Both events and separations in the construction industry reached third quarter program highs in 2008. The number of separations in manufacturing rose sharply (+32,175) over the year, largely due to increased layoff activity in the transportation equipment sector (+12,930).
Among the seven categories of economic reasons for layoff, business demand accounted for the highest share of events (43 percent) and number of separations (76,979) in July-September 2008. The largest over-the-year increases in the number of separations occurred in layoffs attributed to business demand factors (+27,711) and organizational changes (+10,533). Within business demand, the number of separations due to slack work nearly doubled to 41,116, while in organizational changes, layoffs attributed to business- ownership changes more than doubled to 11,692. Within financial issues, the number of workers terminated because of bankruptcies nearly doubled over the year to 12,156.
Permanent closure of worksites occurred in 15 percent of all extended mass layoff events and affected 50,025 workers during the third quarter of 2008. Thirty-one percent of employers reporting a layoff indicated they anticipate some type of recall, down from 38 percent a year earlier and the lowest third quarter proportion since 2002. Excluding seasonal events, employers anticipated recalling workers in 20 percent of the layoffs, matching third quarter 2002 as the lowest proportion for any quarter since data collection began in 1995.
The national unemployment rate averaged 6.0 percent, not seasonally adjusted, in the third quarter of 2008, up from 4.7 percent a year earlier. Private nonfarm payroll employment, not seasonally adjusted, decreased by 0.6 percent (-672,000) over the year. Industry Distribution of Extended Layoffs
Manufacturing industries were responsible for 32 percent of private nonfarm extended layoff events and 35 percent of related separations in the third quarter of 2008; a year earlier, manufacturing made up 26 percent of events and 27 percent of separations. Manufacturing had 430 extended mass layoff events and 75,511 separations, the highest third quarter levels for the industry since 2003. The largest numbers of separations were in transportation equipment manufacturing (21,630, mostly associated with light truck and utility vehicle manufacturing) and food manufacturing (10,975). The construction sector accounted for 16 percent of events and 10 percent of separations, the highest third quarter percentages recorded in the program. These job cuts were largely in specialty trade contracting. Layoffs in administrative and waste services accounted for 9 percent of all events and separations and were concentrated in temporary help services.
Reasons for Extended Layoffs
Among the seven categories of economic reasons for extended mass layoffs, events related to business demand factors (contract cancellation, contract completion, domestic competition, excess inventory, import competition, and slack work) accounted for 43 percent of the extended layoffs and 35 percent of separations during the third quarter of 2008. Separations in this category registered the largest over-the-year increase (+27,711), with those related to slack work/insufficient demand/nonseasonal business slowdown nearly doubling. The numbers of workers terminated because of business demand reasons were highest in temporary help services, light truck and utility vehicle manufacturing, and professional employer organizations.
Seasonal factors (seasonal and vacation period) made up 15 percent of the extended layoff events and resulted in 38,742 separations, primarily in school and employee bus transportation and in food service contracting.
Job losses related to financial issues (bankruptcy, cost control, and financial difficulty) accounted for 13 percent of events and resulted in 32,812 separations during the third quarter of 2008, compared with 28,461 separations a year earlier. This increase was largely due to bankruptcies in full service restaurants.
Movement of Work
In the third quarter of 2008, 82 extended mass layoffs involved the movement of work and were associated with 14,613 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 7 percent of nonseasonal layoff events in the third quarter of 2008. A year earlier, there were 63 layoff events and 12,367 separations associated with the movement of work. Among the 82 extended mass layoff events with reported relocation of work in the third quarter of 2008, 55 percent were permanent closures of worksites, which affected 9,873 workers. In comparison, 15 percent of the total extended mass layoff events reported for the quarter involved the permanent closure of worksites affecting 50,025 workers.
Of the layoffs involving the movement of work, 67 percent of the events and 75 percent of the laid-off workers were from manufacturing industries during the third quarter. Among all private nonfarm extended layoffs, manufacturing accounted for 32 percent of the events and 35 percent of separations.
While only 8 percent of the extended mass layoff events in the total private nonfarm economy were because of organizational change, such reasons accounted for 56 percent of layoff events associated with work relocation and resulted in 8,276 separations during the third quarter.
Among the regions, the Midwest accounted for the largest proportion of workers affected by extended mass layoffs associated with the movement of work (56 percent), followed by the Northeast and the West (15 percent each), and the South (13 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 82 ex- tended layoff events with movement of work for the third quarter of 2008 involved 104 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 104 relocations, employers were able to provide information on the specific number of separations associated with the movement of work component of the layoff in 76 actions involving 9,265 workers. In the 76 actions where employers were able to provide more complete separations information, 86 percent of relocations (65 out of 76) occurred within the same company. Seventy-five percent of relocations (57 out of 76) were domestic reassignments, while 25 percent (19 out of 76) involved out-of-country moves. Domestic relocation of work—both within the company and to other companies--affected 7,054 workers. Out-of-country relocations were associated with the separation of 2,211 workers, 1 percent of all nonseasonal and nonvacation extended mass layoff separations.
Recall Expectations
Thirty-one percent of employers reporting an extended layoff in the third quarter of 2008 indicated they anticipated some type of recall, down from 38 percent a year earlier and the lowest third quarter proportion since 2002. Of those employers expecting to recall workers, 38 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-two 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 93 percent of the employers expected a recall), employers anticipated recalling laid-off workers in 20 percent of the events, matching third quarter 2002 as the lowest proportion since the program began in 1995.
Size of Extended Layoffs
The average size of a layoff (as measured by separations per layoff event) in the third quarter of 2008 was 164, compared to 157 per layoff in third quarter 2007. Layoff events continued to be concentrated at the lower end of the extended layoff-size spectrum, with 48 percent of events involving between 50 and 99 workers and 71 percent of events with less than 150 workers.
Layoffs involving less than 150 workers accounted for 37 percent of all separations during the period, about the same percentage recorded a year earlier (38 percent). Separations involving 500 or more workers, while comprising only 4 percent of the events, accounted for 28 percent of all separations in the third quarter of 2008, up from 24 percent a year earlier.
Initial Claimant Characteristics
A total of 181,386 initial claimants for unemployment insurance were associated with extended mass layoffs in the third quarter of 2008. Of these claimants, 16 percent were black, 18 percent were Hispanic, 40 percent were women, 34 percent were 30 to 44 years of age, and 18 percent were 55 years of age or older. Among persons in the civilian labor force for the same period, 12 percent were black, 14 percent were Hispanic, 46 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 West recorded the highest number of separations (78,277) due to extended mass layoff events in the third quarter of 2008, followed by the Midwest, with 53,265. Separations in the West occurred largely in specialty trade contracting and in food manufacturing. The West accounted for 36 percent of all separations, up from 33 percent in the same period last year.
Among the 9 census divisions, the highest number of separations during the third quarter of 2008 was in the Pacific division (70,079). The East North Central division had the next-highest level of separations, with 44,284.
California recorded the largest number of worker separations (61,375), followed by Florida (20,261), Illinois (17,552), and New York (14,310). (See table 5.) After excluding the impact of seasonal reasons, California still reported the highest number of job cuts (57,116).
