Effect of Layoffs and Downsizing in California Research Paper

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Layoffs and Downsizing in California

Business entities are established on the basis of profit making. As a result, they ensure that profit margins are maintained by balancing the levels of expenditure as compared to their revenues. When faced with hard economic situations such as the recession that was realized in the year 2008, entities refer to cutting their expenditures, a move that include layoffs of workers as operations are streamlined. This paper seeks to discuss the impacts that were felt in California due to downsizing of organizations and subsequent layoff of workers.

Recession in California

The economic crisis that was realized globally in the year 2008 was greatly felt in the state of California just as experts had predicted. A review of the economy of the state that was characterized with a lot of weaknesses indicated immense effects that would be felt by residents of the state as compared to other regions of the United States. This was due to the background that the California had exhibited prior to the period. The volatility of its economy together with the sub-prime mortgage crisis that had been realized threatened the state's stability and was expected to run down even if other states in America could be able to withstand the threat of economic meltdown. The mortgage crisis had for example run down the housing industry and spread to affect other sectors such as financial institutions that suffered losses. The economy of California is also identified to be on either extreme in the general consideration of the economy of the United States. It poses the best performance in good times and the worst in bad times. The trend repeated itself in the year 2008 as the state was greatly affected by the recession forcing organizations and employers to make adjustments into systems for sustainability in the difficult time. The result was thus restructuring of organization for downsizing that led to subsequent layoff of workers (Barbara, 2008).

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Impacts of layoffs and downsizing in California

Bad economic situations are characterized by negative impacts on economic operations of organizations. With recession, demand for some types of commodities is realized to reduce or completely disappear. This's followed by loss of market that subsequently makes it difficult for the produces to pay their workers when they don't get any revenues from operations leading to layoffs. The lost job opportunities would imply reduced purchasing capacity of the individuals who looses their jobs. This would add to reduced demand and the circle may continue to worsen the economic crisis. The first impact of downsizing of organizations which causes unemployment thus induces a reduced purchasing power in the economy. Layoffs of employees are also identified with a number of direct impacts on the employees together with their family members. One of the effects of layoffs that curtail an individual's income is an induced level of poverty on a person. When experienced in extreme levels especially in cases where the individual employees had no savings, people are forced to lose property as well as being changed into beggars in a bid to at least survive by getting basic needs. A level of dissonance is also an impact that was associated with the recession of the year 2008. With strains such as inability to make provisions for family members, social discomfort that is associated with stress became a factor and a further failure to even make provisions for health care inducing health crisis on people. Such were the experiences that were realized in California after the recession (Flamong, Burns and Matsunaga, 2008).

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