The Cliff’s Edge: Individual Impact of Business-Level Decision Making
- Jillian O’Malior
- 2 days ago
- 12 min read
By Jillian O'Malior, Founder & CEO, New World Labs
PUBLISHED: June 7, 2026
One Decision, One Life
I suppose every good story has to start somewhere. And for the sake of this particular story, why not start with me.
November 14, 2024. I had been with my company for 7 1/2 years at that point, having grown from Marketing Manager to VP of Brand & Creative. I had led growth, expansion. Going from a team of graphic designers who put together banner ads and HTML emails to a full-fledged brand strategy and execution team, developing global EVP campaigns and winning awards. But on November 14, I was an expensive line item in an ever-changing organizational restructure. And I was let go on a 3-minute Zoom call.
I was given eight weeks of severance, which after taxes took their share at a supplemental rate, came out to closer to 4-5 weeks. I was able to secure the max allowance for unemployment, but at $450 a week barely covered half of my monthly rent. And as a single mom, with a bit in savings but ultimately not a massive nest egg, I figured with my connections, my experience, and my tenacity, I could secure something before I had to dip too far into my reserves.
Those first 45 days, I was confident. Sure that once the holidays were over and people were back in office, I would have no trouble securing my next full-time position. I started building my consultancy as well, but went after networking and applying like it was my full-time job. After all; I had navigated downturns in the market before, and always managed to get back on my feet within about 2 months. I had this.
16 months, 773 applications later, I finally landed that job.
My severance was long gone. Unemployment too.
Savings was drained.
My 401k had been cashed out and I was awaiting a large tax bill as a result.
Credit card debt spent on gas and groceries was mounting every month.
I had secured through those 16 months two short-term, part-time jobs, but all they managed to do was keep my bank account from going into the red.
After 16 months, I had finally located a shovel. But I was still in the hole. And even today, digging myself out feels like an almost insurmountable job.
And I did what almost any person would do in that position: I believed it had to be me.
My resume wasn’t good enough. My interviewing skills weren’t up to par. My network wasn’t comfortable referring me. My background was too niche; coming from an agency I didn’t have enough in-house experience for the roles I was going after. I wasn’t smart with my money, I should have made different decisions in the years before to better prepare myself. Or maybe it was just bad karma; bad luck that I found myself in that position, mid-career.
But as time went on, I started to question my taking it all as a personal indictment of my worth. And I started looking into the data. What exactly was happening in this market, what exactly had happened at a macro scale that might have informed some of this bad luck?
Was it really all my fault, or am I a part of a broader rule, a bigger pattern of what is happening across the market?
And as it turns out, what happens next isn’t just my bad luck. It’s pure math.
The Before Times: What a Working Labor Market Looks Like
We are in odd times, no one can deny that. The pandemic, 2020-2022, experienced two massive pendulum swings when it comes to the job market: mass layoffs as the pandemic started, social safety nets and structures in place to stem the bleed, and then mass hiring to correct for the contraction. It was effectively a two-year blip; an isolated market that cannot be reflective of a baseline for what “health” looks like.
For that, we need to go back pre-pandemic, to 2018-2019.
This period of time was widely considered stable: low unemployment and healthy job growth. High employee confidence, meaning the number of voluntary job loss (quitting) exceeded firings and layoffs, as individuals felt secure in seeking new opportunities for better pay and growth.
U-6 unemployment rates (often considered “true” unemployment given the factors that come into play with that calculation) averaged at 7.4% across the two years. At roughly 5.8M hires per month, the gap between job loss and job creation was healthy and stable. Not only that, individual financial security was steady: about 7% of all individual income was classified as “personal savings rate”; the ratio of personal income that is used to either provide funds to capital markets or invest in tangible assets (like real estate). Credit card debt in total was below $1 trillion, and delinquency rates on all debt (credit card, auto, and mortgages) held steady across 30-day and 90-day delinquencies.
This is what the floor looked like when it was solid; healthy job growth, secure financial investment, lower debt and delinquency.
2026 is telling a slightly different story.
Standing on the Clifftop: The Freeze
The story of this labor market is not purely mass layoffs, though that is an ongoing issue that I personally feel needs addressing. Involuntary job loss, which layoffs are a part of, have been more or less comparable to the 2018 baseline. The real story is hires. Monthly hires has dropped within two years from a 2023 average of 5.87M per month to 5.24M per month in 2025 – a decline of 620,000 per month. Annualized, that’s 7.4 million fewer hiring opportunities per year in just a 24 month period. On top of that, voluntary job loss (quits) dropped from an average of 3.69M per month in 2023 to 3.17M per month in 2025, indicating that employee confidence in the market itself has shifted.
When we take these three numbers together (hires, voluntary job loss, and involuntary job loss) what we can clearly see is that the gap between loss and opportunity has started to narrow over the past 2 years. Layoffs themselves may not have gone up dramatically, but the escape hatch has closed.
