Displaced Workers: Trends in the 1980s and Implications ...

CONGRESS OF THE UNITED STATESCONGRESSIONAL BUDGET OFFICE

S T U D Y

S U M M A R

February 1993

CBO STUDY OF DISPLACED WORKERS

CONGRESSIONAL

BUDGET OFFICE

Second and DStKets,S.W.

Washington, D.C. 20515

In the 1980s, roughly 20 million full-time workers reported losing jobs because theiremployers either went out of business or laid them off and had not recalled them over ayear later. Workers will undoubtedly continue to be displaced, both because of thenormal adjustments that occur in a dynamic market economy and because of changes infederal policy, such as cuts in defense spending. A new Congressional Budget Officestudy, Displaced Workers: Trends in the 1980s and Implications for the Future, examineswhat can be learned from the experiences of workers displaced during the past decade.

From 1981 through 1990, the annual number of displaced workers generally mir-rored the overall state of the economy, with the number ranging from 2.7 million work-ers in the weak labor market of 1982 to 1.5 million in the relatively strong labor marketof 1988. The demographic characteristics of displaced workers were remarkably stable,however, despite a wide swing in the business cycle, differences in the industries fromwhich jobs were lost, and changes in a broad array of government policies. Slightly morethan 20 percent of all displaced workers were age 45 and older, for example, and abouthalf had been with their employer for more than three years.

Although some of the displaced workers found new jobs easily, others experiencedsubstantial difficulties. One to three years after being displaced, half of the workerseither were not working or were making less than 80 percent of their previous earnings.In contrast, more than a quarter of displaced workers were reemployed and earning atleast 5 percent more; nearly one in five had earnings at least 20 percent higher.

The displaced workers who incurred the largest losses were disproportionatelythose who were the least well educated, the oldest, and had the longest tenure with theirprevious employer. These groups were far less likely to be working again. Even thosewho did find new jobs generally took longer to do so and were more likely to incur sub-stantial wage reductions.

Displaced workers who received Unemployment Insurance benefits (about 60 per-cent of the total) were much more likely than other UI recipients to exhaust their bene-fits without having found another job. During the 1980s, about half of the displacedworkers who received UI benefits exhausted them, compared with about one-third of allUI recipients. Extending the maximum duration of UI benefits would help cushion thelosses that many displaced workers would otherwise incur. To some degree, however, ex-tending benefits would encourage recipients to remain unemployed longer.

In principle, the retraining assistance provided through the Economic Dislocationand Worker Adjustment Assistance program and the Trade Adjustment Assistance(TAA) program could help displaced workers develop new skills or adapt their old ones.This retraining would make them more valuable to new employers and thus help themfind new jobs comparable with their old ones. Despite widespread support for retrainingdisplaced workers, however, little is known about the effectiveness of these programs.Preliminary findings from an evaluation of TAA suggest that it has not increased theaverage earnings of participants or their likelihood of being employed.

Questions regarding this study should be directed to the authors, Murray N. Rossand Ralph E. Smith of CBO's Human Resources and Community Development Division,at (202) 226-2666. The Office of Intergovernmental Relations is CBO's Congressionalliaison office and can be reached at 226-2600. For additional copies of the study, pleasecall the Publications Office at 226-2809.

DISPLACED WORKERS:TRENDS IN THE 1980s AND IMPLICATIONS

FOR THE FUTURE

The Congress of the United StatesCongressional Budget Office

NOTES

Numbers in the text and tables of this study may not add tototals because of rounding.

Cover photo: Line of people at an unemployment office. (Fromthe U.S. News & World Report Collection, Prints and Photo-graphs Division, Library of Congress.)

Preface

enD uring the 1980s, anjobs and were not rethe Subcommittee

Ways and Means, this studexperiences of these displacedcharacteristics of the workafter displacement. It alsoto help these workers andfuture federal policy. In(CBO's) mandate to provid<no recommendations.

verage of 2 million workers per year lost full-timeailed by their former employers. At the request of

Human Resources of the House Committee onexamines what lessons might be learned from the

workers. The study looks at the numbers andrs displaced and investigates workers' experiencesdescribes the major programs that were available

c| scusses the implications of the study's findings forcordance with the Congressional Budget Office'sobjective and impartial analysis, this study makes

Murray N. Ross andCommunity DevelopmentNancy M. Gordon. Many pCullinan, Diane Herz, SuRachel Schmidt, and BruceJacquelyn Vander Brug prtyped drafts of the manuspublication.

February 1993

Ralph E. Smith of CBO's Human Resources andDivision prepared the study under the direction ofeople provided valuable comments, including Paulan Labovich, Ann Lordeman, Constance Rhind,Vavrichek. Christian Spoor edited the manuscript,vided computer assistance. Sharon Corbin-Jallowript. Kathryn Quattrone prepared the study for

Robert D. ReischauerDirector

Contents

SUMMARY

ONE INTRODUCTION

TWO TRENDS IN DISPLACEMENT, 1981-1990

Measuring Displacement 5Trends in the 1980s 6Which Jobs Were Lost and Who Lost Them? 7

THREE WORKERS' EXPERIENCESAFTER DISPLACEMENT

Overview 11Likelihood of Reemployment 14Joblessness and Losses in Earnings for

Reemployed Workers 17

FOUR PROGRAMS TO PROVIDE INCOME ANDREEMPLOYMENT ASSISTANCE

Unemployment Insurance 27The Economic Dislocation and Worker Adjustment

Assistance Program 30Trade Adjustment Assistance 32

FIVE POLICY IMPLICATIONS

Are the Existing Programs Sufficient? 35Potential Changes 36

APPENDIXES

A Data Accuracy and Analytic Methods 43

B Year-by-Year Data for Displaced Workers 49

IX

1

5

11

27

35

CONTENTS

TABLES

1. Characteristics of Displaced Workers VersusAll Civilian Workers, 1988 9

2. Displaced Workers' Employment Statusat Time of Survey, Earnings Ratio, andAverage Duration of Joblessness 12

3. Joblessness and Reemployment Among AllDisplaced Workers, by Selected Characteristics,1981-1990 14

4. Effects of Workers' Characteristics and Circumstancesof Displacement on the Likelihood of Reemploymentfor All Displaced Workers 16

5. Joblessness and Earnings Losses Among ReemployedDisplaced Workers, by Selected Characteristics,1981-1990 19

6. Effects of Workers' Characteristics and Circumstancesof Displacement on the Duration of Joblessnessfor Reemployed Displaced Workers 20

7. Effects of Workers' Characteristics and Circumstancesof Displacement on the Likelihood of Having NewWeekly Earnings Less Than 80 Percent of PreviousEarnings for Reemployed Displaced Workers 23

B-1. Distribution of Displaced Workers by SelectedCharacteristics and Employment Status at Timeof Survey, 1981-1990 50

B-2. Distribution of Displaced Workers by SelectedCharacteristics and Employment Status at Timeof Survey, 1981 51



B-5. Distribution of Displaced Workers by SelectedCharacteristics and Employment Status at TimeofSurvey, 1984 54

vii DISPLACED WORKERS: TRENDS IN THE 1980s February 1993







FIGURES

S-1. Number of Displaced Workers, by Year ofJob Loss, 1981-1990 x

S-2. Characteristics of Displaced Workers, by Yearof Job Loss, 1981-1990 xi

S-3. Earnings of Workers Displaced in the 1980sOne to Three Years After Losing Their Jobs xii

