Lighting the "Lay Off Fuse" - What Happens When You Lay Off a Gen Z Employee

When you lay off a Gen Z employee, you’re not just making a financial decision—you’re lighting a fuse.

Gen Z isn’t like previous generations; they won’t quietly accept being a casualty of corporate America’s bottom line. They’re vocal, they’re connected, and they’re ready to call out any company that treats its people as expendable. The immediate savings might give your CFO a sigh of relief, but the long-term damage? That’s a ticking time bomb that could blow up your brand, your culture, and your future.

The Impact on Trust and Loyalty

For Gen Z, trust in an employer is paramount. This generation values transparency, authenticity, and a sense of security in their workplace. According to a Deloitte study, 80% of Gen Z employees consider trust to be a critical factor in their decision to stay with an employer . When a company lays off a young employee, it risks shattering that trust—not just for the individual affected, but for the entire workforce. Gen Z employees, often keen observers of their work environment, will take note of how their peers are treated. A single layoff can lead to a domino effect of disengagement and disillusionment among other early-career employees, who may question their own future within the organization.

How Gen Z Reacts Differently to Layoffs

Compared to previous generations, Gen Z's reaction to being laid off is often more pronounced and multifaceted. Unlike Gen Y (Millennials), who have grown somewhat accustomed to economic turbulence and have learned to adapt, Gen Z's professional journey is just beginning. They enter the workforce with high expectations for career stability and growth, often shaped by the promises of internships, campus recruiting, and early career programs.

A survey by LinkedIn found that 61% of Gen Z workers feel anxious about job security, a significantly higher percentage compared to Millennials at 45% . When Gen Z employees face layoffs, their response is typically more immediate and visceral. This generation is known for its strong sense of social justice and advocacy, and they are more likely to vocalize their dissatisfaction publicly. Social media, a tool that Gen Z wields with fluency, becomes a platform for airing grievances and sharing their layoff experiences, potentially leading to viral moments that can severely damage a company's reputation.

Moreover, Gen Z is more likely to take layoffs personally, seeing them not just as a business decision but as a breach of trust. This sense of betrayal can have long-lasting effects on their relationship with the workforce, making them more cautious, skeptical, and less likely to fully commit to future employers.

Gen Z’s Toolbox: Adaptability and Advocacy

Gen Z’s approach to being laid off is also distinctive due to their reliance on digital tools and platforms. Unlike previous generations, Gen Z has grown up in a world where remote work, freelance gigs, and digital entrepreneurship are viable alternatives to traditional employment. According to a 2023 McKinsey report, 72% of Gen Z workers are interested in pursuing entrepreneurial ventures, either as a side hustle or full-time career . When faced with a layoff, many Gen Zers are quick to pivot, using online platforms to seek new opportunities, whether through gig work, starting their own ventures, or rapidly building new skills through online courses and certifications.

Their ability to adapt and thrive in a digital-first world means that Gen Z can often rebound from layoffs more swiftly than older generations. However, this adaptability also comes with a heightened sense of independence. After experiencing a layoff, many Gen Z employees may choose to forgo traditional career paths altogether, opting instead to create their own opportunities, which can lead to a brain drain from industries that fail to retain their young talent.

Long-Term Reputation Damage

Gen Z is vocal, and their experiences—positive or negative—are quickly shared across social media platforms and professional networks. A layoff, especially one perceived as unjust or poorly handled, can lead to a reputational hit that reverberates through these digital channels. A Glassdoor study revealed that 86% of job seekers in the Gen Z demographic check company reviews before applying, and negative reviews can deter top talent from even considering your organization . Companies may find it increasingly difficult to attract top Gen Z talent in the future if their reputation is tarnished by stories of layoffs. This generation is not just looking for a job; they are seeking an employer whose values align with their own.

The Loss of Future Leaders

When companies cut ties with a new Gen Z employee, they are not just letting go of a current worker—they are potentially losing a future leader. Gen Z brings fresh perspectives, tech-savviness, and a unique approach to problem-solving that can drive innovation within an organization. According to a report by PwC, 60% of Gen Z employees want to have a positive impact on their organization, and 50% believe they can lead efforts to drive change . By laying off these individuals, companies might inadvertently stifle the very innovation they need to stay competitive in the long run.

The Impact on Company Culture

Laying off a young employee sends a strong message to the rest of the team about what the company values. If cost-cutting is seen as more important than investing in and nurturing new talent, it can lead to a culture of fear and instability. This environment is particularly detrimental to Gen Z, who thrive in workplaces where they feel valued, supported, and able to grow. A single layoff can disrupt the sense of community and collaboration that is vital to a healthy workplace culture. Research from Gallup shows that 66% of Gen Z employees prioritize a positive workplace culture, and 77% are more likely to stay with an employer that invests in their development .

Ramifications for the Future Workforce

The effects of laying off Gen Z employees extend beyond the immediate company. As more organizations make similar decisions, there is a broader impact on the labor market and society as a whole. If young workers consistently face instability, they may become more risk-averse, less willing to innovate, and more focused on job security than on driving change. This shift could have long-term consequences for industries that rely on the bold ideas and fresh perspectives that new generations bring.

A Call for Strategic Decision-Making

Laying off Gen Z employees might seem like a quick fix, but here’s the reality: you’re playing with fire. This generation won’t just sit back and accept it—they’ll take to social media, spread the word, and make sure everyone knows how a company treats its people. The immediate financial relief a company will gain will be nothing compared to the storm that follows.

Gen Z is the future, and cutting them loose isn’t just a short-term mistake; it’s a long-term catastrophe. If you want to stay relevant, to keep your culture intact, and to drive the innovation that will carry you forward, then you need to think twice before letting go of your young talent.

The decisions you make today will shape your company’s future— don’t burn it down before it has a chance to grow.

Wally Bruner, founder of Early Career Partners, is a recognized leader, pioneer and activist in the early career arena, having designed, launched, and led award-winning onboarding and training programs for front-line sellers and solutions engineers at CA Technologies, Salesforce, Amazon Web Services, and Oracle.

Additionally, Wally co-leads the Cross Academy Association for Early Career Programs, a global professional association that develops best practices and frameworks for early career practitioners and organizations. Wally's mission is to cultivate nascent talent and create a synergistic force that propels the early career field to new heights.