Among the seven categories of economic reasons for layoff, business demand accounted for the highest share of events (44 percent) and number of separations (45,859) in July-September 2007. Layoffs due to seasonal factors had the next highest proportion of events (22 percent). Permanent closure of worksites occurred in 16 percent of all extended mass layoff events and affected 29,846 workers, down from 38,151 separations reported for the third quarter 2006. Sixty-one extended mass layoffs involved the movement of work within the same company or to a different company, either domestically or outside the U.S. These events accounted for 8 percent of the nonseasonal layoff events and 11 percent of the nonseasonal separations.
The national unemployment rate averaged 4.7 percent, not seasonally adjusted, in the third quarter of 2007, unchanged from a year earlier.
Private nonfarm payroll employment, not seasonally adjusted, increased by 1.4 percent, or about 1.6 million, over the year.
Industry Distribution of Extended Layoffs
Manufacturing industries accounted for 27 percent of private nonfarm extended layoff events and 28 percent of related separations during July-September 2007; in July-September 2006, manufacturing accounted for 33 percent of events and 36 percent of separations. In the third quarter of 2007, the greatest number of separations in the manufacturing sector was in transportation equipment manufacturing (8,208, mostly associated with motor vehicle parts manufacturing). The next highest industries in terms of separations were food manufacturing (5,365) and computer and electronic product manufacturing (4,481).
Layoffs in the finance and insurance sector more than tripled over the year, and accounted for 12 percent of all mass layoff events and 15 percent of separations. The layoffs in the finance sector were primarily in the credit intermediation and related activities industry, which reported its highest number of events and separations in program history. Construction accounted for 19 percent of events and 11 percent of separations, largely in specialty trade contracting, heavy and civil engineering construction, and building construction. Cutbacks in transportation and warehousing accounted for 8 percent of events and 10 percent of separations and were concentrated in the school and employee bus transportation industry.
Information technology-producing industries (communications equipment, communications services, computer hardware, and software and computer services) accounted for 4 percent of extended mass layoff events and worker separations in the third quarter of 2007, the same proportions as in the third quarter of 2006.
Reasons for Extended Layoff
Among the seven categories of economic reasons for extended mass layoffs, 44 percent of the events were related to business demand (contract cancellation, contract completion, domestic competition, excess inventory, import competition, and slack work). These events resulted in 45,859 separations during the third quarter. Business demand job cuts were most numerous in the specialty trade contractors industry, followed by administrative and support services and in transportation equipment manufacturing.
Seasonal factors (seasonal and vacation period) accounted for 22 percent of the extended layoff events and resulted in 36,410 separations, primarily in transit and ground passenger transportation and food manufacturing.
Job losses related to financial issues (bankruptcy, cost control, and financial difficulty) accounted for 12 percent of events and resulted in 24,197 separations. These layoffs were most common among workers in credit intermediation and related activities.
Layoffs associated with organizational changes (business ownership change and reorganization or restructuring) amounted to 10 percent of events and 14,795 separations, largely in credit intermediation and related activities and in transportation equipment manufacturing. About 70 percent of the separations in the organizational change category were due to company reorganization or restructuring.
Over-the-year decreases in separations were reported in 5 of the 7 categories of economic reasons for layoffs, with the largest declines in organizational change (-21,212) and in business demand (-13,764). Separations due to financial issues (+12,772) and seasonal factors (+8,719) increased over the year.
Movement of Work
Between July and September of 2007, 61 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 company or to other companies. The extended mass layoff events involving movement of work were associated with the separation of 10,887 workers, 11 percent of all separations resulting from nonseasonal and nonvacation mass layoff events. A year earlier, there were 58 layoff events and 12,840 separations associated with the movement of work.
Among the 61 extended mass layoff events with reported relocation of work, 70 percent were permanent closures of worksites, which affected
8,244 workers. In comparison, 16 percent of the total extended mass layoff events reported for the third quarter of 2007 involved the permanent closure of worksites.
Of the layoffs involving the movement of work, 70 percent of the events and 69 percent of the laid-off workers were from manufacturing industries during the third quarter. Among all private nonfarm extended layoffs, manufacturing accounted for 27 percent of the events and 28 percent of the separations.
While 10 percent of the extended mass layoff events in the total private nonfarm economy were because of organizational change, such changes accounted for 36 percent of layoff events associated with work relocation and resulted in 3,595 separations during the third quarter. Most of these separations were due to reorganization or restructuring of the company.
Among the regions, the South accounted for the largest proportion of workers affected by extended mass layoffs associated with the movement of work (46 percent), followed by the Midwest (24 percent), the West (17 percent), and the Northeast (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 61 extended layoff events with movement of work for the third quarter of 2007 involved 79 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 79 relocations, employers were able to provide information on the specific number of separations associated with the movement of work component of the layoff in 59 actions involving 7,019 workers. Thus, a range of 7,019 (separations in movement of work actions where the employer was able to provide specific detail) to 10,887 (total separations in all layoff events that included movement of work) is established for separations due to the movement of work during the third quarter.
