Among the 7 categories of economic reasons for layoff, activity related to business demand factors accounted for the highest share of events (41 percent) and separations (50,621) in January-March 2007. Layoffs due to seasonal reasons had the next highest proportion of events (24 percent). Permanent closure of worksites occurred in 13 percent of all events and affected 24,865 workers, the lowest number of separations due to permanent closures for any first quarter since the program began in April 1995. Extended mass layoffs that involve the movement of work within the same company or to a different company, either domestically or outside the U.S., occurred in 8 percent of the nonseasonal layoff events, accounting for 9 percent of worker separations related to nonseasonal events. Job loss due to domestic relocation of work (either within the company or to another company) accounted for nearly three-quarters of separations associated with movement of work.
The national unemployment rate averaged 4.8 percent, not seasonally adjusted, in the first quarter of 2007; a year earlier it was 5.0 percent. Private nonfarm payroll employment, not seasonally adjusted, increased by 1.6 percent, or about 1.8 million, from January-March 2006 to January-March 2007.
Industry Distribution of Extended Layoffs
Manufacturing industries accounted for 33 percent of private nonfarm extended layoff events and 37 percent of related separations during January-March 2007, slightly higher proportions when compared with first quarter 2006. In the first quarter of 2007, the greatest number of separations in the manufacturing sector was in transportation equipment manufacturing (14,722, mostly associated with motor vehicles). The next highest number of separations was in food manufacturing (8,919).
The construction sector accounted for 29 percent of the extended layoff events and 20 percent of the separations, mostly in specialty trade contractors and in heavy and civil engineering construction. Layoffs in the retail trade sector comprised 8 percent of events and 14 percent of separations, mostly in general merchandise stores and in nonstore retailers. Administrative and waste services accounted for 7 percent of private nonfarm layoff events and separations, largely in temporary help services. Cutbacks in finance and insurance accounted for 5 percent of events and separations and were concentrated in credit intermediation and related activities.
Information technology-producing industries (communications equipment, communications services, computer hardware, and software and computer services) accounted for 3 percent of layoff events and 2 percent of worker separations in the first quarter of 2007, the same percentages as a year earlier.
Reasons for Extended Layoff
Among the 7 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 41 percent of the extended layoffs and resulted in 50,621 separations in the first quarter of 2007. These reasons were often cited in layoffs within transportation equipment manufacturing and in specialty trade contractors.
Seasonal reasons (seasonal and vacation period) accounted for 24 percent of events, and resulted in 35,929 separations during the first quarter. Seasonal layoffs were most numerous in layoffs from general merchandise stores, followed by food manufacturing.
Layoffs associated with organizational changes (business ownership change and reorganization or restructuring) amounted to about 11 percent of both events and separations. About 70 percent of the 15,737 separations for this category was due to company reorganization or restructuring.
Job losses related to financial issues (bankruptcy, cost control, and financial difficulty) accounted for 9 percent of events and resulted in 17,188 separations. These layoffs were mostly among workers in credit intermediation and related activities and in food manufacturing.
Over-the-year decreases in separations were reported in 6 of the 7 categories of reasons for layoffs, with the largest decline occurring in organizational change (-21,703), followed by production specific factors (-6,042), and seasonal reasons (-5,712). Separations due to financial issues registered the only over-the-year increase (+2,687).
Movement of Work
Between January and March of 2007, 58 extended mass layoff events involved the movement of work; this was 8 percent of total extended mass layoff events, excluding those for seasonal and vacation reasons. These movements of work were to other U.S. locations or to locations outside of the U.S., and they occurred either within the same ccompany or to other companies. The extended mass layoff events involving movement of work were associated with the separation of 9,447 workers, 9 percent of all separations resulting from nonseasonal/nonvacation mass layoff events. A year earlier, there were 53 layoff events and 10,519 separations associated with the movement of work.
Among the 58 extended mass layoff events with reported relocation of work, 71 percent were permanent closures of worksites, which affected 7,412 workers. In comparison, 13 percent of the total extended mass layoff events reported for the first quarter of 2007 involved the permanent closure of worksites.
Of the layoffs involving the movement of work, 74 percent of the events and 75 percent of the laid-off workers were from manufacturing industries during the first quarter. Among all private nonfarm extended layoffs, manufacturing accounted for 33 percent of the events and 37 percent of separations.
While 11 percent of the extended mass layoff events in the total private nonfarm economy were because of organizational change bbusiness ownership change and reorganization or restructuring of company), such changes accounted for 52 percent of layoff events associated with work relocation and resulted in 5,392 separations during the first quarter. Most of these were due to reorganization or restructuring of company.
Among the regions, the Midwest accounted for the largest proportion of workers affected by extended mass layoffs associated with the movement of work (29 percent), followed by the South (26 percent), the Northeast (23 percent), and the West (22 percent).
