Manufacturing accounts for 21% of mass layoffs in Q2

In the second quarter of 2007, there were 1,249 mass layoff events that resulted in the separation of 238,721 workers from their jobs for at least 31 days, according to preliminary figures released August 9 by the U.S. Department of Labor’s Bureau of Labor Statistics. Both the total number of layoff events and separations were lower than in the April-June 2006 time period.

The largest over-the-year decreases in separations were in transit and ground passenger transportation, administrative and support services, and general merchandise stores. Extended layoffs in the second quarter 2007 averaged 191 separations, down from an average of 219 separations reported in the second quarter 2006. Much of the decline reflects a decrease in layoff events involving more than 150 workers.

Among the seven 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 non-seasonal layoff events and non-seasonal 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 non-farm 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 non-farm 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. 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 four 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 seven 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 restructuring.

Over-the-year decreases in separations were reported in six of the seven 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).

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 nine 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 non-metropolitan areas separated 30,823 workers in extended mass layoffs, down from 31,742 workers in the second quarter of 2006.