Final answer:
A recession leads to decreased demand and production, resulting in layoffs and the emergence of discouraged workers. Workers who remain employed may face stagnant wages or cuts. Firms often delay hiring until they are certain of the recession's end to avoid rehiring costs.
Step-by-step explanation:
A recession is often characterized by a reduction in production and demand, leading firms to decrease their workforce. This situation can cause discouraged workers, those who have ceased looking for employment due to the scarcity of suitable job opportunities. As business demand decreases, firms may lay off employees, which leads to significant financial and personal costs for the workers and their families. Those who maintain their jobs during a recession may face minimal wage increases or even salary reductions.
Initially, firms might retain employees hoping that the economic downturn is temporary and to avoid the costs associated with rehiring and training new workers once the recession ends. However, as the recession continues, the lack of business may force firms to make difficult decisions about downsizing their workforce. Only when firms are confident that the economic recovery is sustainable will they start hiring again and potentially offer overtime to current workers before committing to expanding their staff.