Mass layoff activity in professional and technical services and in finance and insurance reached second quarter program highs in 2008. Layoffs in professional and technical services were due largely to seasonal job cuts in tax preparation services. Finance and insurance layoffs continued to be concentrated in credit intermediation and related activities, largely in the real estate credit industry.
Among the 7 categories of economic reasons for layoff, seasonal reasons accounted for the highest share of events (38 percent) and number of separations (141,562) in April-June 2008. These seasonal layoffs were due, in part, to the end of the school year. The largest over-the-year increases in the number of separations occurred in layoff events attributed to business demand factors (+18,868) and organizational changes (+18,356). Within these 2 categories, layoffs because of slack work more than doubled over the year to 40,300 separations, and changes in business ownership more than quadrupled to 16,852.
Permanent closure of worksites occurred in 10 percent of all extended mass layoff events and affected 33,695 workers during the second quarter of 2008. Fifty-three percent of employers reporting a layoff indicated they anticipate some type of recall, down from 57 percent a year earlier and the lowest second quarter proportion since 2003.
The national unemployment rate averaged 5.2 percent, not seasonally adjusted, in the second quarter of 2008, up from 4.4 percent a year earlier. Private nonfarm payroll employment, not seasonally adjusted, decreased by 0.1 percent (-124,000) over the year.
Industry Distribution of Extended Layoffs
Manufacturing industries accounted for 22 percent of private nonfarm extended layoff events and 19 percent of related separations in the second quarter of 2008; a year earlier, manufacturing made up 20 percent of events and 17 percent of separations. Manufacturing had 334 extended layoff events in the second quarter of 2008, the highest second quarter total since 2003, and 56,212 separations. The largest numbers of separations were in transportation equipment manufacturing (16,073, mostly associated with heavy duty truck manufacturing) and food manufacturing (10,569).
Professional and technical services accounted for 5 percent of events and 12 percent of separations in the second quarter of 2008, the highest proportion of separations recorded in the program. These job cuts were due largely to seasonal layoffs in the tax preparation industry. Layoffs in transportation and warehousing accounted for 10 percent of all events and 12 percent of separations and were concentrated in school and employee bus transportation.
Reasons for Extended Layoffs
Among the seven categories of economic reasons for extended mass layoffs, events related to seasonal factors (seasonal and vacation period) accounted for 38 percent of the extended layoffs and 47 percent of separations during the second quarter of 2008. The numbers of workers terminated because of seasonal reasons were highest in tax preparation, school and employee bus transportation, skiing facilities, food service contractors, and child daycare services.
Job losses related to business demand (contract cancellation, contract completion, domestic competition, excess inventory, import competition, and slack work) accounted for 34 percent of the extended layoff events and resulted in 70,967 separations. Separations associated with business demand reasons registered the largest over-the-year increase (+18,868), as those related to slack work/insufficient demand/nonseasonal business slowdown more than doubled.
Organizational changes (business-ownership change and reorganization or restructuring of company) accounted for 7 percent of events and resulted in 33,828 separations during the second quarter of 2008, more than double the number of separations due to organizational change for the second quarter of 2007. This increase was due largely to business-ownership changes in the real estate credit industry.
Movement of Work
In the second quarter of 2008, 60 extended mass layoffs involved the movement of work and were associated with 10,957 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 6 percent of nonseasonal layoff events in the second quarter of 2008. A year earlier, there were 65 layoff events and 11,352 separations associated with the movement of work.
Among the 60 extended mass layoff events with reported relocation of work in the second quarter of 2008, 63 percent were permanent closures of worksites, which affected 6,864 workers. In comparison, 10 percent of the total extended mass layoff events reported for the quarter involved the permanent closure of worksites affecting 33,695 workers.
Of the layoffs involving the movement of work, 67 percent of the events and 60 percent of the laid-off workers were from manufacturing industries during the second quarter. Among all private nonfarm extended layoffs, manufacturing accounted for 22 percent of the events and 19 percent of separations.
