First quarter mass layoffs lowest since 2000; 40 percent of employers reporting extended layoffs anticipate recalling employees

In the first quarter of 2004, 1,204 mass layoff actions were taken by employers in the private nonfarm economy that resulted in the separation of 239,361 workers from their jobs for at least 31 days, according to preliminary figures released by the U.S. Department of Labor's Bureau of Labor Statistics. Both the total number of layoff events and the number of separations were sharply lower than in January-March 2003, and were the lowest for a first quarter since 2000. The decline over the year was most notable in general merchandise stores, administrative and support services, computer and electronic product manufacturing, and air transportation. Forty percent of employers reporting an extended layoff in the first quarter of 2004 indicated they anticipated some type of recall.

In the first quarter of 2004, the national unemployment rate was 6.1 percent, not seasonally adjusted; a year earlier it was 6.3 percent. Nonfarm payroll employment, not seasonally adjusted, increased by 0.2 percent or 247,000 jobs from January-March 2003 to January-March 2004.

The completion of seasonal work accounted for 28 percent of all events and 56,478 separations during the period—the highest level for a first quarter since 2000. Layoffs due to internal company restructuring represented 25 percent of events and resulted in 55,376 separations. Permanent closure of worksites occurred in 17 percent of all events and affected 42,814 workers, the lowest first-quarter level since 1998. Thirty-five percent of the employers anticipating a recall expected to extend the offer to all laid-off workers, the highest proportion for a first quarter since 2001.

Industry Distribution of Extended Layoffs

Extended mass layoff separations occurred in 382 of the 1,197 detailed industries for which data are available. This is the fewest number of industries to have at least one extended mass layoff event in the first quarter since 1998.

Retail trade, accounted for 11 percent of private-nonfarm layoff events and 36 percent of separations during January-March 2004. This marked the first time since the program began in 1995 that a sector other than manufacturing reported the greatest share of separations. In addition, the 86,884 worker separations in retail trade were the highest for that sector for any quarter since 1995. Layoff activity in this sector was concentrated in food and beverage stores (54,969, largely in supermarkets and other grocery stores).

Manufacturing industries accounted for 32 percent of private nonfarm layoff events and 24 percent of separations. Layoff activity in this sector was concentrated in food manufacturing (11,005), followed by transportation equipment manufacturing (8,874) and computer and electronic product manufacturing (3,912). Layoffs in construction comprised 19 percent of events and 10 percent of separations, mostly among specialty trade contractors. Cutbacks in administrative and waste services accounted for 11 percent of events and 9 percent of separations, mainly in temporary help services. The accommodation and food services sector accounted for an additional 4 percent of events and separations during the quarter, primarily in hotels and motels, except casino hotels.

Information technology-producing industries (communication equipment, communications services, computer hardware, and software and computer services) accounted for 6 percent of layoff events and 10,556 worker separations in the first quarter, down from 11 percent of layoff events and 28,582 separations a year earlier. This also marked the lowest number of separations in the industry grouping since the first quarter of 2000. Layoffs in the information technology-producing industries were most numerous in communications services, 3,816 separations, followed by those in computer hardware.

Recall Expectations

Forty percent of employers reporting an extended layoff in the first quarter of 2004 indicated they anticipated some type of recall. This compares with 35 percent of the employers anticipating a recall a year earlier. Most of the employers not expecting a recall were in administrative and support services, food manufacturing, and computer and electronic product manufacturing.

Among establishments expecting a recall, most employers expected to recall over one-half of the separated employees and to do so within 6 months. Thirty- five percent of the employers expected to extend the offer to all laid-off workers, the highest proportion for a first quarter since 2001.