August 2, 2004
Recent Layoff Rate Was Highest Since Early 1980's
Layoffs occurred at the second-fastest rate on record during the first three years of the Bush administration, a government report has found.
In the government's latest survey of how frequently workers are permanently dismissed from their jobs, the layoff rate reached 8.7 percent of all adult jobholders, or 11.4 million men and women age 20 or older. That is nearly equal to the 9 percent rate for the 1981-1983 period, which included the steepest contraction in the American economy since the Great Depression.
Recession and weak economic growth characterized most of the period from 2001 to 2003, and millions of jobs disappeared. But while layoffs normally rise in hard times and fall in prosperous years, the new survey published Friday by the Labor Department's Bureau of Labor Statistics added to the statistical evidence that layoffs are more frequent now, in both good times and bad, than they were in similar cycles a decade ago.
The anecdotal evidence is abundant on this point, but the statistical evidence is only beginning to tell the same story. "It appears there is more displacement now; this latest number is quite high," said Henry S. Farber, a Princeton University labor economist who has challenged the anecdotal evidence, wondering whether it overstated the case.
The layoff rate over the last three years, for example, was greater than in the 1990-1991 recession, the displacement survey found. The rate was also higher in the late 1990's boom years than in the late 1980's, a parallel period of strong economic growth.
"No one should be surprised by the increasing frequency of layoffs," said James Glassman, senior United States economist for J. P. Morgan Chase. "It is the echo of globalization. Companies are shifting production around more frequently to take advantage of low-cost centers."
A Bush administration spokeswoman, Claire Buchan, asked for comment, responded with a statement that focused on the surge in job creation in recent months and made no mention of the worker displacement report. A Kerry campaign economist, Jason Furman, said the survey showed that jobs in America were increasingly insecure.
While job displacement has gradually increased during the 23 years covered by the surveys, the unemployment rate has trended down. For some labor economists - Mr. Farber and Jared Bernstein at the Economic Policy Institute, for example - that makes the rising layoff rate even more striking.
"If you plot the displacement rate in relation to the unemployment rate, it is a staircase going up," Mr. Bernstein said. "You are more likely to be laid off now than in similar levels of unemployment in the past."
The falling unemployment rate also suggests that most job losers are re-employed relatively soon, and that is borne out by the surveys. In each of the surveys, about two-thirds of those who said they had lost jobs over the previous three years also said they were working again at the time of the survey. The percentage was even higher - 10 points higher - in the tight labor markets of the late 1990's.
Pay is another matter. In the latest survey, 56.9 percent of those who said they were re-employed also said they were earning less in their new jobs than in the jobs they had lost. That compared with 46.6 percent from 1991 through 1993, a similar period of recession followed by weak recovery, and 42.2 percent from 1997 through 1999, which were boom years.
The worker displacement survey has been conducted in January or February of each even-numbered year since 1984. The members of 60,000 households, a cross section of the population, are asked if they lost a job at any time in the previous three years because a factory or company closed, there was insufficient work or the position they occupied was abolished. A "yes" answer meant the job was permanently gone, without prospect of recall.
President Reagan instituted the job displacement survey in response to grumbling from Congress as layoffs surged. The surveys initially focused on workers who were laid off after holding a job for at least three years. These "long-tenured" workers still get a lot of attention in the biennial reports; 5.3 million were displaced in the 2001-2003 period, or 6.3 percent of all workers age 20 or older with at least three years of tenure.
The 6.3 percent was the highest layoff rate on record for
long-tenured workers, slightly above the 6.2 percent in the 1981-1983