Magazine article Economic Trends

The Employment Report and Displaced Workers

Magazine article Economic Trends

The Employment Report and Displaced Workers

Article excerpt

10.15.10

September's employment report showed continued anemic employment growth for the U.S. economy. Employment fell in September by 95,000 jobs, as the government sector contracted due to reduced Census activity and job loss at state and local governments. On the household side, the unemployment rate remained at 9.6 percent, with the employment-to-population ratio hovering at decadal lows.

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The private sector showed some net job creation, but 64,000 additional payroll jobs, on a monthly basis, is insufficient to bring down unemployment. Employment in goods-producing industries declined (-22,000) after gains in the last six monthly reports, while the service sector showed a moderate rise of 86,000 jobs.

From the peak of employment in December 2007, the U.S. economy remains down 7.75 million jobs after almost three years (33 months). The depth of the recession, the length of the recession, and the shallowness of the recovery make this cycle particularly striking in comparison to previous recession-recovery periods, and the severity of the cycle is reflected in the large number of workers (6.1 million) who are currently unemployed and have been out of work for more than 27 weeks.

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Every two years, the Bureau of Labor Statistics surveys individuals about displacement from the workforce as part of the Current Population Survey. The Displaced Workers Survey asks workers, 20 years of age and older, about the nature and cause of any job displacement they have experienced in the last three years. For example, the January 2010 survey asks workers about job losses that occurred between January 2007 and December 2009, so the survey covers the most recent recession in its entirety. We compare the latest results to those of the 2002 survey, which included the 2001 recession, and the 2008 survey, which covers the three years prior to the current recession.

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The survey reports focus on long-tenured workers--individuals who held their positions for three or more years prior to displacement. There were roughly 4 million long-tenured displaced workers in the 2002 survey, 3.6 million in the 2008 survey, and 6.9 million in the 2010 survey, reflecting the relative severity of the last recession. The long-tenured workers represent about 40 percent to 45 percent of all displaced workers in the three survey years.

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In the January 2010 survey, re-employment rates averaged 48.8 percent, meaning that a little less than half of all long-tenured workers who experienced displacement over the 2007--2009 period are currently employed. Not surprisingly, these re-employment rates are well below the rates observed in the 2002 or 2008 surveys, where they were 63.4 percent and 67.1 percent, respectively. Moreover, since the proportion of workers that ended up out of the labor force is roughly the same in all three survey years, this means the proportion of displaced workers that are unemployed in 2010 is significantly higher than in the earlier surveys.

The Displaced Worker Survey also asks about the reason for the worker's displacement, and in fact, only workers who respond that their plant or company closed or moved, that there was insufficient work, or that their position or shift was abolished are considered as displaced workers. During the last two recessions, there were marked differences in the reasons cited for displacement. …

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