Some extended mass layoff events involve more than one relocation of work action. For example, an extended mass layoff event at an establishment 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 58 extended layoff events with movement of work for the first quarter of 2007 involved 71 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 71 relocations, employers were able to provide information on the specific number of separations associated with the movement of work component of the layoff in 53 actions involving 7,407 workers. Thus, a range of 7,407 (separations in movement of work actions where the employer was able to provide specific detail) to 9,447 (total separations in all layoff events that included movement of work) is established for separations due to the movement of work in the first quarter.
In the 53 actions where employers were able to provide more complete separations information, 89 percent of relocations (47 out of 33) occurred among establishments within the same company. In 74 percent of these relocations (35 out of 47), the work activities were reassigned to places elsewhere in the U.S.
Twenty-three percent of the movement-of-work relocations involved out-of-country moves (12 out of 53). The separation of 1,830 workers was associated with out-of-country relocations, 2 percent of all nonseasonal/nonvacation extended mass layoff separations. Domestic relocation of work--both within the company and to other companies-affected 5,506 workers.
Recall Expectations
Forty-two percent of employers reporting an extended layoff in the first quarter of 2007 indicated they anticipated some type of recall, virtually the same as the 43 percent of employers who expected a recall during the first quarter of 2006. Among establishments expecting a recall, most employers anticipated recalling over one-half of the separated employees and to do so within 6 months. Thirty-nine percent of the employers expected to extend the offer to all laid-off workers.
Excluding layoff events due to seasonal work and vacation period (in which 84 percent of the employers expected a recall), employers anticipated recalling laid-off workers in 28 percent of the events. A year earlier, 30 percent of employers expected a recall in nonseasonal and nonvacation events. In layoff events due to organizational changes, employers anticipated a recall in only 5 percent of events.
Size of Extended Layoff
The average size of a layoff (as measured by separations per layoff event) in the first quarter of 2007 was 144 compared to 190 per layoff in 2006. The average differed widely by industry, ranging from a low of 76 in amusement, gambling, and recreation industries to a high of 532 in nonstore retailers.
Layoff events during the first quarter of 2007 continued to be concentrated at the lower end of the extended layoff-size spectrum, with 74 percent involving fewer than 150 workers, up from 67 percent a year ago. Forty-two percent of all first quarter 2007 separations were in layoffs of this size compared to 31 percent in 2006. Separations involving 500 or more workers, while comprising 3 percent of the events, accounted for 20 percent of all separations, down from 33 percent in January-March 2006.
Initial Claimant Characteristics
A total of 122,595 initial claimants for unemployment insurance were associated with extended mass layoffs in the first quarter of 2007. Of these claimants, 14 percent were black, 18 percent were Hispanic, 35 percent were women, 37 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, 34 percent were age 30 to 44, and 17 percent were 55 years of age or older.
Geographic Distribution
In the first quarter, the number of separations due to extended mass layoff events was highest in the Midwest (44,882), followed by the West (43,583), the South (29,144), and the Northeast (21,660). Extended mass layoffs in the Midwest were mainly in transportation equipment manufacturing and in administrative and support services.
All 4 regions reported over-the-year decreases in separations, with the largest decreases occurring in the Midwest (-20,502), followed by the South (-11,478), the Northeast (-11,135), and the West (-705). Six of the 9 geographic divisions reported over-the-year declines in laid-off workers, with the largest declines occurring in the East North Central (-22,194) and South Atlantic (-10,723) divisions. The West North Central ddivision reported the largest increase in separations (+1,692), followed by the Pacific division (+1,563).
Among the 50 states and the District of Columbia, the largest number of worker separations occurred in California (35,159), followed by Illinois (15,558), Ohio (7,748), and Michigan (7,477). These four states accounted for 51 percent of total layoff events and 47 percent of separations during the first quarter of 2007. Other states with high numbers of separations were Pennsylvania (6,459), Kentucky (5,502), Florida (4,800), and New Jersey (4,108). After excluding the substantial impact of seasonal reasons, California reported the most laid-off workers (25,116), largely due to layoffs in specialty trade contractors and in heavy and civil engineering construction.
Over the year, Michigan reported the greatest decrease in workers laid off for all reasons during the first quarter (-11,570), followed by New York (-8,051) and Ohio (-6,447). The largest increases occurred in California (+3,112), Missouri (+1,718), and Kentucky (+1,661).
Fifty-eight percent of extended layoff events and 54 percent of separations (75,784) occurred in metropolitan areas in the first quarter of 2007, compared with 57 percent of events and 51 percent of separations (95,520) during the first quarter of 2006. Among the 369 metropolitan areas, Chicago-Naperville-Joliet, Ill.-Ind.-Wis., reported the highest number of separations (8,639) in the first quarter of 2007. Next were Los Angeles-Long Beach-Santa Ana, Calif., with 8,588 separations, and Louisville-Jefferson County, Ky.-Ind., with 4,498 separations. (See table G.) Employers located in nonmetropolitan
areas separated 13,830 workers in extended mass layoffs, down from 17,683 workers in the first quarter of 2006.
