Worker displacement in an expanding economy (EXCERPT), Monthly Labor Review Online, Dec. 1997

Worker displacement in an expanding economy

Steven Hipple

Following the 1990–91 recession, labor market conditions were unusually sluggish compared to earlier recoveries. However, as economic activity accelerated in 1993, and especially in 1994, the job market improved, with the result that both the level and risk of job displacement fell during the mid-1990s. Between 1993 and 1994, 2.4 million workers permanently lost jobs they had held for at least 3 years because their plant or company closed down or moved, there was insufficient work for them to do, or their positions or shifts were abolished.¹ By comparison, 2.8 million long-tenured workers were displaced during 1991–92, a period of slower economic growth.² The displacement rate, which reflects the likelihood of job loss during specific periods, fell from 3.9 percent during 1991–92 to 3.2 percent during 1993–94.³ (See table 1.)

This article examines the recent experience of job loss and reemployment, using data from the BLS surveys of displaced workers.⁴ For the following analysis, 2 years of data from each of the displaced worker surveys were used to construct a time series that begins with the 1981–82 period (from the 1984 survey) and ends with the 1993–94 period (from the 1996 survey); particular emphasis is placed on results from the last two studies. (See appendix A for a description of the displaced worker surveys.) The analysis focuses on workers who lost jobs they had held for at least 3 years, under the assumption that these long-tenured workers have developed a more-than-marginal attachment to their jobs.

Demographics
Compared with the early 1990s, the risk of job loss in 1993–94 was lower for nearly every major demographic group. While men continued to comprise a majority of the displaced (about three-fifths in 1993–94), their share has fallen since the early 1980s; this reflects a decline in the proportion of displacement occurring in durable goods industries, in which a large majority of employees are men. Furthermore, since the early 1980s, women have continued to increase their presence in the work force while continuing to be concentrated in service-producing industries, in which the risk of losing a job has increased.

With displacement rates of 3.5 percent, blacks and Hispanics had about an equal likelihood of being displaced as whites (3.2 percent). (See table 1.)

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Footnotes
¹ In addition to workers who said they had lost jobs, the count of displacement also includes workers who said they had left jobs in anticipation of losing them.

² The National Bureau of Economic Research, Inc., generally viewed as the arbiter of business cycle dates, designated March 1991 as the trough of the recession that began in July 1990. However, although the recession officially ended in early 1991, labor market conditions continued to be unusually sluggish well into 1992.

³ Displacement rates are calculated by dividing the number of displaced workers in a specified worker group by a tenure-adjusted, 2-year average estimate of employment for the same worker group. Employment estimates for each year were adjusted, using job-tenure data from the January 1983, 1987, 1991, and February 1996 CPS supplements, to include only those workers with 3 years of tenure or more. A 2-year average was then computed using those adjusted employment estimates.

⁴ These surveys were initiated in 1984 to address concerns about the extent to which structural changes in the economy had resulted in the elimination of many long-held jobs in the early 1980s. The 1984 survey was conducted under the aegis of the Employment and Training Administration of the U.S. Department of Labor. The series of questions on displacement has since become a biennial supplement to the Current Population Survey (CPS).

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Measuring job security. June 1997.

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Worker displacement: a decade of change. April 1995.

Employer and occupational tenure: 1991 update. June 1993.

Recession swells count of displaced workers. June 1993.

Industrial structure of job displacement, 1979-89. September 1992.

Job displacement, 1979-86: how blacks fared relative to whites. July 1991.

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