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Economy in Brief

Mass Layoffs Plunge
by Tom Moeller September 24, 2004

Mass layoffs in the US as reported to the Bureau of Labor Statistics plunged 61.4% in August to the lowest level since August 2000. The decline, however, followed sharp increases in the prior two months.

The number of firms reporting mass layoffs in August fell to 809 from 2,094 in July.

These layoffs generated 69,033 (-48.4% y/y) initial claims for unemployment insurance, down a sharp 72.8% m/m.

Since the series inception in 1995 there has been a (negative) 45% correlation between the number of initial claims generated by mass layoffs and the one month change in non-farm payrolls.

The Mass Layoff Statistics (MLS) program collects reports on mass layoff actions that result in workers being separated from their jobs. Monthly mass layoff numbers are from establishments which have at least 50 initial claims for unemployment insurance (UI) filed against them during a 5-week period. Extended mass layoff numbers (issued quarterly) are from a subset of such establishments--where private sector non-farm employers indicate that 50 or more workers were separated from their jobs for at least 31 days.

Creative destruction and heightened job uncertainty are explored in this paper from the Federal Reserve Bank of Philadelphia titled "CEOs, Clerks, Computers, and the Rise of Competition in the Late 20th Century."

Mass Layoffs Aug July Y/Y 2003 2002 2001
Number of Events: All Industries 809 2,094 -35.7% 18,963 20,277 21,467
Numbers of Persons Filing Initial Unemployment Insurance Claim: All Industries 69,033 253,929 -48.4% 1,888,926 2,245,051 2,514,862
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