1. Number of Displaced Workers, by Reason forDisplacement and Year of Job Loss, 1981-1990 7

2. Number of Displaced Workers, by Industry,Occupation, and Year of Job Loss, 1981-1990 8

3. Characteristics of Displaced Workers, by Yearof Job Loss, 1991-1990 10

4. Outcomes Following Displacement, by Yearof Job Loss, 1981-1990 13

5. Illustrative Relative Effects of Schooling andAge on the Likelihood of Reemployment forAll Displaced Workers 18

CONTENTS

6. Illustrative Relative Effects of Job Tenure andAge on the Duration of Joblessness forReemployed Displaced Workers 22

7. Illustrative Relative Effects of Job Tenure andAge on the Likelihood of Having New WeeklyEarnings Less Than 80 Percent of PreviousEarnings for Reemployed Displaced Workers 24

8. Displaced Workers' Receipt and Exhaustionof Unemployment Insurance Benefits, byDuration of Joblessness 29

A-1. Number of Displaced Workers per Year,by Year of Survey, 1979-1991 44

A-2. Displaced Workers and First UnemploymentInsurance Payments, as a Percentage of1981 Levels, 1981-1990 47

Summary

T he prospect of losing a job and needingto find another one is a concern formany workers. Although the likelihood

of actually being displaced-that is, of beingpermanently terminated from one's job—isfairly low, this concern is understandable be-cause the costs to workers who are displacedcan be quite high. In each year of the 1980s,roughly 2 million full-time workers reportedlosing jobs because their employers eitherwent out of business or laid them off for otherreasons and had not recalled them over a yearlater. Some of these displaced workers soonfound new jobs with wages at least as high asin their previous jobs. But others experiencedlong spells of unemployment, exhaustion ofUnemployment Insurance benefits, and lowerwages in their new jobs.

Several recent developments have put theproblems facing displaced workers on theagenda of many legislators. They include:

o The frequent announcements of large-scale cutbacks by firms that are restruc-turing or closing down, together withthe impression that employers have be-come less inhibited about dischargingtheir workers (including workers inwhite-collar jobs);

o The realization that cuts in the defensebudget over the next few years willcause large-scale job losses among work-ers in the defense sector—both federalcivilian and military personnel and pri-

vate-sector workers whose jobs end be-cause their firms lose defense contracts;

o The concern that efforts to reduce tradebarriers-such as implementing theNorth American Free Trade Agreement(NAFTA)--would eliminate jobs in theUnited States, as employers shiftedsome of their operations to other coun-tries and as the increase in imports re-duced the demand for certain domes-tically produced goods; and

o The perception that the safety net forworkers who lose their jobs is not ade-quate to meet the needs of displacedworkers.

Against that backdrop, this study examineswhat lessons might be learned from the ex-periences of roughly 20 million workers whowere displaced during the 1980s. The analysisis largely based on data collected by the Cen-sus Bureau for the Bureau of Labor Statistics(BLS) in surveys conducted in January 1984,1986, 1988, 1990, and 1992. Displaced work-ers were identified as people who reportedhaving "lost or left a job because of a plantclosing, an employer going out of business, alayoff from which [they were] not recalled orother similar reason" during the five yearspreceding each survey.

The Congressional Budget Office's (CBO's)analysis of these data differs from otherstudies in two important ways that shouldmake it more useful to policymakers. First,

x DISPLACED WORKERS: TRENDS IN THE 1980s AND IMPLICATIONS FOR THE FUTURE February 1993

CBO developed a new technique that permitsthe data from all five surveys to be combinedand used to examine year-to-year changes indisplacement, whereas the BLS and othershave generally focused on the five-year aver-ages from each survey. Year-to-year changesin the number of displaced workers exhibit im-portant cyclical variation that the five-yearaverages mask.

Second, CBO counted workers as displacedregardless of how long they had been withtheir previous employer, whereas other stud-ies have focused on the roughly half of dis-placed workers who were with their employerfor at least three years. This study uses thebroader definition in part because the eventsthat create interest in displacement-such aslarge plant closings—are couched in terms ofthe number of workers who will lose their jobs,not just the number who had been with theemployer for at least three years. Moreover,whether to provide assistance to displacedworkers who had worked for their employerfor less than three years would be a policy de-cision, one that can be informed by knowledgeof the characteristics and experiences of theseworkers.

Number and Characteristicsof Displaced Workers

From 1981 through 1990, the annual numberof displaced workers generally mirrored theoverall state of the economy. The numbersranged from a high of 2.7 million workersdisplaced in the weak labor market of 1982 toa low of 1.5 million in the relatively stronglabor market of 1988 (see Summary Figure 1).Workers in the service sector and in white-collar occupations accounted for a rising por-tion of displaced workers during the decade,reflecting both the increasing share of theseindustries and occupations in the nation'stotal employment and the increased risk ofthese workers' being displaced. On the whole,however, workers in service industries and inwhite-collar jobs remained much less likely tobe displaced than workers in goods-producingindustries and blue-collar jobs.

The characteristics of displaced workerswere remarkably stable during the 1980s, de-spite a wide swing in the business cycle,

Summary Figure 1.Number of Displaced Workers, by Yearof Job Loss, 1981-1990

Displacement in the 1980sand Its ConsequencesWorkers will undoubtedly continue to be dis-placed in the future-both because of normaladjustments made by employers in a dynamicmarket economy and because of changes infederal policies, such as cuts in defense spend-ing. As the Congress considers how to assistthese workers, the experiences of people dis-placed during the past decade provide severaluseful insights.

Thousands of Workers

1981 1984 1987 1990

SOURCE: Congressional Budget Office tabulations of datafrom the January 1984,1986,1988,1990, and 1992Current Population Surveys.

SUMMARY XI

changes in industrial composition, andchanges in a broad array of government poli-cies. For example, throughout the decade,slightly more than 20 percent of all displacedworkers were aged 45 and older, about 50percent had been with their previous employerfor more than three years, and 60 percent weremale (see Summary Figure 2). The percentageof displaced workers with schooling beyondhigh school grow from about 30 percent to 40percent, though, mirroring the increased edu-

cational attainment of the work force as awhole.

The number of workers who will be dis-placed during the next few years may be some-what larger than the number displaced in thelate 1980s, because the economy is likely to beweaker and because defense-related employ-ment is expected to shrink further. CBO fore-casts a gradual economic recovery, with theunemployment rate falling from 7.4 percent in

Summary Figure 2.Characteristics of Displaced Workers, by Year of Job Loss, 1981-1990

100Percent

Age Job TenurePercent

1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990

18-34 35-44 K^ 45-54 55-59 mm 60+ <3 years |If 3-4 years W 5-9 years RS] 10+years

Sex100

80-

60-

40-

20-

Percent

T1 "I1981 1982 1983 1984 1985 1986 1987 1988 1989 1990

• Male Hi Female

100Percent

Years of Schooling Completed3

1981 1982 1983 1984 1985 1986 1987 1988 1989 1990

Less than 12 12 • 13-15 $M 16 or more

SOURCE: Congressional Budget Office tabulations of data from the January 1984, 1986, 1988, 1990, and 1992 Current PopulationSurveys.

a. For workers displaced in 1989 and 1990, years of schooling completed is estimated on the basis of the highest degree obtainedand is not strictly comparable with data for prior years.

xii DISPLACED WORKERS: TRENDS IN THE 1980s AND IMPLICATIONS FOR THE FUTURE February 1993

1992 to 6.0 percent in 1996. The latter un-employment rate would still be one-half of onepercentage point above the unemploymentrate in 1990, the final year of the 10-yearperiod examined in this study. Moreover, thedownsizing of the defense sector that began inthe late 1980s is expected to continue, withthat sector projected to lose more than 1 mil-lion jobs during the next five years. (Esti-mates of the job losses in industries that wouldbe adversely affected by NAFTA are muchsmaller and spread out over a longer period.)

