The national unemployment rate averaged 6.6 percent, not seasonally adjusted, in the fourth quarter of 2008, up from 4.6 percent a year earlier. Private nonfarm payroll employment, not seasonally adjusted, decreased by 2.0 percent (-2,362,000) over the year.
For all of 2008, the total number of extended mass layoff events reached a program high at 7,818, and associated worker separations were at its highest level since 2001 at 1,383,553. Four major industry sectors reported program highs in terms of events and separations in 2008 -construction; finance and insurance; educational services; and accommodation and food services (with annual data available back to 1996). In 2008, eight states reached program highs in terms of numbers of separations - Alaska, California, Hawaii, Idaho, Indiana, Missouri, New Jersey, and Wyoming. Additional information on the annual data is available starting on page 6 of this release.
Industry Distribution of Extended Layoffs
Manufacturing firms reported 1,103 extended mass layoff events involving 185,686 separations, the highest levels for the industry on record. Manufacturing industries were responsible for 35 percent of private nonfarm extended layoff events and 36 percent of related separations in the fourth quarter of 2008. A year earlier, manufacuring made up 24 percent of events and 27 percent of separations. The largest numbers of separations within manufac-turing were associated with transportation equipment manufacturing (56,341, mostly associated with automobile manufacturing) and food manufacturing (21,863).
Construction firms recorded 843 extended mass layoff events and 100,922 separations, the highest levels for the industry on record. While most construction layoff events were due to the end of seasonal work and the completion of contracts, the number of layoff events due to slack work/insufficient demand more than doubled over the year.
In the fourth quarter 2008, thirteen major industry sectors reported fourth quarter program highs in terms of extended mass layoff events -construction; manufacturing; wholesale trade; retail trade; transportation and warehousing; real estate and rental and leasing; management of companies and enterprises; administrative and waste services; educational services; health care and social assistance; arts, entertainment, and recreation; accommodation and food services; and other services, except public administration.
Reasons for Extended Layoffs
Among the seven categories of economic reasons for extended mass layoffs, business demand factors (contract cancellation, contract completion, domestic competition, excess inventory, import competition, and slack work) accounted for 44 percent of the extended layoff events and 41 percent of separations during the fourth quarter of 2008.
This compared to 34 percent of events and 28 percent of separations in the same period a year earlier. Separations related to these business demand factors more than doubled over the year from 83,996 to 207,609, with those due to slack work/insufficient demand/nonseasonal business slowdown more than tripling from 42,201 to 152,279.
Job losses stemming from financial issues (bankruptcy, cost control, and financial difficulty) more than doubled from 124 events associated with 24,652 separations in the fourth quarter 2007 to 300 events and 65,034 separations in the fourth quarter 2008. These layoffs accounted for 10 percent of the events and 13 percent of separations during the fourth quarter of 2008, compared to 7 and 8 percent, respectively, a year earlier. Seasonal factors (seasonal and vacation period) resulted in 26 percent of the extended layoff events and 27 percent of the sepa-rations in October-December 2008.
Movement of Work
In the fourth quarter of 2008, 110 extended mass layoffs involved the movement of work and were associated with 24,236 separated workers. These movements of work were to other domestic locations or to locations outside of the U.S., and they occurred either within the same company or to other companies. Movement of work layoffs accounted for 5 percent of nonseasonal layoff events in the fourth quarter of 2008. A year earlier, there were 69 layoff events and 11,302 separations associated with the movement of work.
Among the 110 extended mass layoff events with reported relocation of work in the fourth quarter of 2008, 64 percent were permanent closures of worksites, which affected 16,849 workers. In comparison, 9 percent of the total extended mass layoff events reported for the quarter involved the permanent closure of worksites and affected 71,111 workers.
Of the layoffs involving the movement of work, 68 percent of the events and 61 percent of the laid-off workers were from manufacturing industries during the fourth quarter. Among all private nonfarm extended layoffs, manufacturing accounted for 35 percent of the events and 36 percent of separations.
While only 4 percent of the extended mass layoff events in the total private nonfarm economy were because of organizational change, such reasons accounted for 44 percent of layoff events associated with work relocation and resulted in 8,706 separations during the fourth quarter.
Among the regions, the Midwest accounted for the largest proportion of workers affected by extended mass layoffs associated with the movement of work (59 percent), followed by the West and the South (16 percent each). Among the 50 states and the District of Columbia, Ohio accounted for the largest proportion of workers affected by extended mass layoffs associated with the movement of work (24 percent), followed by Illinois (14 percent) and California (9 percent).
Some extended mass layoff events involve more than one relocation of work action. For example, an extended mass layoff event at an employer may involve job loss due to movement of work to both another domestic location of the company and a location out of the country; this would be counted as two movement of work actions. The 110 extended layoff events with movement of work for the fourth quarter of 2008 involved 150 identifiable relocations of work. An identifiable relocation of work occurs when the employer provides sufficient information on the new location of work and/or the number of workers affected by the movement. Of the 150 relocations, employers were able to provide information on the specific number of separations associated with the movement of work component of the layoff in 111 actions involving 16,061 workers.
