Manufacturing accounts for 35% of Q4 mass layoffs

Employers initiated 3,140 mass layoff events in the fourth quarter of 2008 that resulted in the separation of 508,859 workers from their jobs for at least 31 days, according to preliminary figures released February 13 by the U.S. Department of Labor's Bureau of Labor Statistics. Extended

mass layoff events and separations reached their highest levels in program history (with data available back to 1995). The total number of layoff events in the fourth quarter 2008 was 1,326 higher than the same period a year earlier, and the number of associated separations increased by 207,267 over the year. The construction and manufacturing industries experienced record highs in both the number of layoff events and separations for any quarter in program history.

Separations due to business demand reasons more than doubled over the year to 207,609, with those related specifically to slack work/insufficient demand more than tripling to 152,279. Forty-five percent of employers reporting an extended layoff in the fourth quarter of 2008 indicated they anticipated some recall of workers, the lowest fourth quarter proportion since 2001. Fourth-quarter 2008 layoff data is preliminary and are subject to revision.

The national unemployment rate averaged 6.6 percent, not seasonally adjusted, in the fourth quarter of 2008, up from 4.6 percent a year earlier. Private non-farm payroll employment, not seasonally adjusted, decreased by 2.0 percent (-2,362,000) over the year.

For all of 2008, the total number of extended mass layoff events reached a program high at 7,818, and associated worker separations were at its highest level since 2001 at 1,383,553. Four major industry sectors reported program highs in terms of events and separations in 2008 – construction; finance and insurance; educational services; and accommodation and food services (with annual data available back to 1996). In 2008, eight states reached program highs in terms of numbers of separations – Alaska, California, Hawaii, Idaho, Indiana, Missouri, New Jersey and Wyoming.

Industry Distribution of Extended Layoffs

Manufacturing firms reported 1,103 extended mass layoff events involving 185,686 separations, the highest levels for the industry on record. Manufacturing industries were responsible for 35 percent of private non-farm extended layoff events and 36 percent of related separations in the fourth quarter of 2008. A year earlier, manufacturing made up 24 percent of events and 27 percent of separations. The largest numbers of separations within manufacturing were associated with transportation equipment manufacturing (56,341, mostly associated with automobile manufacturing) and food manufacturing (21,863).

Construction firms recorded 843 extended mass layoff events and 100,922 separations, the highest levels for the industry on record. While most construction layoff events were due to the end of seasonal work and the completion of contracts, the number of layoff events due to slack work/insufficient demand more than doubled over the year.

In the fourth quarter 2008, thirteen major industry sectors reported fourth quarter program highs in terms of extended mass layoff events – construction; manufacturing; wholesale trade; retail trade; transportation and warehousing; real estate and rental and leasing; management of companies and enterprises; administrative and waste services; educational services; health care and social assistance; arts, entertainment and recreation; accommodation and food services; and other services, except public administration.

Reasons for Extended Layoffs

Among the seven categories of economic reasons for extended mass layoffs, business demand factors (contract cancellation, contract completion, domestic competition, excess inventory, import competition and slack work) accounted for 44 percent of the extended layoff events and 41 percent of separations during the fourth quarter of 2008. This compared to 34 percent of events and 28 percent of separations in the same period a year earlier. Separations related to these business demand factors more than doubled over the year from 83,996 to 207,609, with those due to slack work/insufficient demand/non-seasonal business slowdown more than tripling from 42,201 to 152,279.

Job losses stemming from financial issues (bankruptcy, cost control and financial difficulty) more than doubled from 124 events associated with 24,652 separations in the fourth quarter 2007 to 300 events and 65,034 separations in the fourth quarter 2008. These layoffs accounted for 10 percent of the events and 13 percent of separations during the fourth quarter of 2008, compared to 7 and 8 percent, respectively, a year earlier. Seasonal factors (seasonal and vacation period) resulted in 26 percent of the extended layoff events and 27 percent of the separations in October-December 2008.

Movement of Work

In the fourth quarter of 2008, 110 extended mass layoffs involved the movement of work and were associated with 24,236 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 5 percent of non-seasonal layoff events in the fourth quarter of 2008. A year earlier, there were 69 layoff events and 11,302 separations associated with the movement of work.

Among the 110 extended mass layoff events with reported relocation of work in the fourth quarter of 2008, 64 percent were permanent closures of worksites, which affected 16,849 workers. In comparison, 9 percent of the total extended mass layoff events reported for the quarter involved

the permanent closure of worksites and affected 71,111 workers.

Of the layoffs involving the movement of work, 68 percent of the events and 61 percent of the laid-off workers were from manufacturing industries during the fourth quarter. Among all private non-farm extended layoffs, manufacturing accounted for 35 percent of the events and 36 percent of separations.

While only 4 percent of the extended mass layoff events in the total private non-farm economy were because of organizational change, such reasons accounted for 44 percent of layoff events associated with work relocation and resulted in 8,706 separations during the fourth quarter.

Among the regions, the Midwest accounted for the largest proportion of workers affected by extended mass layoffs associated with the movement of work (59 percent), followed by the West and the South (16 percent each). Among the 50 states and the District of Columbia, Ohio accounted for the largest proportion of workers affected by extended mass layoffs associated with the movement of work (24 percent), followed by Illinois (14 percent) and California (9 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 110 extended layoff events with movement of work for the fourth quarter of 2008 involved 150 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 150 relocations, employers were able to provide information on the specific number of separations associated with the movement of work component of the layoff in 111 actions involving 16,061 workers.

Of the 111 actions where employers were able to provide more complete separations information, 90 percent of relocations occurred within the same company and 70 percent of relocations were domestic reassignments. Domestic relocation of work affected 12,286 workers, and out-of-country relocations were associated with 3,775 separations, 1 percent of all non-seasonal and non-vacation extended mass layoff separations.

Read the full report and view all of the data tables by clicking on the link below:

http://www.bls.gov/news.release/mslo.htm