While only 7 percent of the extended mass layoff events in the total private nonfarm economy were because of organizational change, such reasons accounted for 53 percent of layoff events associated with work relocation and resulted in 4,798 separations during the second quarter.
Among the regions, the South (30 percent) and the West (29 percent) accounted for the largest proportions of workers affected by extended mass layoffs associated with the movement of work, followed by the Midwest (26 percent) and the Northeast (14 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 60 extended layoff events with movement of work for the second quarter of 2008 involved 84 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 84 relocations, employers were able to provide information on the specific number of separations associated with the movement of work component of the layoff in 62 actions involving 6,516 workers.
In the 62 actions where employers were able to provide more complete separations information, 92 percent of relocations (57 out of 62) occurred within the same company. Sixty-eight percent of relocations (42 out of 62) were identified as domestic reassignments, while 31 percent (19 out of 62) involved out-of-country moves. Domestic relocation of work--both within the company and to other companies--affected 3,480 workers. Out-of-country relocations were associated with the separation of 2,761 workers, 2 percent of all nonseasonal and nonvacation extended mass layoff separations.
Recall Expectations
Fifty-three percent of employers reporting an extended layoff in the second quarter of 2008 indicated they anticipated some type of recall, down from 57 percent a year earlier and the lowest second quarter proportion since 2003. Of those employers expecting to recall workers, 51 percent indicated that the offer would be extended to all displaced employees, the lowest second quarter proportion since 2003, and 88 percent of employers anticipated extending the offer to at least half of the workers. Eightyfour 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 97 percent of the employers expected a recall), employers anticipated recalling laid-off workers in 25 percent of the events, about the same as a year earlier (24 percent).
Size of Extended Layoffs
The average size of a layoff (as measured by separations per layoff event) in the second quarter of 2008 was 195, compared to 196 per layoff in second quarter 2007. Layoff events continued to be concentrated at the lower end of the extended layoff-size spectrum, with 47 percent of events involving between 50 and 99 workers and 67 percent of events with less than 150 workers.
Layoffs involving less than 150 workers accounted for 29 percent of all separations during the period, the same percentage recorded a year earlier. Separations involving 500 or more workers, while comprising only 6 percent of the events, accounted for 38 percent of all separations in the second quarter of 2008, up from 36 percent a year earlier.
Initial Claimant Characteristics
A total of 215,808 initial claimants for unemployment insurance were associated with extended mass layoffs in the second quarter of 2008. Of these claimants, 16 percent were black, 17 percent were Hispanic, 52 percent were women, 33 percent were 30 to 44 years of age, and 23 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 30 to 44 years of age, 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 (119,388) due to extended mass layoff events in the second quarter of 2008, followed by the Midwest (86,410). Separations in the West, which reached a program high this quarter, occurred largely in amusements, gambling, and recreation and in credit intermediation and related activities. The West accounted for 40 percent of all separations, up from 34 percent in the same period last year.
Among the 9 census divisions, the highest number of separations during the second quarter of 2008 was in the Pacific (92,614). The East North Central division had the next-highest level of separations (72,140).
California recorded the largest number of worker separations (77,751), followed by Illinois (26,475), Ohio (19,683), and Florida (17,216). After excluding the substantial impact of seasonal reasons, California still reported the highest number of job cuts (59,685), the highest second quarter level since 2003.
California accounted for 26 percent of all separations in the second quarter of 2008, up from 21 percent in 2007. Illinois accounted for 9 percent of the separations in the second quarter of 2008, about the same as last year (8 percent).
Forty-seven percent of events and 37 percent of separations (109,698) occurred in metropolitan areas in the second quarter of 2008, compared with 51 percent of events and 39 percent of separations (107,310) during the second quarter of 2007. Among the 369 metropolitan areas, Chicago-Naperville-Joliet, Ill.-Ind.-Wis., reported the highest number of separations (8,603) in the second quarter of 2008. Next were Los Angeles-Long Beach-Santa Ana, Calif., with 8,027 separations and Detroit-Warren-Livonia, Mich., with 6,459 separations. Employers located in nonmetropolitan areas separated 29,857 workers in extended mass layoffs.
