Being a Developer During a Recession

There is a growing fear that we are going into another recession if we aren't already there. The mortgage finance issues, the massive losses that came to the hedge funds, many consecutive bad trading days, rumors of Yahoo about to layoff folks and so on. The picture we are given is one that things are relatively bleak and that soon we will be homeless, jobless, the wife or girlfriend is ditching us and the dog is looking like he's ready to go on the road and run with the pack.

The more immediate fear, for us developers, is being laid off because the company isn’t doing well for one reason or another. It is reasonable to be scared but it is unreasonable to do nothing. Now is the time to start planning for a lay-off and hopefully it will never come for you. But I can assure you that some people reading this right now have been laid off in the past and it will probably happen to you too at some point. It isn't the worst thing that can happen to you but you really don't want to experience it without some kind of parachute.

First, layoffs are common. In the late 80's and early 90's Digital Equipment Corporation (DEC) and Wang went through massive rounds of layoffs and saturated the market with developers. It was difficult to get a gig during that period because of such tremendous competition. Of course, many of the laid off guys founded new companies and hired old friends.

Second, most people remember the "Dot-com" bust that hit its peak some time during 2001- 2002 and 2003 was the start of the recovery. We should also remember that it was preceded by the mobile phone and telco bust that happened a year or two earlier. The network hardware companies also took a beating as Dot-com companies stopped buying. A lot of people were out of work but there were still jobs to be had.

You'll hear a lot of stuff about how to avoid being laid off over the next few months. Some will say that you need to work really hard and work on truly critical code. Work so hard on critical items that the company can't afford to lay you off. You'll hear things like "keep your head down and just do what you are told" and "avoid arguing at all costs." Don't take time off, don't say no, don't be too senior, don't be paid too well, don't be too junior, don't be average, don't stick out and be sure to stick out and get noticed for your work.

The truth: layoffs are fickle. You can be laid off for a number of reasons completely out of your control, that of your manager and her manager. There is no such thing as a person who cannot be laid off. You see C-level executives get ousted for just having a bad quarter or they fell out of favor with investors. Are these people any less critical than even the best developer or architect? If they can go, then so can you. The company, its investors and directors believe that they cannot succeed unless they make cuts and they can make cuts for unusual reasons regardless of how it will impact the company. They believe that another employee will learn the work and pick up the slack, even if the product comes out later. It's true too, someone will learn the code and go from there.

With that, let's talk about what to do before a layoff. I'm not a financial or credit adviser so take what I'm about to say as my opinion alone. You should contact an investment or financial adviser if you have any personal questions.

Saving some money every paycheck is critical. That money is incredibly valuable later on down the line if you get laid off. The cushion it provides is incredibly valuable, especially when you see your unemployment insurance check. Some experts say that you need to have at least one year's worth of salary saved. This is obviously difficult, but every penny counts.

Homeowners are especially vulnerable. In some states unemployment insurance may max out at only $1600 a month depending on your annual income. Is your monthly mortgage payment more or less than that amount? How about your monthly living expenses: food, utilities, medical insurance and car related costs (gas, state taxes, insurance)? Can the unemployment insurance cover all that? No? Then you need savings and you need to start today.

One thing homeowners can do is refinance to a lower interest rate, but you usually need to be working to be eligible. It may be worth your while to refinance and save the difference from your old payment and your new one.

The day you get laid off is terrible. It truly sucks. They hand you lots of paperwork and try to get you to sign everything. They can often withhold severance packages until you agree not to sue them later. Some companies don't give severance except to executives who negotiated it in their employment agreement. Other companies give as much as 6 months pay. It varies but it is not required. They can't withhold COBRA- your health insurance plan. Most of the paperwork is pretty standard, of course, talk to a lawyer and be sure that you are comfortable signing away some rights.

The next thing you have to do is call the state and get your unemployment insurance going. Most states require employers to put money into a pool as a part of their payrole taxes. The state then pays the money back to laid off staff at whatever the state's rate is. Don't worry so much about how much money your company paid into the fund, that doesn't impact your payments. However, the company's unemployment insurance rate often goes up for every layoff. It takes time for the state to process your unemployment request as they have to get in touch with the employer and verify the circumstances of your unemployment. Being laid off and being fired are completely different in many states and it affects what your unemployment insurance rate will be.