But there’s another detail to consider here, which is the U-6 unemployment rate. This is the broadest rate we have available, and we’ve seen it move from 6.8% at the close of 2019 to 8.2% in April 2026. This shows us it’s not just about the stereotypical “unemployed” population. It’s about people stuck in a cycle of part-time work, of gig work, who’ve felt defeated and stopped looking, who can’t find their way back to what they once had. And they no longer show up in the standard headline number.
Duration Evidence
The hiring data tells us from the organization side the market is absorbing far fewer people. But the unemployment duration data tells us what that freeze feels like from the individual’s experience.
In 2022, during the post-pandemic hiring boom, the median unemployed worker found a job in about eight weeks. That number has climbed every year since. By December 2025, it broke the 2018-2019 baseline for the first time, hitting 11.4 weeks. Come March 2026, it’s at 11.5. It’s now taking the typical unemployed person 40% longer to find work than they did just three years ago.
But that’s the median. The mean tells a far shakier story: 25.7 weeks as of February 2026. The average unemployed person is spending more than six months out of work – right at the threshold where UI benefits in most states max out.
And then the long-term unemployed, those out of work 27 weeks or more, have grown from 18.5% of all unemployed people in December 2022 to 26% in December 2025. That group has again exceeded our 2018-2019 baseline, and they’re the group who is past the point of social supports.
The market is taking longer to absorb people into the workforce. The average person is landing employment right at the point of UI exhaustion, and an ever-growing share has fallen through the data entirely. This goes a bit beyond what economists have labeled a “low-fire, low-hire” economy. This is an entire pipeline of experienced, talented individuals with an ever-narrowing exit point.
The Cliff’s Edge: The Buffer Runs Out
Let’s take a look at the cold, hard cash numbers an individual faces when staring down unemployment. The average severance for a director-level employee is 4-12 weeks, depending on tenure and organization. Unemployment insurance is up to 26 weeks, and at its max, only replaces roughly 40-45% of prior income. When you factor in that the April 2026 personal savings rate has dropped precipitously to 2.6%, we can see that the average American household has almost nothing to bridge the gap.
That savings rate context is critical in a whole other way: in 67 years of measurement since 1959, there have only been two other periods when savings were this low. February 2005 - October 2006, and August - December 2007. The first was the peak of the housing bubble. The second was the eve of the Great Financial Crisis. Both periods preceded the 1.59 million individual bankruptcies filed in 2010.
The difference today: in 2005-2007, low savings reflected a false wealth effect (rising home values, people felt less inclined to save for a rainy day). Today however, it reflects genuine financial exhaustion. Stagnant wages, rising costs, individual income does not stretch to the places it once did to allow for further investment. The vulnerability of the hard number is identical, but the cause is far more honest, and far more existential.
Another factor we want to consider is 401k hardship withdrawals. We’ve seen steady, significant growth year over year: 1.7% in 2020 up to 6.0% in 2025, a record high in 24 years of tracking. Consider what this entails: people are paying a 10% early withdrawal penalty plus income taxes just to access their own savings. This doesn’t happen from poor planning or impulse; these are families trying not to tumble over the cliff’s edge.
The Cliff Face: Debt in Free Fall
When people are faced with constrained income, they flip to their own version of a bill-specific Maslow’s Hierarchy of Needs: mortgage/rent holds strongest (they need to keep the roof). Then the car (they need to get around). Then utilities. Credit cards are last on the list, so they are the first to go delinquent. So when credit card delinquency reaches the level it has, 9.1% of balances flipping into 30+ day delinquency in a single quarter, it means every hard prioritization decision has already been made and still can’t cover the minimum payment.
So, let’s look at this across our three debt measures, and our baseline to today:
Credit card 30+ day delinquency: 6.4% baseline (2018) > 9.1% peak (Q2 2024) > 8.6% at last measure (Q1 2026)
Auto loan 30+ day delinquency: 7.06% baseline > 8.12% peak (Q3 2024) > 7.72% at last measure
Mortgage 30+ day delinquency: 3.47% baseline > 3.85% peak (Q4 2025) > 3.76% at last measure
Despite monthly fluctuations, we are now surpassing our baseline levels on all measures, even mortgages, the last bill people are willing to go delinquent on. People have stopped protecting even the roof over their heads.
But as we tumble our way down the cliff face in free fall, the 90-day delinquency rate matters most: at 7.1% for credit cards, 2.97% for auto, and 1.48% for mortgages, every single lever is now above their respective baseline measures for Q1 2026, and the trend line seems to be pointing up. And when someone is 90 days past due, it’s not a matter of them merely catching up. This is unfortunately when they are going deeper.
Hitting the Breakers: The Last Resort
This exceeds every quarter post-pandemic, and is rapidly approaching our 2018-2019 baseline.
The distinction between Chapter 7 filings and Chapter 13 filings is this final tumble’s real argument. Chapter 13 is a bankruptcy plan with forgiveness built in; it says “I have a plan but I need help.” It allows for the repayment of debt and the retention of the majority of assets. Chapter 7 however, that says “I have nothing left.” It is the last resort for most Americans, particularly those who have spent their adult life building careers and lives of pride and ownership. Chapter 7 has now exceeded the previous 5 year's filings and is on the tails of pre-pandemic measurements. Chapter 13 is rapidly approaching as well.
