Echo

Mass layoffs declining in private sector; heating up in public sector

Tuesday, May 26, 2009

I missed this because I was travelling to Germany, but initial claims filed under mass layoff events declined 9.4% in April, its first decline since November 2008. This is the latest in the line of labor market reports suggesting that a slowdown in its rate of decline is underway. However, the report also indicates that the public sector is just getting started: state and local mass firings surged in April. From the Bureau of Labor Statistics:

Employers took 2,712 mass layoff actions in April that resulted in the separation of 271,226 workers, seasonally adjusted, as measured by new filings for unemployment insurance benefits during the month, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. Each action involved at least 50 persons from a single employer. The number of mass layoff events in April decreased by 221 from the prior month, and the number of associated initial claims decreased by 28,162. Compared to last year, the number of mass layoff events and associated initial claims more than doubled.
The chart illustrates (click to enlarge) the number of initial claims filed under mass layoffs in April - a mass layoff is an event of 50 or more workers being laid off in a given month by a single employer - as a percentage of the payroll since 1995 (the first data point).

Clearly, a one month drop in mass layoffs does not dictate a trend. However, it is consistent with other labor market indicators (see Credit Writedowns' post on the peak in initial and continuing unemployment claims): that the hurricane in the labor market seems to be dissipating a bit.

However, I will note (again) that the state and local governments are still firing in bulk in April.

The chart illustrates the number of initial claims due to mass layoffs from state-level government jobs not adjusted for seasonal variations in April. Across the full public sector (federal + state + local, not shown in chart), state level mass firings saw the biggest surge, a 53% bump in initial claims (probably in California), which was followed by local governments, 49%, and federal mass layoffs declined 1.9% (you can see this data in Table 3 of the mass layoff release).

I expect that the government mass layoffs will rise going forward, as state and local governments fire workers in order to trim budget deficits. However, in aggregate, it does appear that the worst of the labor decline is now behind.

Rebecca Wilder

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