In the 59 actions where employers were able to provide more complete separations information, 76 percent of relocations (45 out of 59) occurred within the same company. In 64 percent of these movement-of-work relocations (38 out of 59), the work activities were reassigned to places elsewhere in the U.S. Thirty-four percent of the relocations involved out-of-country moves (20 out of 59). The separation of 3,047 workers was associated with out-of-country relocations, 3 percent of all nonseasonal and nonvacation extended mass layoff separations. Domestic relocation of work--both within the company and to other companies--affected 3,793 workers.
Recall Expectations
Thirty-nine percent of employers reporting an extended layoff in the third quarter of 2007 indicated they anticipated some type of recall, the lowest since the third quarter of 2003. Of those employers expecting to recall workers, 47 percent anticipated recalling all of the
separated employees, 88 percent anticipated extending the offer to at least half of all laid-off employees, and 86 percent expected a recall within 6 months.
Excluding layoff events due to seasonal work and vacation period (in which 92 percent of the employers expected a recall), employers antici-
pated recalling laid-off workers in 24 percent of the events. A year earlier, 31 percent of employers expected a recall in nonseasonal and
nonvacation events. In layoff events due to organizational changes, employers anticipated a recall in only 6 percent of events.
Size of Extended Layoff
The average size of a layoff (as measured by separations per layoff event) in the third quarter 2007 was 146 compared to 173 per layoff in
2006. The average differed widely by industry, ranging from a low of 66 in electrical equipment and appliance manufacturing to a high of 1,007 in amusements, gambling, and recreation.
Layoff events during the third quarter 2007 continued to be concentrated at the lower end of the extended layoff-size spectrum, with 73 percent of the events involving fewer than 150 workers up from 68 percent a year ago. Forty-two percent of all separations in the third quarter 2007 were in layoffs involving less then 150 workers, compared to 35 percent in 2006. Separations involving 500 or more workers, while comprising 4 percent of the events, accounted for 21 percent of all separations in July-September 2007, down from 27 percent in July-September 2006.
Initial Claimant Characteristics
A total of 115,742 initial claimants for unemployment insurance were associated with extended mass layoffs in the third quarter of 2007. Of these claimants, 16 percent were black, 18 percent were Hispanic, 44 percent were women, 36 percent were 30 to 44 years of age, and 19 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, 46 percent were women, 33 percent were age 30 to 44, and 17 percent were 55 years of age or older.
Geographic Distribution
In the third quarter, the number of separations due to extended mass layoff events was highest in the West (42,575), followed by the Northeast (39,406), the Midwest (30,785), and the South (23,468). Extended mass layoffs in the West were largely in credit intermediation and related activities and in specialty trade contractors.
The South region reported the largest over-the-year decrease in separations (-27,831), mainly due to fewer layoffs in administrative and support services. The number of separations in the Midwest decreased by 7,258. The Northeast region reported the largest over-the-year increase in separations (+9,688), due in part to layoffs in transit and ground passenger transportation. Four of the 9 geographic divisions reported over-the-year decreases in laid-off workers, with the largest declines occurring in the South Atlantic (-22,243) and East North Central (-7,335) divisions. The Middle Atlantic division reported the largest increase in separations (+6,916), followed by the New England division (+2,772).
Among the 50 states and the District of Columbia, the largest number of worker separations occurred in California (34,078), followed by New York (18,308), Illinois (13,333), Massachusetts (7,348), and Florida (6,990). These five states accounted for 59 percent of total layoff events and separations during the third quarter of 2007. After excluding the substantial impact of seasonal reasons, California still reported the highest number of job cuts (30,782), largely due to layoffs in credit intermediation and related activities and in specialty trade contractors.
Over the year, Florida reported the greatest decrease in workers laid off during the third quarter (-18,315), followed by Ohio (-6,302) and
Louisiana (-3,275). The largest increases occurred in New York (+7,372), Massachusetts (+5,120), California (+2,134), and Missouri (+1,515).
Fifty-three percent of events and 52 percent of separations (70,930) occurred in metropolitan areas in the third quarter of 2007, compared with 59 percent of events and 53 percent of separations (85,654) during the third quarter of 2006. Among the 369 metropolitan areas, Los Angeles-Long Beach-Santa Ana, Calif., reported the highest number of separations (10,738) in the third quarter of 2007. Next were New York-Northern New Jersey-Long Island, N.Y.-N.J.-Pa., with 9,907 separations, and Chicago-Naperville-Joliet, Ill.-Ind.-Wis., with 4,662 separations. Employers located in nonmetropolitan areas separated 13,289 workers in mass layoffs, down from 15,998 workers in the third quarter of 2006.