The stability of the characteristics of work-ers displaced during the past decade is noguarantee, of course, that the displaced work-ers of the future will look like those of thepast. Workers displaced from a shrinkingdefense industry, for example, may well lookdifferent from those who lost jobs from ashrinking (in terms of employment) steelindustry. At the same time, it is reasonable toexpect that many of the factors that resultedin the patterns observed for displaced workersin the 1980s will continue. For example,seniority practices are likely to ensure thatolder workers continue to be a relatively smallshare of all displaced workers. Similarly,workers with more years of schooling willprobably continue to have more stable em-ployment patterns than those with feweryears of schooling.

The Experiences of WorkersAfter Displacement

Although some of the workers who were dis-placed during the 1980s found new jobs withlittle trouble, others experienced substantialdifficulties. This finding is based on threemeasures used in this study to examine theconsequences of displacement, each based onsurvey questions asked of displaced workersone to three years after they lost their jobs:whether or not they were employed at the timeof the survey; how long they had been jobless;and the earnings of the reemployed workers intheir new jobs relative to their previousearnings.

Summary Figure 3.Earnings of Workers Displaced in the 1980sOne to Three Years After Losing Their Jobs

Earning At Least 120 Percent

of Prior Earnings

(18%)

Earning 105-120 Percent

of Prior Earnings

(10%)

Not EmployedWhen Surveyed

(27%)

Earning 95-104 Percentof Prior Earnings

(11%) Earning Less Than 80 Percent

of Prior Earnings(24%)

Earning 80-94 Percent

of Prior Earnings

(10%)


One to three years after being displaced,half of the workers who lost jobs over the pastdecade either were not working or had newjobs with weekly earnings that were less than80 percent of their old earnings (see SummaryFigure 3). In contrast, more than a quarter ofthe displaced workers were reemployed andearning at least 5 percent more than theirprevious weekly earnings; nearly one in fivehad an increase in earnings of at least 20percent.

The vast majority of displaced workers whohad found new jobs experienced some period ofjoblessness after displacement, and manywere without work for a substantial period oftime. The average duration of joblessness forpeople reemployed at the time of the surveywas just under 20 weeks. The reemployedworkers who incurred the biggest wage reduc-tions, on average, took the longest to find newjobs. For instance, those whose earnings haddeclined by more than 20 percent had beenjobless for an average of 26 weeks, whereas

SUMMARY Xlll

those whose earnings had increased by at least20 percent were jobless an average of 14weeks.

The state of the economy had an importantinfluence on the extent of joblessness after dis-placement. It did not, however, have an ap-parent effect on the proportion of reemployedworkers who incurred large losses in theirearnings. The average duration of joblessnessfell from almost 30 weeks in 1981 (during arecession) to 15 weeks in 1988. But the per-centage of reemployed workers whose earn-ings had fallen by at least 20 percent was notsubstantially higher in 1981 than in 1988.

The displaced workers who incurred thelargest losses were disproportionately thosewho were the least well educated, the oldest,and had the longest tenure with their previousemployer. In fact, these groups were far lesslikely than the displaced workers who werebetter educated, younger, and had shorter ten-ure to be working at all at the time of the sur-vey. For example, less than 60 percent of thedisplaced workers who had not completed highschool had found new jobs, compared withmore than 70 percent of the displaced workerswho had completed exactly 12 years of school-ing and almost 90 percent of those with 16 ormore years of education.

Likewise, the less-educated, older, andlonger-tenured workers who did find new jobsgenerally took longer to find them and weremore likely to incur substantial wage reduc-tions than were other displaced workers. Forexample, those reemployed workers who hadnot completed high school were jobless for anaverage of 39 weeks, and two in five of themincurred an earnings loss of more than 20 per-cent. In contrast, reemployed workers with atleast 16 years of education were jobless anaverage of 22 weeks, and only one in four ofthem incurred that large a wage loss.

Despite variation over the business cycle inworkers' outcomes after displacement, theserelationships between workers' characteristicsand their likelihood of difficulties were quitestable. That is, the kinds of workers who were

jobless longer in bad years were also joblesslonger in good years, and similar workersincurred losses in earnings in both good andbad years. Such stability reinforces confi-dence in the applicability of this study forlearning about the outcomes likely to faceworkers who are displaced in the future.

Providing Assistance toDisplaced WorkersThe federal government, together with stategovernments, offers a wide range of programsfor displaced workers who need temporary in-come assistance until they find another joband help in preparing for, and finding, thatnew job. Unemployment Insurance (UI) is themain program providing income assistance todisplaced workers (as well as to other workerswho lose their jobs). The Economic Disloca-tion and Worker Adjustment Assistance(EDWAA) program and the Trade AdjustmentAssistance (TAA) program provide reemploy-ment assistance. These three programs arelikely to be the starting point for the 103rdCongress as it considers what new measures,if any, should be taken to help displacedworkers.

Unemployment Insurance

The UI program provides weekly benefits toexperienced workers who lose their jobs,whether or not the job loss is permanent.Work histories determine the specific durationand weekly amount of benefits for workers,but benefits are generally available for nomore than 26 weeks. When unemployment ina state is sufficiently high, the federal/stateExtended Benefit (EB) program provides addi-tional weeks of benefits. The Emergency Un-employment Compensation program, enactedin 1991 and amended in 1992, enables un-employed workers who have exhausted regu-lar UI benefits to receive further payments.When the emergency program expires in

xiv DISPLACED WORKERS: TRENDS IN THE 1980s AND IMPLICATIONS FOR THE FUTURE February 1993

March, states will have the option of using anew method of triggering EB. Nonetheless, farfewer unemployed workers are likely to re-ceive EB payments than did so under theemergency program.

Displaced workers who received UI benefits(about 60 percent of the displaced workers inthe decade analyzed) were much more likelythan other UI recipients to exhaust their bene-fits without having found another job. Duringthe 1980s, about half of the displaced workerswho received UI benefits exhausted them. Incontrast, about one-third of all UI recipientsran out of benefits during that decade.

The Congress might want to consider ex-panding the potential duration of UI benefitsfor all displaced workers or for specific groupsof them-those with relatively long job tenure,for example, or those who enroll in a retrain-ing program or a program that helps partici-pants find new jobs faster. Extending themaximum duration of UI benefits would helpcushion the losses that many displaced work-ers would otherwise incur. To some degree,however, extending benefits would encouragerecipients to remain unemployed longer.Linking the additional benefits to participa-tion in some kind of reemployment assistanceprogram (as is done in the TAA program, dis-cussed below) could speed their adjustment,but it would be a major undertaking andwould add significantly to the administrativecosts of the UI program.

