Worker displacement: A fancy name for losing a job

Every three years since 1984 the Employment and Training Administration of the U.S. Department of Labor has released information on workers who were “displaced” from their jobs.

The latest survey shows that in the months between January 1999 and December 2001, 4 million workers with at least three years’ seniority were “displaced.” Although the current crisis had not yet done its worst damage at the time the survey was released, the number of displaced workers increased by 700,000 compared to an earlier survey covering the January 1997-December 1999 period.

The current survey says another six million persons were displaced from jobs they had held for less than three years (the “short-tenured”). The combined total of both groups raises the number of displaced workers between January 1999 and December 2001 to just under 10 million, nearly 2.5 million more than in the prior survey.

The Labor Department defines “displaced workers” as individuals at least 20 years old who lost or left jobs. The latest survey says 47 percent of displaced workers lost or left their jobs due to plant or company closings; 25 percent cited insufficient work as the reason for being displaced and 27 percent reported that their position or shift was abolished.

Although most displaced workers succeeded in finding new jobs, nearly half of long-tenured workers who were displaced from full-time wage and salary jobs and who were re-employed earned less than they had made in the job they lost. The Labor Department says three of every ten of these workers had earnings that were at least 20 percent below those of their original jobs.

Many, 21 percent of the four million long-tenured workers who lost their jobs during the three years covered by the survey, were unemployed at the time the survey was taken. Another 15 percent had dropped out of the labor market, meaning they were no longer counted among the unemployed.

Re-employment rates for workers aged 65 and older (20 percent) were markedly lower than for workers age 55-64 (50 percent plus), graphic testimony that many laid-off workers find themselves in the category of those who are too old to work and too young to retire.

There were other disparities: Although re-employment rates of men and women in January of this year were roughly equal (65 and 62 percent respectively), women were less likely to be counted among the unemployed because the proportion of laid-off women who left the labor market (19 percent) was more than 50 percent higher than the proportion of men (12 percent) because of the futility of searching for non-existent jobs. Sixty-five percent of displaced white workers had been re-employed in January 2002, significantly more than either African Americans (62 percent) or Latinos (55 percent).

During the 1999-2001 period, 1.3 million factory workers were displaced from their jobs, representing 19 percent of the long-tenured displaced, in a situation where manufacturing workers account for only 14 percent of total long-tenured employment.

Manufacturing displacements were concentrated in durable goods industries, with operators and fabricators bearing the brunt. In durable goods manufacturing the re-employment rate was 56 percent, lower than the overall re-employment rate for displaced workers and considerably below the 62 percent for displaced workers in construction, transportation and public utilities, and the 71 percent for workers who lost jobs in finance, insurance, and real estate and in government.

The proportion of displaced workers who had found new jobs when surveyed was highest for mechanics and repairers (82 percent) and lowest for machine operators, assemblers, and inspectors (49 percent).

Of the 2.3 million re-employed displaced workers who lost full-time wage and salary jobs during the 1999-2001 period, 1.9 million were working again in such jobs in January 2002. Of these re-employed full-time workers, fewer than half were earning as much or more in their new jobs as they had earned in the jobs they lost. This was lower than the proportion recorded in the February 2000 survey (58 percent). In January 2002, 29 percent of re-employed workers reported their earnings had fallen by 20 percent or more.

Nor is the situation going to improve anytime soon. According to the Labor Department, official unemployment stood at 5.9 percent in July, essentially unchanged for the past three months. There were still 2.9 million workers unemployed for 15 weeks or more – a statistic that does not take into account workers who do not qualify for unemployment benefits or who have exhausted their benefits.

Other indicators of a continued employment crisis were the growth in the number of persons working part time despite their preference for full-time work – now 4.2 million, and in the number of workers the Labor Department says are only “marginally attached” to the labor force, now 1.5 million compared to 1.2 million a year ago.