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June 2004, Vol. 127, No. 6
Worker displacement in 1999–2000
The economic expansion that began in 1991 continued through 1999 and 2000, peaking in March 2001, exactly 10 years from the trough of the prior recession.1 During 1999 and 2000, nonfarm payroll employment increased by 5.1 million jobs, and the national unemployment rate fell to historic lows, averaging 4.1 percent over the period.2 These strong labor market conditions allowed the incidence of job displacement to remain low.
The final years of the 1990s expansion brought continued job and wage gains across the economic spectrum, although job loss remained a reality for many workers. During the 1999–2000 period, 2.0 million persons 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 for them to do. This level of displacement was about the same as the 1.9 million reported during the 1997–98 period. The displacement rate—the proportion of long-tenured workers who were displaced from their jobs—was 2.5 percent in 1999–2000, the same as the 1997–98 rate. Despite the strongest labor market witnessed since the inception of the survey in 1984, the displacement rate did not fall below its all-time low of 2.4 percent from 1987–88.3
About three-fourths of long-tenured workers who lost jobs in 1999–2000 were reemployed when surveyed in January 2002.4 The median time spent between jobs remained low, at 5.5 weeks. As a result, relatively few of these displaced workers were forced to rely on unemployment insurance to replace lost income.
The U.S. Department of Labor’s Employment and Training Administration sponsors biennial surveys of displaced workers as supplements to the Current Population Survey (CPS). Using data from the January 2002 supplemental survey, this article examines job loss and reemployment, focusing on characteristics of workers displaced in 1999–2000 and their experiences following a job loss. A time series has been constructed using 2 years of data from each survey, beginning with the 1981–82 period (from the first survey in 1984) and ending with the 1999–2000 period (from the 2002 survey). (See appendix for a description of the Displaced Worker Survey.)
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1 The National Bureau of Economic Research (NBER), generally viewed as the arbiter of business cycle dates, designated March 1991 as the trough of the recession that began in July 1990.
2 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 60,000 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.
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, 1998, and 2000 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 Reemployment rates and other measures concerning a worker’s current employment status may not be strictly comparable between the 2002 and 2000 surveys. In 2002, the survey was conducted in January and, in 2000, it was done in February. Between January and February of each year, there is usually a large seasonal increase in employment. Hence, it is possible that reemployment rates as measured in any given January may be lower than those measured in February because of this seasonal employment pattern. However, in the January 2002 data, it is not possible to disentangle the effects of the seasonal pattern on the data from cyclical or other economic factors.
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