EDWAA and TAA

Under Title III of the Job Training Partner-ship Act, as amended by the Economic Dislo-cation and Worker Adjustment Assistance Actof 1988, states receive federal funds to helpdisplaced workers obtain employment throughtraining and related employment services. Al-though the criteria for qualifying for servicesare quite broad, available funding is notsufficient to serve all workers eligible forEDWAA. Closely related programs exist forworkers displaced because of defense cutbacksand implementation of the Clean Air Act. The

funds for all of these programs are mainlyused to provide classroom training, on-the-jobtraining, and job search assistance to the par-ticipants. In recent years, between 200,000and 250,000 displaced workers have partici-pated in these programs.

TAA provides income replacement benefits,training, and related services to workers un-employed because of import competition. Toget assistance, workers from a firm must firstpetition the Secretary of Labor for certifica-tion and then meet other requirements for eli-gibility. For a group of workers to qualify, theSecretary must conclude that a significantshare of the firm (or a subdivision) is threat-ened with displacement; sales or productionhave decreased; and increased imports have"contributed importantly" to the reductions inemployment and in sales or production. Certi-fied workers are eligible for training and otherreemployment assistance. Cash benefits arealso available to certified workers, but onlyafter their UI benefits run out. Benefits canlast up to one year if recipients are taking partin an approved training program. In recentyears, only about 25,000 displaced workersreceived cash assistance and fewer receivedtraining or other reemployment assistance.

EDWAA and TAA represent two quite dif-ferent approaches to serving the needs of dis-placed workers. EDWAA emphasizes reem-ployment assistance, mainly through short-term training and job search assistance, withfew participants receiving income support. Incontrast, TAA essentially extends the poten-tial duration of UI benefits for eligible work-ers willing to participate in a training pro-gram, with about two-thirds of the program'soutlays going for income support. The debateover whether to use EDWAA or TAA as amodel for developing a new displaced-workerprogram largely centers on the merits of pro-viding income support longer than is normallyavailable through the UI system.

In principle, the retraining assistance pro-vided through either program could help dis-placed workers develop new skills or adapttheir old ones, making them more valuable to

SUMMARY xv

new employers and thus helping them findnew jobs at wages comparable with their oldones. Despite widespread support for retrain-ing displaced workers, however, very little isknown about the effectiveness of the currentprograms in increasing the earnings of theirparticipants. The EDWAA program has notbeen evaluated, and preliminary findingsfrom an evaluation of TAA now under waysuggest that the training received by its par-

ticipants has not increased their average earn-ings or their likelihood of being employed.Evaluations of earlier demonstration pro-grams for displaced workers in specific sitesprovide considerable basis for optimism aboutthe effectiveness of job search assistance, butnot of short-term training. Whether a better-designed, and possibly more extensive, train-ing program would be more effective is a mat-ter of conjecture.

Chapter One

Introduction

D isplacement of workers is a normalfeature of a dynamic market economy.Changes in consumer tastes, technolo-

gy, and competitive positions affect both thenumber and types of employers as well as thenumber and types of workers they need. Justas employers adjust to increases in the de-mand for their products by hiring new work-ers, they adjust to changes that decrease theirneed for some or all of their workers by ter-minating workers' employment. Althoughattrition may be used to achieve small cut-backs in employment, large reductions oftennecessitate dismissals. Economists generallyview these features of a market economy asbeneficial in directing resources—includinghuman resources-to where they are mosthighly valued. But the benefits are achievedpartly at the expense of the workers who aredisplaced.

Cutbacks announced in 1992 by GeneralMotors, IBM, and Sears, among other firms,are dramatic examples of the corporate re-structuring and downsizing that are likely todisplace workers in a wide range of industriesin the future. Less dramatic are the displace-ments caused by closures or cutbacks in thou-sands of smaller companies throughout thenation. Such events-together with the con-tinual but less well publicized openings of newbusinesses and expansions of existing ones--are typical of the adjustments that employershave always made in response to changes inmarket conditions.

Displacement may also result from changesin public policy. Cutbacks in defense spend-ing, in particular, are likely to lower the levelof employment in that sector substantiallyover the next few years. Total employment inthe defense industry-including civilian andmilitary jobs in the Defense Department anddefense-related jobs in the private sector—hasalready fallen by about 1 million jobs, from 6.6million in 1987 to 5.5 million in 1992. Defenseemployment is expected to decline by at leastanother 1 million jobs by 1997. The reductionsin 1993 and 1994 may be especially large,with cuts currently estimated at about400,000 in each year.i

Changes in trade policy are also likely tocause some workers to be displaced, thoughthese reductions are not expected to be aslarge as those in the defense sector. Much at-tention has focused on the North AmericanFree Trade Agreement (NAFTA), which theCongress is expected to consider in early 1993.Most analyses of the potential effects of im-plementing NAFTA estimate that its net im-pact on the level of U.S. employment-that is,the number of jobs gained minus the numberof jobs lost-would be positive. But analystsgenerally agree that, whatever the net im-pact, jobs in some firms and industries would

Congressional Budget Office, The Economic Effects ofReduced Defense Spending (February 1992), p. 17, re-vised to incorporate CBO's current estimate of the re-duction in defense-related jobs through 1997.

2 DISPLACED WORKERS: TRENDS IN THE 1980s AND IMPLICATIONS FOR THE FUTURE February 1993

be lost.2 Predictions of these losses range fromabout 100,000 jobs to more than 500,000 overthe next decade.

Although some of the reductions in employ-ment--whether caused by changes in publicpolicy or by changes in the economy—could beachieved by cutting the number of workershired, permanent separations might be re-quired. And although the well-being of thenation as a whole may be enhanced by manyof the changes that lead to displacement, theworkers who lose their jobs are often worse off.For instance, a significant number of dis-placed workers have trouble finding new jobsand earn less when they become reemployedthan they did before.

Why might displaced workers not be able tofind jobs as good as the ones they lost? Onereason is that the wages they earned in theirprevious jobs may have rewarded them forknowledge that is not as useful elsewhere. Forexample, a detailed knowledge of the mer-chandise sold by Sears, or of that company'spersonnel and uventory control policies, couldbe of limited value to other employers. This"firm-specific human capital," as economistscall it, enables workers to be more productiveand thus worth more to their employer than toothei employers The elimination of their job-for whatever reason-essentially destroys thevalue of such capital.

Specific knowledge is not necessarilylimited to a firm, but may also be related to aworker's industry and occupation. Coalminers, for example, may find that the skillsuseful in underground mining are not readilytransferable to other industries. Truck driv-ers who haul coal, in contrast, may be able toapply their skills to other industries withoutmuch difficulty. The cost of moving to another

community may further restrict a displacedworker's ability to transfer the skills acquiredin one job to another.

