Among the 7 categories of economic reasons for layoff, activity related to seasonal factors accounted for the highest share of events (44 percent) and number of separations (128,654) in April-June 2007. Layoffs due to business demand reasons had the next highest proportion of events (31 percent). Permanent closure of worksites occurred in 11 percent of all events and affected 27,021 workers, down from 34,458 separations reported for the second quarter 2006. Sixty extended mass layoff events 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 7 percent of both the nonseasonal layoff events and nonseasonal separations.
The national unemployment rate averaged 4.4 percent, not seasonally adjusted, in the second quarter of 2007; a year earlier it was 4.6 percent. Private nonfarm payroll employment, not seasonally adjusted, increased by 1.5 percent, or about 1.7 million, over the year.
Industry Distribution of Extended Layoffs
Manufacturing industries accounted for 21 percent of private nonfarm extended layoff events and 18 percent of related separations during April-June 2007; in April-June 2006, manufacturing accounted for 21 percent of events and 20 percent of separations. (See table 1.) In the second quarter of 2007, the greatest number of separations in the manufacturing sector was in transportation equipment manufacturing (13,256, mostly associated with motor vehicle manufacturing). The next highest number of separations was in food manufacturing (9,969).
Layoffs in the accommodation and food services sector comprised 10 percent of events and 12 percent of separations, mostly in the food service contractors industry and in full-service restaurants. Transportation and warehousing accounted for 9 percent of events and 11 percent of separations, largely in transit and ground passenger transportation and in truck transportation. Layoffs in professional and technical services accounted for 4 percent of events and 10 percent of separations and were concentrated in tax preparation services. The health care and social assistance sector accounted for 12 percent of the extended layoff events and 9 percent of the separations, mostly in child day care services and in other individual and family services.
Within the 4 information technology-producing industries (communications equipment, communications services, computer hardware, and software and computer services), the computer hardware industry had the highest number of events (19) and separations (3,167).
Reasons for Extended Layoff
Among the 7 categories of economic reasons for extended mass layoffs, events related to seasonal reasons (seasonal and vacation period)
accounted for 44 percent of events, which resulted in 128,654 separations during the second quarter. These layoffs were due, in part, to the end of the school year. Seasonal job cuts were most numerous in transit and ground passenger transportation (which includes school buses), followed by professional and technical services.
Business demand factors (contract cancellation, contract completion, domestic competition, excess inventory, import competition, and slack work) accounted for 31 percent of the extended layoffs and resulted in 47,431 separations in the second quarter of 2007. These reasons were often cited in layoffs within specialty trade contractors and in administrative and support services. Completion of contracts was the single most cited reason for layoffs in the business demand category.
Job losses related to financial issues (bankruptcy, cost control, and financial difficulty) accounted for 8 percent of events and resulted in 25,005 separations. These layoffs were most common among workers in food and beverage stores and in transportation equipment manufacturing.
Layoffs associated with organizational changes (business ownership change and reorganization or restructuring) amounted to 6 percent of events and 7 percent of separations. About 66 percent of the 16,694 separations in the organizational change category was due to company reorganization or restruc-turing.
Over-the-year decreases in separations were reported in 6 of the 7 categories of economic reasons for layoffs, with the largest decline occurring in seasonal reasons (-27,573), followed by organizational reasons (-23,635), and business demand reasons (-13,920). Separations due to financial issues registered the only over-the-year increase (+14,620).
Movement of Work
Between April and June of 2007, 60 extended mass layoff events involved the movement of work. These events made up 7 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 10,118 workers, 7 percent of all separations resulting from onseasonal/nonvacation mass layoff events. A year earlier, there were 72 layoff events and 16,610 separations associated with the movement of work.
Among the 60 extended mass layoff events with reported relocation of work, 73 percent were permanent closures of worksites, which affected 7,391 workers. In comparison, 11 percent of the total extended mass layoff events reported for the second quarter of 2007 involved the permanent closure of worksites.
Of the layoffs involving the movement of work, 73 percent of the events and 77 percent of the laid-off workers were from manufacturing industries during the second quarter. Among all private nonfarm extended layoffs, manufacturing accounted for 21 percent of the events and 18 percent of separations.
While 6 percent of the extended mass layoff events in the total private nonfarm economy were because of organizational change (business ownership change and reorganization or restructuring of company), such changes accounted for 45 percent of layoff events associated with work relocation and resulted in 3,831 separations during the second quarter. Most of these were due to reorganization or restructuring of company.