The implication we’re tracking here is clear: people have been launched over the cliff’s edge, and they’re landing far harder when they fall. More people are arriving at bankruptcy without options; no more backups, no more safety nets, no restructuring plans.
Looking at the annual trajectory over the past two years:
2024: 478,752 consumer filings
2025: 533,949 consumer filings (+12%)
2026 pacing: ~591,000+ (tracking +14% as of Q1)
We are seeing a closing gap between job loss and job opportunity. We are seeing the time people are unemployed stretching out week by week, more and more losing benefits without having secured work. We are seeing credit card debt increasing, up to $1.3T in Q1 2026, the highest in history. We are seeing delinquency rates on debts across the board increasing, bypassing our baseline rates pre-pandemic. And we’re seeing most people’s last resort, Chapter 7 filings, pacing to exceed all rates from the previous several years.
What the Job Seekers Can Take Away
If you are currently navigating the job market, or have just found your way out of it, please take this single piece away: this isn’t about you.
Every single metric moved against you simultaneously. Fewer hiring opportunities. A labor market that now takes 40% longer for a displaced worker to find work than it did in 2022. A savings rate at historical lows; only two other comparable periods in 67 years. Retirement accounts being raided at record rates. Debt that grows faster than income. Not to mention a healthcare and cost-of-living environment that leaves no margin for error, let alone surprise.
There is no individual decision you could have made to protect yourself from a structural shift that shows up in every federal dataset simultaneously. The system and your ability to navigate it did not fail you specifically. It failed at a macro scale; you just happened to be in it.
Or, to put it more poetically: the cliff face eroded away while you were standing there, and took you with it.
What Leaders Need to Understand
No single executive decided to freeze the labor market on their own.
But 50,000 executives each making the same “prudent” headcount decision in the same quarter produce exactly that outcome. Monthly hires fell an average of 620,000; not because one company pulled back, but because every company pulled back at once. The hires data shows with no uncertainty that this is coordinated, if unintentional.
Your laid off employee’s bankruptcy filing isn’t visible to you 8 months after the severance letter is signed. Neither is their reduced spending, or the restaurant that closed because too many of its regulars stopped coming, or the software subscription cancelled, or the discretionary purchase that never happened. The damage is deferred and diffused; and it never makes it back to the boardroom by the time you’re instituting the next hiring freeze or executing the next round of layoffs.
Another factor to consider here when it comes to your company's financial success: the Consumer Confidence Expectations Index has been below 80 since February 2025.
Below 80 is a key historical recession signal. Employees aside, your consumers are spending from a place of fear, not optimism. That is a fundamentally fragile consumer, and one that will inevitably have an impact on your broader bottom line far more than any single salary point.
Where We’re Headed
This data does not happen instantaneously or even simultaneously; it’s a stair-step.
Based on the lag patterns documented in this data, the consequences of 2025 hiring and firing decisions have not yet fully landed. The layoff-to-delinquency lag is 6-9 months. The delinquency-to-bankruptcy lag is another 6-12. Decisions that were made in the executive meetings of mid-2025 are producing delinquency now. Bankruptcy is to follow.
This is not an alarmist projection or even a prediction of collapse. The data does not show GFC-level crisis. Mortgage delinquency is growing, but remains contained. And the absolute numbers, while elevated, are still below the 2010 peaks.
What this does show is a steady, accelerating deterioration of every personal financial buffer simultaneously, and in an economy where those buffers have shrunken to a point of being measured in weeks, not months, for most households.
The individuals navigating this stagnant job market and financial insecurity are not alone in the patterns they’re seeing emerge in their bank accounts and inboxes.
And the executives who seek the quick financial win of headcount contraction and reduction would be well advised to look at the macro landscape of consumer confidence and spending capabilities that affect their profit margin before pulling that lever.
When I was in the thick of my own recent journey of job loss, hiring struggles, and debt accumulation, I felt instinctively that I couldn’t have been alone. It couldn’t be entirely me, my decisions, my spending habits, my judgment that put me in this position. And I sought a logical, data-backed explanation. And even if I couldn’t find it, I could be put at ease knowing that I looked at every angle. And as it turns out, I wasn’t alone. None of us are.
Sources & Further Reading
Monthly hires / quits / layoffs data: BLS Job Openings and Labor Turnover Survey (JOLTS)
Median / mean unemployment duration: BLS Employment Situation
U-6 unemployment rate: BLS Table A-15
Personal savings rate (2.6%): BEA Personal Income and Outlays
401k hardship withdrawal rate (6.0%): Vanguard How America Saves 2025
Credit card / auto / mortgage delinquency: Federal Reserve Bank of New York Consumer Credit Panel
Credit card debt $1.3T: Federal Reserve G.19 Consumer Credit Report
Consumer bankruptcy filings: U.S. Courts Bankruptcy Statistics
Consumer Confidence Expectations Index: The Conference Board Consumer Confidence