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Study looks at layoff's effect on remaining workers

By Paul Nelson  |  Posted Sep 24th, 2013 @ 7:49am


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SALT LAKE CITY — New findings by researchers at the University of Utah might be pretty frightening for workers. It shows that layoffs may be a powerful motivator for employees who are left behind.

If you've ever felt like your company is doing more with less and that you're doing the work of two people, this research proves you're correct. The data, compiled by the David Eccles School of Business and Stanford University, shows that a round of layoffs actually increase a worker's productivity, if he or she survives them.

"The people who are left after the layoffs happen tend to be working a lot harder and producing more output." said Assistant Professor of Finance Christopher Stanton.

He said they looked at the productivity rates of employees in service firms across the country.

"Individuals in areas of the country where the unemployment rate increased the most became more productive than individuals in areas of the country where the unemployment rate didn't increase as much," Stanton said.

So, a worker in Florida would have seen a bigger increase in productivity than someone in Kansas would have.


The firm can really demand that you do two peoples' jobs now because your alternative becomes quite poor in a recession.

–Christopher Stanton


Stanton pointed out that unemployment rates in Utah never got as high as in many other states. So why are workers able to do more work than before? Stanton said workers who are fearful of losing their jobs are willing to do more.

"The firm can really demand that you do two people's jobs now because your alternative really becomes quite poor in a recession," Stanton said.

He said employers don't really have to go through with another round of firings.

"From the perspective of the firm, all they have to do is threaten layoffs if the employee doesn't perform. You only need the threat of ‘the stick' in order to get the employee to work harder. You don't actually have to carry out the threat," Stanton said.

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