The theory of specific human capital impliesthat losses in earnings incurred by displacedworkers who have worked for a long time forthe same firm (or for a long time in the sameindustry or occupation) will probably be great-er than the losses incurred by workers withshorter job tenure. Long-tenured workers arelikely to have amassed a greater stock of spe-cific human capital and therefore have more tolose by moving to their next-best job.3

Another reason displaced workers might ex-perience earnings losses is that displacementmay result in the severing of implicit lifetimecontracts-arrangements in which workersmake up for relatively low wages early intheir careers with higher wages later. Payingworkers less than their productivity warrantsearly in their careers, and paying them morethan their productivity warrants later in theircareers, may provide workers with greater in-centive to be productive and to remain withtheir employer in order to reap the gains oflong tenure.4 Workers whose employers payhigher wages than competing firms-for ex-ample, because of union contracts-are alsolikely to earn less in subsequent employment.In these cases, too, the magnitude of the loss islikely to be positively related to the length oftime the worker spent with the employer.

In practice, determining which of theseexplanations applies to particular displacedworkers is not very feasible. One can observe

2. For example, the Secretary of Labor, testifying beforethe House Committee on Ways and Means on September15, 1992, cited the projection by the Institute forInternationa] Lconomics that 150,000 jobs would be lostover a 10-year period, which would be more than offsetby an increase of 325,000 jobs, leading to a net rise of175,000 jobs The Secretary characterized the 150,000estimate as "what we believe to be the absolute top endof the range of credible estimates of worker dislocation."

3. Studies confirming the positive association betweenwages and job tenure include James N. Brown, "Why DoWages Increase with Tenure? On-the-Job Training andLife-Cycle Wage Growth Observed Within Firms,"American Economic Review, vol. 79, no. 5 (December1989), pp. 971-991; and Robert Topel, "Specific Capital,Mobility, and Wages: Wages Rise with Job Seniority,"Journal of Political Economy, vol. 99, no. 1 (February1991), pp. 145-176.

4. Empirical support for this theory is provided by RobertM. Hutchens, "A Test of Lazear's Theory of DelayedPayment Contracts," Journal of Labor Economics, vol. 5,no. 4, part 2 (October 1987), pp. S153-S170. As theauthor notes, however, his findings are also consistentwith theories based on specific human capital.

CHAPTER ONE INTRODUCTION 3

what happens to workers following their ter- displacement. Interpreting such observationsmination and relate that experience to their and their implications for public policy is morecharacteristics and the circumstances of their speculative.

Chapter Two

Trends in Displacement,1981-1990

E ach year between 1981 and 1990, anaverage of almost 2 million workerslost full-time jobs and were not re-

called by their former employers. About halfof these displaced workers lost jobs whentheir employers closed or relocated facilities.The other half were laid off and not recalled,even though their employers continued to op-erate. This chapter uses data from supple-ments to the Current Population Survey(CPS)--a monthly survey of approximately60,000 households administered by the Cen-sus Bureau for the Bureau of Labor Statis-tics—to provide information about trends inthe number and characteristics of these dis-placed workers.

Three key findings emerge. First, althoughpermanent layoffs are cyclically sensitive,they are fairly common even in a healthylabor market. Second, the industrial and occu-pational composition of displacement haschanged over the past decade: displacement isincreasingly a phenomenon that affects work-ers in services-producing industries and work-ers in white-collar occupations. Third, thecharacteristics of displaced workers them-selves have changed relatively little despitethe sectoral changes in displacement.

Measuring DisplacementWhen does the loss of a job constitute dis-placement? Although no single definition

exists, discussions of displacement often in-corporate several conceptual aspects of jobloss. First, displacement generally connotespermanent job loss; displaced workers arepeople who will not be recalled by their formeremployers. Second, it generally connotes theloss of a job held for an appreciable length oftime, although "appreciable" means differentthings to different observers. Finally, someanalysts also consider the consequences of los-ing a job to be part of the definition; that is, adisplaced worker is not only a person whopermanently lost a job but one who experi-enced adverse consequences-such as lengthyjoblessness or lower earnings-as a result.

As a practical matter, many analysts usethe definition of displacement incorporated bythe Bureau of Labor Statistics (BLS) in itsanalyses of data from five special supplementsto the CPS administered in January 1984,1986, 1988, 1990, and 1992. The BLS analy-ses, whose results have often been cited bypolicymakers, identify displaced workers aspeople who report having "lost or left a job be-cause of a plant closing, an employer going outof business, a layoff from which [they were]not recalled or other similar reason" duringthe five years preceding the survey.1 In itsanalyses, the BLS has focused on workers whohad been with their previous employer for atleast three years before being laid off.

Detailed results from the January 1990 survey, whichanalyzes displacements between 1985 and 1989, aredescribed in Diane E. Hei-z, "Worker Displacement StillCommon in the Late 1980's," Monthly Labor Review(May 1991), pp. 3-9.


The use of the CPS supplement data in thisstudy differs in three important ways fromtheir use by the BLS and most other re-searchers. First, data from all five supple-ments are combined in a way that permitsanalysis of year-to-year changes in displace-ment over the past decade; other analyseshave generally focused on the five-year cumu-lative number of displacements shown by eachsurvey. Second, whether workers are countedas displaced does not depend on how long theyhad been with their previous employer. Fi-nally, the estimates reported in this study arebased on workers who lost full-time jobs-about 90 percent of those who reported perma-nent job losses in the CPS; the BLS analysesinclude workers who lost part-time jobs.

Data from the CPS supplements are com-bined by selecting information only for work-ers who were laid off in the second and thirdyears preceding each survey. (For example,the January 1992 survey was used to obtaininformation about workers who lost jobs in1989 and 1990.) This procedure, which is in-tended to avoid including workers who wereeventually recalled to their jobs and to reduceproblems associated with response bias, alsopermits analysis of year-to-year changes indisplacement that have previously receivedlittle attention. Annual changes in the num-ber of displaced workers exhibit importantcyclical variation that is obscured when onlythe cumulative five-year totals are examined.Appendix A discusses this procedure and itsimplications in more detail.

The second way in which this analysis dif-fers from those of the BLS is that it includesall workers who reported being displaced, re-gardless of the number of years they had beenwith their employer. Although many re-searchers have followed the BLS convention ofanalyzing data only for displaced workers whowere with their employer for at least threeyears, this study uses the broader definitionbecause one of the important issues it ad-dresses is the relationship between job tenureand the losses incurred by displaced workers.Moreover, the events that create interest indisplacement-such as the closing of a large

plant-are often couched in terms of the num-ber of workers who will lose their jobs, not justthe number who had been with the employerfor at least three years. In addition, the notionof targeting resources toward displaced work-ers who had worked for their employer for aparticular length of time is itself a policy deci-sion.

The exclusion of workers who lost part-timejobs reflects a subjective decision, similar tothe BLS's decision to exclude workers who lostseasonal jobs, and does not materially affectthe results.2 On average, part-time workershad been with their employers for fewer years,were much more likely to have worked inretail or wholesale trade, and were much lesslikely to have received Unemployment Insur-ance benefits. The percentage of all displacedworkers who had worked on a part-time basisvaried between 9 percent and 12 percent dur-ing the 10-year period examined.

Trends in the 1980sThe data analyzed in this study cover 1981through 1990, a 10-year span that began andended with the nation's economy in recession.From the low point of the 1981-1982 recession,when the civilian unemployment rate reached10.7 percent in late 1982, the economy grewsteadily for nearly eight years before slippinginto recession again in 1990. During thistime, civilian employment grew 18 percent,from 100 million workers in 1981 to 118 mil-lion workers in 1990.