Of the 111 actions where employers were able to provide more complete separations information, 90 percent of relocations occurred within the same company and 70 percent of relocations were domestic reassignments. Domestic relocation of work affected 12,286 workers, and out-of-country relocations were associated with 3,775 separations, 1 percent of all nonseasonal and nonvacation extended mass layoff separations.
Recall Expectations
Forty-five percent of employers reporting an extended layoff in the fourth quarter of 2008 indicated they anticipated some type of recall, down from 56 percent a year earlier and the lowest fourth quarter proportion since 2001. Of those employers expecting to recall workers, 36 percent indicated that the offer would be extended to all displaced employees, and 79 percent of employers anticipated extending the offer to at least half of the workers. Seventy-eight percent of employers expecting to recall laid-off employees intend to do so within 6 months. Excluding layoff events due to seasonal work and vacation period in which 96 percent of the employers expected a recall, employers anticipated recalling laid-off workers in 43 percent of the events, the lowest fourth quarter proportion since 1997.
Size of Extended Layoffs
The average size of a layoff (as measured by separations per layoff event) in the fourth quarter of 2008 was 162, compared to 166 per layoff in fourth quarter 2007. Layoff events continued to be increasingly concentrated at the lower end of the extended layoff-size spectrum, with 46 percent of events involving between 50 and 99 workers and 70 percent of events with less than 150 workers. This was the fourth consecutive fourth quarter that both of these proportions increased. Similarly, the proportion of events involving more than 500 workers, less than 4 percent, has also decreased each fourth quarter since 2004.
Layoffs involving between 50 and 99 workers accounted for 20 percent of all separations during the period, and layoffs with less than 150 separated workers accounted for 37 percent. These proportions are up from 18 and 36 percent from a year earlier, respectively, and have been increasing for the last four consecutive fourth quarters. Separations involving 500 or more workers accounted for 24 percent of all separations in the fourth quarter of 2008, up slightly from a year earlier.
Initial Claimant Characteristics
A total of 463,715 initial claimants for unemployment insurance were associated with extended mass layoffs in the fourth quarter of 2008. Of these claimants, 12 percent were black, 16 percent were Hispanic, 30 percent were women, 36 percent were 30 to 44 years of age, and 16 percent were 55 years of age or older. Among persons in the civilian labor force for the same period, 11 percent were black, 14 percent were Hispanic, 47 percent were women, 33 percent were age 30 to 44, and 18 percent were 55 years of age or older.
Geographic Distribution
Among the 4 census regions, the Midwest recorded the highest number of separations (202,392) due to extended mass layoff events in the fourth quarter of 2008, followed by the West with 164,717. Both regions recorded program highs in terms of numbers of separations in the fourth quarter. Among the 9 census divisions, the high-est number of separations during the fourth quarter of 2008 was in the East North Central division (156,100). The Pacific division had the next highest level of separations with 132,747. Five divisions reported program highs in terms of numbers of separations in the fourth quarter - the East North Central, West North Central, East South Central, Mountain, and Pacific.
California recorded the largest number of worker separations (103,470), followed by Illinois (55,229), Michigan (38,820), and Ohio (30,295). excluding the impact of seasonal reasons, California still reported the highest number of job cuts (88,075). Seventeen states reported fourth quarter program highs in terms of numbers of separations--Arkansas, California, Delaware, Florida, Idaho, Illinois, Indiana, Kentucky, Michigan, Minnesota, Mississippi, Missouri, Nevada, Ohio, Oklahoma, Oregon, and Vermont.
Forty-six percent of extended mass layoff events and 43 percent of separations (217,268) occurred in metropolitan areas in the fourth quarter of 2008, compared with 50 percent of events and 45 percent of separations (136,573) during the fourth quarter of 2007. Among the 369 metropolitan areas, Chicago-Naperville-Joliet, Ill.-Ind.-Wis., reported the highest number of separations (19,894) in the fourth quarter of 2008. Next were Detroit-Warren-Livonia, Mich., with 14,714 separations and Los Angeles-Long Beach-Santa Ana, Calif., with 12,438 separations. Employers located in nonmetropolitan areas separated 62,879 workers in extended mass layoffs.
Review of 2008
For all of 2008, employers reported 7,818 extended mass layoff actions, affecting 1,383,553 workers. Compared to 2007, the number of events was up 46 percent (+2,455 from 5,363), and the number of separations increased by 43 percent (+417,618 from 965,935). The annual average national unemployment rate increased from 4.6 percent in 2007 to 5.8 percent in 2008, and private nonfarm payroll employment decreased by 0.7 percent, or 812,000. In 2008, employers expected a recall in 42 percent of the mass layoff events, down from 50 percent of events in 2007. Eleven percent of extended events in 2008 were permanent closures, the same proportion as in 2007. Permanent closures were most numerous in the manufacturing industry, pri-marily in transportation equipment manufacturing, and in retail trade, primarily in general merchandise stores. When compared with 2007, events associated with permanent closures in 2008 increased 45 percent from 594 to 860, and separations increased 65 percent from 125,836 to 208,103.
