News & Information

LABOR & EMPLOYMENT LAW — 1/30/08

2007 mass layoffs increase over 2006, finance industry layoffs at series high

For all of 2007, the total numbers of mass layoff events, at 15,493, and initial claims, at 1,598,875, were higher than in 2006, when the totals were 13,998 and 1,484,391, respectively. For all of 2006, layoff events had hit a series low, and the number of initial claimants was the lowest reported since 1996 (USDL 08-0091, Bureau of Labor Statistics).

Of note, the finance and insurance industry registered series highs for mass layoff events and initial claims in 2007. This reflected increased layoffs in the credit intermediation and related activities industry, which includes real estate credit, commercial banking, and mortgage and nonmortgage lending brokers.

The 10 detailed industries with the highest number of mass layoff initial claims in 2007 accounted for 30 percent of the total for the year. Temporary help services and school and employee bus transportation ranked first and second among the 10 industries in both 2007 and 2006. In 2007, elementary and secondary schools entered the top 10 industries in terms of initial claims, displacing light truck and utility vehicle manufacturing.

Manufacturing accounted for 30 percent of all mass layoff events and 38 percent of initial claims filed during 2007, about the same as 2006 (31 and 39 percent, respectively). The number of manufacturing claimants was highest in transportation equipment manufacturing, 228,213, followed by food manufacturing, 62,141, and machinery manufacturing, 45,831.

Among the major industry sectors, manufacturing had the largest over-the-year increase in mass layoff-related initial claims (+26,941) from 2006 to 2007. Within manufacturing, transportation equipment (+6,956), wood products (+6,876), machinery (+5,762), and primary metals (+5,150) experienced the largest increases from the previous year. Construction had the second largest increase (+26,335) among the major industry sectors, due to more layoff activity in specialty trade contractors (+11,445), heavy civil engineering (+10,076), and construction of buildings (+4,814).

Finance and insurance registered series highs for mass layoff events and initial claims in 2007. This reflected increased layoffs in the credit intermediation and related activities industry, which includes real estate credit, commercial banking, and mortgage and nonmortgage lending brokers. For the second straight year, mining had a series low in mass layoff initial claimants during 2007.

The Midwest reported the highest number of initial claims filed due to mass layoffs during 2007 than any other region with 509,431. Layoffs in transportation equipment manufacturing accounted for 31 percent of the claims in the Midwest. Administrative and support services, heavy and civil engineering construction, and machinery manufacturing accounted for an additional 17 percent of layoffs in that region in 2007. The fewest number of mass layoff initial claims was reported in the Northeast (273,079).

From 2006 to 2007, all 4 regions had over-the-year increases in the number of initial claims from mass layoffs, led by the West (+51,536) and South (+43,920). Seven of the 9 divisions also experienced higher claimant activity in mass layoffs when compared with 2006, with the largest increases occurring in the Pacific (+43,924), the Middle Atlantic (+20,894), and the East South Central (+19,253) divisions.

Among the 50 states and the District of Columbia, California recorded the largest number of initial claims filed in mass layoff events during 2007 (357,994), 22 percent of the national total. The states with the next highest numbers of initial claims were Michigan (125,942), Pennsylvania (108,128), Ohio (83,429), and Illinois (80,477). Forty-nine percent of events and 47 percent of all initial claims during 2007 were from these five states. New Mexico was the only state to report a series high in mass layoff claimant activity, while 5 states--Alaska, Massachusetts, Minnesota, North Carolina, and Virginia--recorded series lows.

California reported the largest over-the-year increase in initial claims (+40,087), followed by Pennsylvania (+18,569) and Alabama (+16,013). The largest over-the-year decreases were reported in Indiana (-8,472), Virginia (-8,146), and Minnesota (-6,498).

Changes to mass layoff reporting

With the release of January 2008 data on February 27, 2008, the Mass Layoff Statistics program will revise the basis for industry classification from the 2002 North American Industry Classification System (NAICS) to the 2007 NAICS. The new classification reflects minor definitional changes within manufacturing, telecommunications, financial activities, and professional, scientific, and technical services. Several industry titles and descriptions will also be updated.

For more information on this and other topics, consult CCH Employment Practices Guide or CCH Labor Relations.

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