Despite the increase in total employment,the number of workers in goods-producing in-dustries—agriculture, mining, construction,and manufacturing-was slightly lower in1990 than it had been in 1981. Employmentin manufacturing industries fell substantially

2. Following the BLS convention, this study also excludesworkers who lost seasonal jobs and those whose self-owned businesses failed.

CHAPTER TWO TRENDS IN DISPLACEMENT, 1981-1990 7

during the 1981-1982 recession and was stillabout 5 percent below its 1981 level in 1990.Conversely, the number of workers in ser-vices-producing industries increased everyyear throughout the decade. (Services-produc-ing industries include transportation, publicutilities, communications, wholesale and re-tail trade, financial services, insurance, realestate, other services, and government.)Within these broad categories, however, theexperience of particular industries variedwidely. Employment in primary metals firmssuch as steel makers, for example, fell byabout one-third over the decade, but firms inthe rubber and plastics industry increasedtheir employment by about 15 percent.

The total number of displaced workers hasgenerally mirrored the overall state of theeconomy, reflecting the close connection be-tween the demand for the goods and servicesthat firms produce and the number of em-ployees they require. In 1982, 2.7 millionworkers-about one of every 25 full-time wageand salary workers-lost jobs and were notrecalled. The economy was much stronger in1988 as the unemployment rate fell to 5.5 per-cent, but even then 1.5 million workers-aboutone in 50--permanently lost their jobs.

The pronounced cyclical variation in dis-placement over the 1980s is primarily causedby changes in the number of workers who lostjobs because of "slack work," rather thanchanges in the number whose employersclosed or relocated facilities or whose shifts orpositions were abolished (see Figure I).3 Forexample, when displacement fell by 1.2 mil-lion workers between 1982 and 1988, three-quarters of the decrease resulted from a lowernumber of workers who reported being dis-placed because of slack work. Similarly, theincreased number of workers displaced be-cause of slack work accounted for 60 percent of

3. The term "slack work" is not well defined in the CPSsupplements. In reporting results from the first survey,however, BLS analysts said that it may be interpreted as"insufficient demand for the products or services" of thedisplaced worker's former employer. See Department ofLabor, Bureau of Labor Statistics, Displaced Workers,1979-83, Bulletin 2240 (July 1985).

Figure 1.Number of Displaced Workers, by Reason for

Displacement and Year of Job Loss, 1981-1990

3.000

2.500

2.000

1.500

1.000

500

0

Thousands of Workers

1981

Plant Closed

1984 1987

Job Abolished

1990

Slack Work


NOTES: "Plant closed" includes workers who lost jobs be-cause their employers closed or relocated facilities."Job abolished" includes workers whose employerscontinued to operate, but whose position or shiftwas abolished. "Slack work" includes workers dis-placed for other reasons, excluding the completionof seasonal work or the failure of a self-ownedbusiness.

the total increase in displacement between1988 and 1990.

Which Jobs Were Lostand Who Lost Them?Displacement is often characterized in populardiscussion as a phenomenon affecting older,less-educated men who lose long-term jobswhen manufacturing firms shut down plants.This depiction, however, is more accurate indescribing the types of workers who face thehighest costs of displacement-that is, who aremost likely to experience significant difficul-ties in finding reemployment-than it is indescribing the characteristics of displacedworkers. For example, older workers withsubstantial seniority who lose their jobs faremuch worse than younger workers in terms of


Figure 2.Number of Displaced Workers, by Industry, Occupation, and Year of Job Loss, 1981-1990

Industry Occupation

3.000

2.500

2.000

1.500

1.000

500

0

Thousands of Workers Thousands of Workers

1981 1984

m||!j Goods-Producing

1987 1990

j Services-Producing

1981 1984

111 Blue-Collar

1987 1990

White-Collar


NOTES: Goods-producing industries comprise agriculture, mining, construction, and manufacturing. Services-producing industriescomprise transportation, public utilities, and communications; wholesale and retail trade; finance, insurance, and real estate;other services; and government. White-collar workers are those in managerial and professional specialty occupations andtechnical, sales, and administrative support occupations. Blue-collar workers are those in service occupations; precisionproduction, craft, and repair occupations; farming, forestry, and fishing occupations; as well as operators, fabricators, andlaborers.

joblessness and subsequent earnings. How-ever, because older, senior workers are muchless likely to lose their jobs in the first place,they constitute a relatively small share oftotal displacement.

The risk of displacement varied signifi-cantly among industries and occupations inthe past decade, with workers in goods-pro-ducing industries typically facing the greatestlikelihood of permanent job loss. In 1990, forexample, roughly one in 25 workers in theseindustries was displaced, about three timesthe rate experienced by workers in services-producing industries. The risk of displace-ment in goods-producing industries was lowerin 1988, when the economy was stronger, butwas almost triple that in services-producingindustries.

The relatively greater risk of job loss facingthese workers is reflected in the dispropor-tionate share of total displacement that goods-producing industries make up. On average,

about 1 million workers per year lost jobs ingoods-producing industries between 1981 and1990 (see Figure 2). The share of these in-dustries in total displacement fell during thedecade, however, from about 60 percent in theearly 1980s to just under 50 percent in 1990.This decline, which occurred despite the cycli-cal downturn that began in 1990, still leftgoods-producing industries with a share oftotal displacement that was twice their shareof total employment.

In a similar vein, blue-collar workers havebeen more likely than white-collar workers tobe displaced, but rates vary substantially bothover time and within these broad occupationalcategories.4 The difference in the risk of

4. White-collar workers are those in managerial, profes-sional specialty, technical, sales, or administrative sup-port positions. Blue-collar workers are defined as op-erators, fabricators, or laborers, as well as people in ser-vice, precision production, craft, or repair occupationsand farming, forestry, and fishing occupations.

CHAPTER TWO TRENDS IN DISPLACEMENT, 1981-1990 9

displacement between the two groups may benarrowing, however.

Blue-collar workers accounted for a ma-jority of displaced workers throughout thepast decade, with an average of 1.1 millionlosing jobs each year. The share of blue-collarworkers in total displacement generally de-clined over the decade, however, falling fromabout 65 percent in 1982 to 55 percent in 1990.Most of the relative decrease in displacementamong blue-collar workers is attributable toproportionately fewer job losses among ma-chine operators. These workers were lesslikely to become displaced at the end of thedecade, and they also accounted for a smallershare of total employment.

The risk of displacement also varies withcertain job-related characteristics of workersthemselves. For example, workers who havenot finished high school are about twice aslikely to be displaced as those with a collegedegree. Similarly, older workers, who tend tohave greater seniority, are less likely to bedisplaced than younger workers. These dif-ferent risks of displacement translate into dif-ferences in characteristics between displacedworkers and the work force as a whole. How-ever, relatively large differences in the risk ofdisplacement do not necessarily yield largedifferences in characteristics. And from theperspective of formulating policy for assistingworkers once they are displaced, it is the char-acteristics of those who lost their jobs that ismost relevant, not their risk of displacement.

With the important exceptions of job tenureand type of industry in which they work, thecharacteristics of displaced workers arebroadly similar to those of the work force as awhole. In 1988, for example, 49 percent ofdisplaced workers were between the ages of 18and 34, compared with 45 percent of all civil-ian workers (see Table 1). And only a slightlyhigher proportion of displaced workers (62percent) did not continue their education be-yond high school than was the case for civilianworkers overall (55 percent).

