue they generate for the company. What would happen if your job function went away? Would the ability to deliver to customers properly be severely impacted—by how much, and by which measures? Create a list identifying what functions would go unfulfilled, needs unserved, and deadlines missed in your absence, then work backward from there to estimate the potential impact on revenue. Even rough, back-of-the-envelope arithmetic like this can be useful to you.

2. Do you fall in a knowledge sweet spot for your skill or industry?
When companies go through a restructuring, their goal is to reduce the cost of the workforce while hanging onto the highest level of knowledge and skills that they can. This usually results in layoffs of the overpaid and the inexperienced.

Do your homework on open platforms like Glassdoor, PayScale, and Salary.com to find out where you fall in years of experience and pay grade for your role. If your salary is a lot higher than average, you could be eliminated in order to save money. If you're paid a lot lower, it’s possible that your skills aren’t valued enough by your employer and your job could be outsourced or divvied up among temporary or freelance workers.

If you think you might be overpaid, now is the time to bring your expertise up to par. Identify your specialty, then invest in some coursework to help you become even more of a subject-matter or skill expert—just make sure your area of specialization is actually in demand. If you're on the lower end of the pay scale, you should do the same thing. The rule is simple: The more you know and the more you can do, the more valuable you'll be to an employer that needs to cut costs.

3. How strong are your relationships at work—with your managers as well as your peers?
Layoffs create a lot of uncertainty and feelings of guilt for those who survive the cuts. Employers will try to keep those employees they feel have a positive mind-set and those they're most comfortable working with. The idea is that those who remain can rally together and keep their spirits up.

So your relationships across the organization matter. Reach out to managers and coworkers to see how you can help take tasks off their plates or make their jobs even a little easier. When you alleviate pain or solve a problem, you’re appreciated. Your ability to step up and help others feel better about their own jobs will be remembered when the business takes a hit and it's time to review the headcount.

Today, every job is temporary, and a trait that could most determine your employability over the next decade is your ability to learn. If you aren’t growing and developing your skills according to market demands, the risks to your career may quietly pile up. That would be true even if you never had to worry about another recession ever again.


J.T. O’Donnell is the CEO of CAREEREALISM, a site for "job shoppers." Her company hosts the new web video series, The Job Shop, which each month showcases the employer brands of companies to more than 1 million professionals seeking new opportunities. Follow her on Twitter at @jtodonnell.

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