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Worker displacement in a strong labor market
June, 2001, Vol. 124, No. 6
Ryan T. Helwig
The U.S. economy continued to expand in 1997 and 1998, experiencing its seventh and eighth consecutive years of economic growth. During this 2-year period, payroll employment rose by 6.4 million jobs, and the unemployment rate averaged less than 5 percent for the first time since the early 1970s.1 As a result of these improved labor market conditions, both the level and incidence of job displacement continued to decline.
While many workers benefited from an expanding economy in the late 1990s, job loss continued to affect a substantial number of workers. During the 1997–98 period, 1.9 million workers permanently lost jobs they had held for 3 or more years because their plant or company closed down or moved, their positions or shifts were abolished, or there was insufficient work.2 This compares with 2.2 million workers displaced during 1995–96, and 2.4 million during 1993–94. As the displacement decline suggests, the likelihood of losing a job also fell. The displacement rate—the proportion of long-tenured workers who were displaced from their jobs—was 2.5 percent in 1997–98, down from 2.9 percent in 1995–96, and the lowest in nearly a decade.3
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1 Data on nonfarm payroll employment are derived from the Current Employment Statistics (CES) Survey, a monthly sample survey that collects information on employment, hours, and earnings from about 400,000 business establishments. The unemployment rate is derived from the Current Population Survey (CPS), a sample survey of about 50,000 households, conducted monthly by the Census Bureau for the Bureau of Labor Statistics (BLS). The CPS collects information about the demographic characteristics and employment status of the civilian noninstitutional population aged 16 years and older.
2 In addition to those who lost jobs, the count of displacement includes workers who left jobs in anticipation of losing them. Debriefing data collected as part of the quality assessment research conducted on the February 2000 Displaced Worker Survey indicate that 77 percent of the displaced were job losers, 22 percent were job leavers, and 1 percent 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 worker group. Employment estimates for each year were adjusted, using job-tenure data from the January 1983, 1987, 1991, and February 1996 and 1998 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.
Current Population Survey
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