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Worker displacement in the mid-1990's
July 1999, Vol. 122, No. 7
The years 1995 and 1996 marked the fifth and sixth consecutive years of economic growth that began in the early 1990s. During these 2 years, 5.0 million jobs were added to nonfarm payrolls. The unemployment rate, which peaked at 7.8 percent in mid-1992, remained at about 5½ percent during 1995–96.1
Despite these favorable labor market conditions, between 1995 and 1996 2.2 million workers aged 20 years and older lost jobs they had held for 3 or more years because their plants or companies closed down or moved, their positions or shifts were abolished, or their employer did not have enough work for them to do.2
In comparison, 2.4 million workers in that age group were displaced between 1993 and 1994, also a period of strong labor market conditions.
The displacement rate, which represents the likelihood of being displaced, fell from 3.3 percent during 1993–94 to 2.9 percent during 1995–96.3 Of the 2.2 million workers displaced in the most recent period, 83 percent were reemployed when surveyed in February 1998. Workers who lost jobs earlier in the decade had not fared nearly as well: of those who had lost jobs during 1991 and 1992, only 75 percent were working in February 1994.
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1 Data on job growth refer to nonfarm payroll employment and are derived from the Current Employment Statistics survey, a monthly survey that collects information on payroll employment, hours, and earnings from about 390,000 nonfarm business establishments. The unemployment rate is derived from the Current Population Survey (CPS), a monthly sample survey of about 50,000 households that provides information on demographic characteristics of the labor force and the employment status of the noninstitutional population aged 16 years and older.
2 The count of displaced workers includes, in addition to those who lost jobs, workers who left jobs in anticipation of losing them. Debriefing data collected as part of quality assessment research conducted on the February 1998 Displaced Worker Survey indicate that 79 percent of the displaced were job losers and 19 percent were job leavers. (One percent said they had retired.) Thus, the group referred to as job losers includes some workers who left or retired from their jobs prior to losing them.
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 group. Employment estimates for each year were adjusted, using job-tenure data from the January 1983, 1987, and 1991 and February 1996 and 1998 CPS supplements, to include only those workers with 3 or more years of tenure. A 2-year average was then computed by means of the adjusted employment estimates.
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