Some states let you do the unemployment insurance registration over the phone while others require you go into an office. You may feel like a failure in some way, but you are not. Layoffs are supposed to be about the financial failure of the company, not your ability to perform. If you were a poor performer they could have fired you or forced you to quit. You are going to that office to get what taxes paid for. It is owed to you.

The drive home after being laid off is terrible too. You may have a wife and kids to tell and that's a hard thing to face. You may be single and you have to figure out how you are going to tell your parents and friends. Its really depressing.

Now you are laid off and you have to sit at home. You may have to make some cuts, like go out to dinner and lunch less, buy less beer or buy cheaper beer, buy less expensive clothes, go to the movies less or rent fewer movies. The trend is clear: buy less if you can.

The first week of unemployment is hard because you may miss your friends from work. It can be painful because one day you are having lunch with friends and then the next you are not allowed to see them at the office anymore. You have been evicted from people that are important to you and a routine you live by. Sure, you can still catch-up with them and have lunches and such, but it isn't the same. Even the strong and reclusive people become depressed by these circumstances.

Looking for a new job is your new job. It can be difficult for a number of reasons. First, being pushed out of a job can leave you bitter and that shows up in an interview. You have probably interviewed people that seemed angry and didn't hire them.

Second, layoffs at the height of a recession can leave you with few job options. I checked for jobs through Hot Jobs during the Dot-com bust and saw very few postings and sometimes no postings in the Boston area. Do a search today and you'll find hundreds of Java developer positions in the same area.

Recruiters can be supremely helpful when they are being employed by companies. They may be in a drought during a recession too though. Next are the online ads. I often wonder the value of ads on HotJobs and Dice whether the companies are showing off or are really hiring. Craigslist.com seems to have ads from employers actively hiring. Of course, your professional network is gold and you really should tell people about your situation. They may get know of a company that's hiring and get you in front of someone.

I've painted a bleak picture so far and now I'm going to talk about some of the joys of being out of work. Yes, being unemployed and scraping by can be a wonderful life-changing thing that may bring you a lot of happiness. And provided you can weather the financial drought, could be the best thing that ever happened to you.

Bear in mind that you are a developer. You have all the skills to write your own application from scratch. You can start your own company. You can work for yourself and now is a good time to start. Your skills will stay sharp and you can explore areas of application development that were not available to you in the past. You can learn things outside of your old job too, like learning sales, marketing and finance. It can be an incredibly valuable learning experience.

You don't have to start your own company though. Consider working on an OSS project fixing bugs and working your way up to being a mainline contributer. The minimal goal is to ensure you don't lose your valuable development skills.

There are lots of fun things you can do on the cheap too. You can go out for a walk, a long walk, every day. Reading is something you have plenty of time for. And of course, you can code for several hours a day on things you are interested in. You can also spend some time blogging (aka writing skills), cooking and gardening. You could probably paint your house too. You can go on long drives and hikes.

One obstacle to overcome is the notion that you must get hired at your old salary, old title or even get a promotion. It happens, but many developers will tell the tales of how employers snapped up highly skilled laid off folks on the cheap.

I talked to a manager at a defense research company during the beginning of the Dot-com crash who was excited by the layoffs happening in the area. She was looking forward to hiring a couple of new people at lower salaries. I lost interest immediately because I currently had a job and a front line manager probably shouldn't be so excited by how labor costs were coming down thanks to the misfortune of others. Moreover, they shouldn't gleefully take advantage of the laid off when there is actually no financial benefit to the hiring manager. An argument could be made that the manager can now hire a better engineer for the money, but that engineer probably has enough sense to leave when the market rebounds. These managers are looking to cut labor costs and a laid off person has almost no room to negotiate salary or benefits.

There are some guys out there that haven't been laid off and they attribute it to their stellar performances and that's great, good for them! The risk is that you simply never know what is going to happen from one quarter or week to the next. Preparing for a layoff is sort of like a squirrel preparing for winter, you hope it will never come, but you are ready if it does.

Now some of this sounds like words of experience. I've been laid off and it wasn't a good time for about a week and I was bitter about it for a lot longer. A few days after being laid off I started writing a lot of code every day, reading voraciously, dating more, watching a lot of movies, cooking, spending a lot of time outdoors, looking for a new job every day and met my future wife. I had saved ahead of time and had a low mortgage. I look back at that time as being one of the best times of my life, but only because I had the savings.