Manufacturing accounts for 29% of extended mass layoffs

Employers initiated 1,776 mass layoff events in the third quarter of 2009 that resulted in the separation of 277,924 workers from their jobs for at least 31 days, according to preliminary figures released November 10 by the U.S. Bureau of Labor Statistics. The number of extended mass layoff events reached a record high for any third quarter (with data available back to 1995). Third-quarter program highs in the number of events were also recorded in half of the 18 major industry sectors, two of the four geographic regions, four of the nine divisions and 15 states.

Separations due to business demand reasons increased by 27 percent from the same period a year ago. Thirty-three percent of employers reporting an extended mass layoff event in the third quarter of 2009 indicated they anticipated some type of recall, up slightly from 29 percent a year earlier. Third-quarter 2009 layoff data are preliminary and are subject to revision.

The national unemployment rate averaged 9.6 percent, not seasonally adjusted, in the third quarter of 2009, up from 6.0 percent a year earlier. Private non-farm payroll employment, not seasonally adjusted, decreased by 5 percent (-5,765,000) over the year.

Industry Distribution of Extended Layoffs

Manufacturing firms reported 511 extended mass layoff events involving 80,135 separations in third quarter 2009 and were responsible for 29 percent of private non-farm extended layoff events and related separations. A year earlier, manufacturing made up 31 percent of events and 33 percent of separations. The largest numbers of separations within manufacturing were associated with transportation equipment manufacturing (mostly from light truck and utility vehicle manufacturing and railroad rolling stock manufacturing) and food manufacturing (mostly related to fresh and frozen seafood processing and fruit and vegetable canning).

Nine major industry sectors reported third quarter program highs in 2009 in terms of the number of extended mass layoff events in the private non-farm sector – construction; wholesale trade; transportation and warehousing; professional and technical services; management of companies and enterprises; administrative and waste services; educational services; arts, entertainment and recreation; and other services, except public administration.

Reasons for Extended Layoffs

Among the seven categories of economic reasons for extended mass layoffs, business demand factors accounted for 48 percent of events and 44 percent of separations during the third quarter of 2009; up from 41 percent of events and 33 percent of separations in the same period a year earlier. Separations related to business demand factors increased by 26,286, or 27 percent, over the year. Within the business demand category, the largest over-the-year increases in separations were due to slack work/insufficient demand (+14,661) and contract completion (+14,267).

Extended mass layoff separations decreased from a year ago in all economic reason categories except business demand and seasonal. The largest decrease was in organizational changes (-15,463),largely in the business-ownership change reason. The financial issues economic category also saw a large decrease (-12,686), with the largest decline associated with bankruptcy.

Movement of Work

In the third quarter of 2009, 75 extended mass layoffs involved the movement of work and were associated with 12,107 separated workers. The number of such events was down 11 percent from the third quarter of 2008, while the number of separations was down 19 percent. Movement of work layoffs accounted for 5 percent of non-seasonal layoff events in the third quarter of 2009.

Six out of 10 extended mass layoff events related to movement of work were from manufacturing industries. In comparison, manufacturing accounted for less than three out of 10 events in the total private non-farm economy. Employers cited an organizational change in more than half and business demand in more than a quarter of extended mass layoff events involving movement of work. Among the regions, the largest proportions of workers affected by movement of work were in the West and Midwest.

The 75 extended layoff events with movement of work for the third quarter of 2009 involved 107 identifiable relocations of work actions. Employers were able to provide more complete separations information for 72 of the actions. Of these 72 actions, 81 percent involved work moving within the same company and 75 percent were domestic reassignments.

Recall Expectations

About 33 percent of employers reporting an extended layoff in the third quarter of 2009 indicated they anticipated some type of recall, up from 29 percent a year earlier. Of those employers expecting to recall workers, about one-third indicated that the offer would be extended to all displaced employees. Less than two-thirds of employers anticipated extending the offer to at least half of the workers. Two-thirds of employers expecting to recall laid-off employees intend to do so within six months, a lower proportion than the same period a year earlier. Excluding layoff events due to seasonal work and vacation period, in which 95 percent of the employers expected a recall, employers anticipated recalling laid-off workers in just 22 percent of extended mass layoff events.

Size of Extended Layoffs

The average size of a layoff (as measured by separations per layoff event) in the third quarter of 2009 was 156, down 28 from the third quarter a year earlier. Three of the 18 major industry sectors registered average layoff sizes of 200 or more workers per event in the third quarter – arts, entertainment and recreation; professional and technical services; and administrative and waste services.

Nearly half of all events involved between 50 and 99 workers and 73 percent of events affected less than 150 workers. Layoffs involving between 50 and 99 workers accounted for 22 percent of all separations during the period and layoffs with less than 150 separated workers accounted for 40 percent. Both these proportions are up from a year earlier. Extended mass layoffs involving 500 or more workers accounted for only 4 percent of events but 25 percent of the separated workers in the third quarter of 2009, down from 6 percent of events and 31 percent of separations last year.

Initial Claimant Characteristics

A total of 266,938 initial claimants for unemployment insurance were associated with extended mass layoffs in the third quarter of 2009. Of these claimants, 13 percent were black, 18 percent were Hispanic, 36 percent were women, 35 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, 15 percent were Hispanic, 47 percent were women, 33 percent were age 30 to 44 and 19 percent were 55 years of age or older.

Geographic Distribution

Among the four census regions, the West and the Midwest recorded the highest numbers of separations due to extended mass layoff events in the third quarter of 2009. All regions except the West reported over-the-year decreases in the number of separations. Among the nine census divisions, the highest numbers of separations during the third quarter of 2009 were in the Middle Atlantic, East North Central, South Atlantic and Pacific. Only three divisions reported over-the-year increases in terms of the numbers of separations – New England, West North Central and Mountain.

California recorded the largest number of worker separations, followed by Florida, New York, Pennsylvania, Illinois, Ohio and New Jersey. After excluding the impact of seasonal reasons, California still reported the highest number of job cuts (81,079), followed by Florida (24,066) and Pennsylvania (16,833). Four states reported third quarter program highs in terms of numbers of separations – California, Kentucky, Missouri and New Jersey.

Eighty-four percent of the initial claimants associated with extended mass layoff events in the third quarter of 2009 resided within metropolitan areas, an increase of more than 4 percentage points from a year earlier. Among the 372 metropolitan areas, Los Angeles-Long Beach-Santa Ana, Calif., reported the highest number of resident initial claimants in the third quarter of 2009. The next highest were New York-Northern New Jersey-Long Island, N.Y.-N.J.-Pa., San Francisco-Oakland-Fremont, Calif., and Riverside-San Bernardino-Ontario, Calif. Both Peoria, Ill., and San Jose-Sunnyvale-Santa Clara, Calif., moved into the top 10 metropolitan areas in terms of initial claims by residency of claimant in the third quarter of 2009, replacing Miami-Fort Lauderdale-Pompano Beach, Fla., and Tampa-St. Petersburg-Clearwater, Fla., from the previous year.

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

http://www.bls.gov/news.release/mslo.nr0.htm