Table 1.Characteristics of Displaced Workers VersusAll Civilian Workers, 1988 (In percent)

Characteristic

Age18-3435-4445-5455-5960 and older

Job TenureLess than 3 years3-4 years5-9 years10 or more years

Schooling CompletedLess than 12 years12 years13-1 5 years16 or more years

SexMaleFemale

OccupationWhite-collarBlue-collar

IndustryGoods-producingServices-producing

DisplacedWorkers

49261555

50151718

19432117

5941

5149

4852

All CivilianWorkers

45251667

35151930

15402026

5545

5644

2476

SOURCES: Data for displaced workers are based on Con-gressional Budget Office tabulations of datafrom the January 1990 Current Population Sur-vey. Data on age, sex, occupation, and industryfor all civilian workers are from Bureau of LaborStatistics, Employment and Earnings (January1990). Data on job tenure for all civilian work-ers are based on Congressional Budget Officetabulations of data from the May 1988 CurrentPopulation Survey. Data on schooling com-pleted are from Bureau of Labor Statistics,Handbook of Labor Statistics (August 1989).Schooling data are for the civilian labor forceaged 25 through 64.

Despite the changes in the overall economy,and in the industrial and occupational com-position of displacement, the characteristics ofthe people who lost jobs permanently re-mained fairly stable over the past decade. Theshare of total displacement accounted for byworkers aged 18 to 34 was slightly smaller atthe end of the decade than at the beginning,


Figure 3.Characteristics of Displaced Workers, by Year of Job Loss, 1981-1990

PercentAge

8H^ ^

1981 1982 1983 1984 1985 1986 1987 1988 1989 1990

n 18-34 III 35-44 $£3 45-54 • 55-59 ||| 60+

Job TenurePercent

1981 1982 1983 1984 1985 1986 1987 1988 1989 1990

M<3 years ||| 3-4 years M 5-9 years EJ3 10+ years

Sex100

Percent

1981 1982 1983 1984 1985 1986 1987 1988 1989 1990

HI Male HI Female

100Percent

Years of Schooling Completed"

1981 1982 1983 1984 1985 1986 1987 1988 1989 1990

HI Less than 12 ill 12 IH! 13-15 &$] 16 or more


a. For workers displaced in 1989 and 1990, years of schooling completed is estimated on the basis of the highest degree obtainedand is not strictly comparable with data for prior years.

but the fraction aged 45 and older remainedalmost constant at just over 20 percent of thetotal (see Figure 3). Similarly, workers whohad been with their previous employer for lessthan three years accounted for about half oftotal displacement throughout the decade; theshare of those who had been with their em-

5. Schooling data for 1989 and 1990 are not strictlycomparable with data for prior years. Beginning inJanuary 1992, the questions relating to schooling on theCurrent Population Survey were changed to ask aboutspecific educational attainment rather than years ofschooling completed. For this study, workers displacedin 1989 and 1990 were assigned to one of four categories

ployer 10 or more years held steady at around15 percent. The trend in job displacement byeducational attainment was also quite stable,although the share accounted for by workerswith schooling beyond high school grewthrough the decade from about 30 percent toabout 40 percent.5

of years of schooling that would be consistent with theireducational attainment. For example, workers whoreported holding a high school diploma (but no higherdegree) were assigned to the category that previouslyincluded workers who reported completing exactly 12years of schooling.

Chapter Three

Workers' ExperiencesAfter Displacement

"The biggest problem we've had is helpingpeople get over their fear, frustration, anger,and anxiety and take advantage of the ser-vices. . . . It's like dealing with the death of aloved one. Working at the plant has been theirwhole life and it can be tough for them to makethe transition."^

L osing a job, especially one held formany years, can be traumatic. Peoplewho have worked for one employer for

a long time may be uncertain about how to goabout finding new work. Moreover, even forpeople equipped to hunt for jobs effectively,labor market conditions may require uproot-ing families to find new employment; this isespecially true when the reason for displace-ment is the failure of a major local employer.In addition, the skills acquired while workingwith one firm may not be needed by other em-ployers, which implies that many displacedworkers may be unable to regain their previ-ous level of earnings when they do find work.

Three types of data recorded by the CurrentPopulation Survey are useful in identifyingthe characteristics that are associated withsignificant difficulty in finding new employ-ment. Those three are whether or not workerswho lost jobs were reemployed at the time ofthe CPS survey, how long reemployed workershad been jobless, and the likelihood that reem-

ployed workers had earnings in their new jobsthat were well below their previous earnings.

OverviewMost displaced workers eventually return towork. Almost three-quarters of those dis-placed over the past decade were reemployedwhen surveyed-between 13 and 36 monthsafter losing their jobs (see Table 2). About 14percent were unemployed at the time of thesurvey-although some of these workers mayhave been reemployed temporarily after los-ing their jobs~and about 12 percent were notin the labor force. Some of the displaced work-ers who were unemployed or not in the laborforce may also have returned to work after thesurvey was conducted.

The vast majority of workers displaced overthe past decade experienced a period of jobless-ness following displacement. Although almostone-third of displaced workers were joblessless than five weeks, many were without workfor a substantial period of time. At the time ofthe survey, the average duration of joblessnessfor all workers displaced in the 1980s was al-most 30 weeks; those who were reemployed atthe time of the survey had an average dura-tion of just under 20 weeks.2

Joy Margrave, a training program coordinator, discuss-ing the difficulties in helping workers who lost their jobswhen a plant that manufactured children's clothing inLaFollette, Tennessee, closed. Quoted in Employmentand Training Reporter, November 28,1990, p. 266.

2. The duration of joblessness is defined here as the totalnumber of weeks that displaced workers reported beingwithout work following the loss of their jobs. Becausechanges were made in the survey, CBO adjusted the datato make estimates of weeks without work more con-sistent. The procedure is described in Appendix A.


Table 2.Displaced Workers' Employment Statusat Time of Survey, Earnings Ratio,and Average Duration of Joblessness

Status atSurvey Date

AverageDuration of

Distribution Joblessness(Percent) (Weeks)

All Displaced Workers

ReemployedUnemployedNot in Labor Force

Total

731412

100

195260

29

Reemployed Displaced Workers

Ratio of Current Earningsto Previous Earnings

Less than 80 percent 3280-94 percent 1395-104 percent 15105-120 percent 14120 percent or more 25

Total 100

2618161314

19

SOURCE: Congressional Budget Office tabulations of datafrom the January 1984, 1986, 1988, 1990, and1992 Current Population Surveys.

NOTE: Workers were surveyed between 13 and 36 monthsafter losing their jobs.

Many of the reemployed workers found jobswith pay roughly comparable with that oftheir old jobs; without taking inflation intoaccount, 55 percent had weekly earnings thatwere 95 percent or more of their previousearnings.3 Those who had lower earnings intheir new jobs, however, tended to have muchlower earnings: about one-third of reemployeddisplaced workers had weekly earnings at

least 20 percent below the earnings they hadin their old jobs.4 In addition, workers whoincurred the largest pay cuts also tended to bethose who had been jobless longest.

