As the global economy navigates a turbulent period marked by widespread job cuts, a new analysis sheds light on a concerning dimension of workplace inequality: women are consistently receiving smaller severance packages than their male counterparts. This disparity not only underscores existing pay gaps but also raises critical questions about equity in an era defined by economic uncertainty and evolving employment practices.
The Unsettling Severance Gap
According to the latest Severance & Salary Benchmarking Report from outplacement firm Challenger, Gray & Christmas, women were paid an average of 4.6% less in severance than men across all industries in 2024. This finding emerges as job cuts ripple through various sectors, leaving many workers facing unexpected transitions.
While the overall trend favors men, the report also highlights intriguing exceptions. In the education sector, women received significantly larger severance packages, averaging approximately 75% more than men. Similarly, the chemicals industry saw women’s packages average 27.6% higher, with insurance and automotive industries also paying women 10–22% more in average severance. Despite these specific industry bright spots, the overarching gap remains a stark reminder of persistent pay inequities that extend beyond regular wages.
Beyond the Payout: Reputation and Trust
HR leaders emphasize that fair severance decisions are crucial for demonstrating organizational equity and respect. A persistent gender gap in this area can severely damage employer reputations and erode trust, particularly when layoffs are widespread and impactful. John Challenger, CEO of Challenger, Gray & Christmas, powerfully articulates this sentiment: “Your former people are your people. How you part ways says everything about who you are as an employer.”
The Era of ‘Forever Layoffs’
The findings arrive amidst a cooling job market. Early 2026 has already seen significant layoff announcements from major firms, including Meta, Citi, BlackRock, and Macy’s, among others. While some companies, like Microsoft, have publicly denied broad workforce reductions, others, such as Amazon, are reportedly planning thousands of cuts.
The December 2025 U.S. payroll report painted a weaker-than-anticipated picture, with only 50,000 non-farm payrolls added and a dip in the unemployment rate to 4.4%. Last year marked the slowest annual job growth since 2003, with over 1.1 million jobs cut through November, a 54% increase from the prior year. This included massive reductions at Amazon, UPS, and Target.
Compounding the contracting job market is a shift in firing trends. Glassdoor Economic Research has coined the term “forever layoffs” to describe a new reality where “job cuts come in never-ending waves instead of a tsunami.” This strategy of smaller, regular layoffs, rather than less frequent, larger cuts, creates “cultures of anxiety, insecurity and resentment at companies,” as Glassdoor’s report warns.
‘AI-Washing’: A Convenient Narrative?
Adding another layer of complexity, many companies are attributing layoffs to the rise of artificial intelligence. However, a survey by Resume.org, an AI-powered resume service, found that nearly 60% of hiring managers emphasize AI’s role when laying off workers or freezing hiring because it “plays better with stakeholders than citing financial constraints.”
Experts have echoed these concerns, suggesting that some companies might be “AI-washing” their job cuts to mask business missteps or routine cost-cutting measures. Peter Cappelli, a professor of management at the Wharton School, notes, “We spend a lot of time looking carefully at companies that are actually trying to implement AI, and there’s very little evidence that it cuts jobs anywhere near like the level that we’re talking about. In most cases, it doesn’t cut head count at all.” He adds that “using AI and introducing it to save jobs turns out to be an enormously complicated and time-consuming exercise.”
The current economic landscape presents a multifaceted challenge for workers. The persistent gender gap in severance pay, the unsettling trend of “forever layoffs,” and the potentially misleading narrative of “AI-driven” job cuts all converge to create an environment of heightened insecurity. As companies navigate these choppy waters, a commitment to genuine equity and transparency will be paramount, not just for their employees, but for their long-term credibility and success.
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