Reversal of fortune
Jobs are getting easier to lose and harder to find
Layoff notices seem to appear nearly daily, affecting large national companies and lakes area firms.
As strong economy gave way to slowdown, workers were faced with an unexpected reversal of fortune. The climate of worker shortages and higher wage offerings changed to higher unemployment and slower job growth.
The Research and Statistics Office at the Minnesota Department of Economic Security recently issued a layoff report in its publication Minnesota Economic Trends.
"All indications are, however, that most jobseekers will have a more difficult time finding jobs now than during the previous several years," the report stated.
People may be laid off for a longer period of time and jobs may be harder to find compared to last year.
The state office noted laid-off workers are only a very small portion of the people who are looking for and taking new jobs at any given time. And job churn is viewed by economists as a part of the dynamism of the current economy, the report stated.
But layoff notices have become more commonplace on the national, regional and local economic scene.
In a study of workers displaced by a mass layoff in Minnesota in 1996 and 1997, the state reported about 94 percent were reemployed in the state within a year.
Major concerns for laid-off workers included loss of benefits, a possible cut in pay, or interruption in healthcare benefits. Minnesota workers who were reemployed in the study earned, on average, almost 93 percent of their pre-layoff income. The state office said workers who earned $23,469 on average before the layoff, earned $21,731 at the new job.
But those worker's earnings also rose in the robust economy. The report noted that national studies find workers earn less in the three years after a layoff compared to the track they would have been on if they stayed on the original job.
"...This gap becomes larger during periods of economic slowdown," the state research office reported.
Unemployment rates this spring reached rates that have not been in the state since 1996. During 2000, the state reported the average stay on Unemployment Insurance was just less than 12 weeks.
"... There has been a rapid rise in the number of initial claims, or applications, for Unemployment Insurance benefits," the report stated. "UI initial claims increased almost 82 percent from second quarter of 2000 to second quarter 2001 and reached a level not seen since the economic slowdown in the early 1990s."
Unemployment Insurance initial claims do not separate laid-off workers from others claiming benefits because they quit or were fired for good cause. Minnesota's Mass Layoff Statistics Program tracks closures in Minnesota where at least 50 workers are separated involuntarily from their employer for more than 30 days.
The state reported the likelihood of remaining unemployed after a layoff decreases with each additional year of education. Even in the best scenarios when finding a new job comes quickly, lay offs likely equate to a loss of income.
"For some laid-off workers, this loss in wages means taking the first job they can rather than waiting for a higher-paying job," the state reported, noting laid-off workers were more likely than others looking for work to take temporary jobs or be employed part-time involuntarily.
The layoffs are coming at a time when the state's job growth was also reported to have slowed. Manufacturing and mining industries were reported to be feeling the pinch the most with Unemployment Insurance benefits claims rising 200 to 590 percent when the second quarter in 2001 was compared to a year earlier.
Agriculture, forestry, fishing and public administration were other industries with an increase in Unemployment Insurance claims. The southwest, Arrowhead and Twin Cities areas of the state had the greatest increases in the claims comparing this year to one year ago and comparing those regions to other areas of the state.
More than 7 1/2 million U.S. workers age 20 years and older were displaced from jobs between 1997 and 1999, despite a historically low unemployment rate, the state office reported.
"... While the current labor market has weakened, when the economy rebounds and job growth accelerates, the employment outlook for laid-off workers will probably be brighter."