Among the regions, the South accounted for the largest proportion of workers affected by extended mass layoffs associated with the movement of work (41 percent), followed by the Midwest (24 percent), the West (21 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 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 60 extended layoff events with movement of work for the second quarter of 2007 involved 82 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 82 relocations,
employers were able to provide information on the specific number of separations associated with the movement of work component of the layoff in 61 actions involving 6,971 workers. Thus, a range of 6,971 (separations in movement of work actions where the employer was able to provide specific detail) to 10,118 (total separations in all layoff events that included movement of work) is established for separations due to the movement of work in the second quarter.
In the 61 actions where employers were able to provide more complete separations information, 84 percent of relocations (51 out of 61) occurred among establishments within the same company. (See table D.) In 64 percent of these relocations (39 out of 61), the work activities were reassigned to places elsewhere in the U.S. Thirty-six percent of the movement-of-work relocations involved out-of-country moves (22 out of 61). The separation of 3,492 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 3,479 workers.
Recall Expectations
Fifty-six percent of employers reporting an extended layoff in the second quarter of 2007 indicated they anticipated some type of recall, down from the 60 percent of employers who expected a recall during the second quarter of 2006. Among establishments expecting a recall, more than half of em-ployers anticipated recalling all of the separated employees within 3 months. Ninety-three percent of the employers expecting to recall workers anticipated extending the offer to at least half of all laid-off workers and 86 percent expected a recall 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 24 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 4 percent of events.
Size of Extended Layoff
The average size of a layoff (as measured by separations per layoff event) in the second quarter 2007 was 191, compared to 219 per layoff in 2006. The average differed widely by industry, ranging from a low of 80 in nursing and residential care facilities to a high of 795 in amusements, gambling, and recreation.
Layoff events during the second quarter 2007 continued to be concentrated at the lower end of the extended layoff-size spectrum, with 69 percent of the events involving fewer than 150 workers, up from 61 percent a year ago. Thirty-one percent of all separations in the second quarter 2007 were in layoffs involving less then 150 workers, compared to 25 percent in 2006. Separations involving 500 or more workers, while comprising 6 percent of the events, accounted for 38 percent of all separations in April-June 2007, down from 40 percent in April-June 2006.
Initial Claimant Characteristics
A total of 173,487 initial claimants for unemployment insurance were associated with extended mass layoffs in the second quarter of 2007. Of these claimants, 18 percent were black, 15 percent were Hispanic, 54 percent were women, 34 percent were 30 to 44 years of age, and 22 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, 34 percent were age 30 to 44, and 17 percent were 55 years of age or older.
Geographic Distribution
In the second quarter, the number of separations due to extended mass layoff events was highest in the West (89,071), followed by the Midwest (70,635), the South (42,404), and the Northeast (36,611). Extended mass layoffs in the West were largely in amusements, gambling, and recreation and in professional and technical services.
The Northeast region reported the largest over-the-year decrease in separations (-32,814), mainly due to fewer layoffs in transit and ground
passenger transportation. The South (-15,366), the Midwest (-6,526), and the West (-2,537) also experienced reductions in separations. Six of the 9 geographic divisions reported over-the-year declines in laid-off workers, with the largest declines occurring in the Middle Atlantic (-25,314) and South Atlantic (-17,889) divisions. The West South Central division reported the largest increase in separations (+1,547).
Among the 50 states and the District of Columbia, the largest number of worker separations occurred in California (58,345), followed by Illinois (21,618), Michigan (15,769), Colorado (13,588), and New Jersey (13,464). These five states accounted for 41 percent of total layoff events and 51 percent of separations during the second quarter of 2007. Other states with high numbers of separations were Ohio (12,008) and Florida (11,396). After excluding the substantial impact of seasonal reasons, California reported the most laid-off workers (39,677), largely due to layoffs in professional and technical services and in specialty trade contractors.
Over the year, Florida reported the greatest decrease in workers laid off for all reasons during the second quarter (-14,374), followed by New York (-13,384) and New Jersey (-7,085). The largest increases occurred in California (+1,968), North Carolina (+1,929), Arkansas (+1,337), and Kentucky (+1,336).
Fifty percent of extended mass layoff events and 38 percent of separations (91,079) occurred in metropolitan areas in the second quarter of 2007, compared with 55 percent of events and 40 percent of separations (119,380) during the second quarter of 2006. Among the 369 metropolitan areas, Los Angeles-Long Beach-Santa Ana, Calif., reported the highest number of separations (13,423) in the second quarter of 2007. Next were Chicago-Naperville-Joliet, Ill.-Ind.-Wis., with 6,199 separations and Detroit-Warren-Livonia, Mich., with 3,458 separations. Employers located in nonmetropolitan areas separated 30,823 workers in extended mass layoffs, down from 31,742 workers in the second quarter of 2006.