The state of the national economy had animportant influence on the extent of jobless-ness after displacement. Displaced workerswho lost jobs in the early 1980s were jobless 40weeks, on average, compared with an averageof about 20 weeks for workers displaced in1987 and 1988, when the economy was strong-er (see Figure 4). The likelihood that workerswere reemployed shows the same cyclical pat-tern, with the percentage of displaced workerswho found new jobs generally rising throughmost of the 1980s. The average duration ofjoblessness for workers who found new jobsexhibits the same basic pattern, falling fromalmost 30 weeks in 1981 to 15 weeks in 1988.

There is no evidence of any cyclical patternor trend in the earnings of workers who foundjobs, as shown by the proportion of reemployedworkers with earnings 20 percent or morebelow the earnings of their old jobs. The ap-parent absence of a relationship between lossof earnings and the economy is particularlysurprising in view of the change in the in-dustrial composition of displacement over thepast decade. Workers displaced from high-paying jobs in the steel and auto industriesduring the early 1980s presumably wouldhave been more likely to have trouble regain-ing their prior earnings than workers dis-placed from retail trade jobs late in the decade.If those steel and auto workers were less likelyto find new jobs, however, such losses wouldnot be apparent in the earnings data.

The state of the national economy is onlyone source of variation in workers' experiences

3. Displaced workers may also have experienced changes innonwage compensation. Unfortunately, the CPS sup-plements provide no information about changes in pen-sions and vacations and only limited information aboutchanges in health insurance coverage. About one in fiveof the roughly 70 percent of displaced workers who hadhealth insurance in their old jobs were not covered byany group health insurance plan when they were sur-veyed. At the same time, about one in two of the workerswho did not have health insurance before were covered.

4. To make the wage data consistent within each survey,the wages of workers who were displaced in the earliestyear were adjusted upward by the growth in theemployment cost index during that year. The data werenot adjusted for price inflation. Thus, the wages ofworkers displaced in 1989 and 1990 are expressed in1990 dollars and compared with earnings in new jobs inJanuary 1992.

CHAPTER THREE WORKERS' EXPERIENCES AFTER DISPLACEMENT 13

after being displaced. The characteristics ofworkers themselves are also important, witholder, longer-tenured, and less-educated work-ers faring much worse than others. The cir-cumstances of displacement also matter:workers who lost jobs in industries that werecontracting (or growing more slowly thanaverage) and those who lived in states with

relatively high unemployment rates also faredworse.

Despite variation over the business cycle inworkers' outcomes after displacement, the re-lationships between workers' characteristicsand their likelihood of difficulties are quitestable. That is, the kinds of workers who were

Figure 4.Outcomes Following Displacement, by Year of Job Loss, 1981-1990

Weeks

All Displaced Workers

Duration of Joblessness Percentage Reemployed

100 Percent

40 -

20 -

1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990

60

40

20

Weeks

Duration of Joblessness

Reemployed Displaced Workers3

Percentage of Workers with New EarningsLess Than 80 Percent of Previous EarningsPercent

1981 1982 1983 1984 1985 1986 1987 1988 1989 1990

100

80

60

40

20

1981 1982 1983 1984 1985 1986 1987 1988 1989 1990


a. Includes people who are working part time.


Table 3.Joblessness and Reemployment Among All Displaced Workers,by Selected Characteristics, 1981-1990

Characteristic

Percentage of AllDisplaced Workers

in Category

Average Numberof Weeks Jobless

(Up to survey date)

PercentageEmployed atSurvey Date


Age18-3435-4445-5455-5960 and older

Schooling CompletedLess than 12 years12 years13-15 years16 or more years

SexMaleFemale

Total

50161716

55231354

19442215

6337

100

25283137

2526354053

39292322

2732

29

74777765

7679706132

58737987

7768

73

SOURCE: Congressional Budget Office estimates based on data from the January 1984, 1986, 1988, 1990, and 1992 Current Popu-lation Surveys.

jobless longer in bad years were also joblesslonger in good years, and similar workers in-curred losses of earnings in both good and badyears. This stability suggests that the experi-ences of workers displaced in the 1980s arelikely to be applicable to workers displaced inthe future.

Likelihood ofReemploymentIn general, older workers, those who had beenwith their employer the longest, and less-educated workers tended to be jobless longerand were less likely to find new jobs.5 Work-ers who were 60 or older when they lost theirjobs were jobless an average of 53 weeks, and

only 32 percent were reemployed at the time ofthe survey (see Table 3).6 The relationship be-tween job tenure and joblessness also standsout clearly: workers who had been with theiremployer for 10 or more years were jobless anaverage of 37 weeks, compared with 29 weeksfor displaced workers overall.

Workers who had not completed highschool-about one-fifth of all displaced work-ers-had much greater difficulties than otherworkers. They were jobless 39 weeks, on aver-age, and only 58 percent were reemployedwhen surveyed. In contrast, workers with 16or more years of schooling—that is, those with

5. Age is estimated at the time of job losa. Schooling ismeasured as the number of years completed at the timeof the survey.

6. Year-by-year tabulations are presented in Appendix B.

! CHAPTER THREE WORKERS' EXPERIENCES AFTER DISPLACEMENT 15

a college degree or at least significant collegetraining-were jobless 22 weeks, on average,and 87 percent were reemployed when sur-veyed.

Independent Effects

The above findings are based on simple, one-way cross-tabulations that do not take intoaccount possible relationships among workers'characteristics or variation in the circum-stances of displacement. The analysis that fol-lows uses a statistical technique that identi-fies the independent effects of each character-istic-and that also permits other factors to betaken into account-to look more closely at thefactors determining reemployment.7

When other characteristics are taken intoaccount, there is no statistically significantdifference in the likelihood of reemploymentbetween workers with 10 or more years of jobtenure and those with less than three years(see Table 4). The independent effect of age onthe likelihood of reemployment remainsstrong. Holding other factors constant, work-ers aged 55 to 59 were almost 17 percentagepoints less likely to be reemployed than work-ers aged 18 to 34, and workers 60 and olderwere 46 percentage points less likely to be re-employed. Virtually all of this difference isassociated with older workers' being morelikely to have withdrawn from the labor force;at the time of the surveys, the fraction ofworkers 60 and older who were unemployedwas the same as that for younger workers.8

7. As discussed earlier, the findings concerning the dura-tion of joblessness among all displaced workers may re-flect in part the tendency of older workers to retire. Thistendency is shown clearly by examining the likelihoodthat a worker was reemployed at the time of the survey.

8. The distinction between being unemployed and not be-ing in the labor force is more than just a technical one.Most directly, jobless workers looking for work areeligible for Unemployment Insurance benefits; displacedworkers who withdraw from the labor force are not. Lessdirectly, but also important for consideration of policiesto assist workers who experience difficulties, some of theworkers who did not return to work following displace-ment essentially retired.

The effects of schooling on the likelihood ofreemployment are slightly smaller, but stillsizable, when other factors are taken into ac-count. Workers with 16 or more years ofschooling were about 10 percentage pointsmore likely to be reemployed than those withjust 12 years; the latter, in turn, were about 11percentage points more likely to be reem-ployed than those with less than 12 years ofschooling. Blue-collar workers were 6 per-centage points less likely than white-collarworkers to be reemployed; this effect is in-dependent of differences between these twogroups in their educational attainment.

Women were about 13 percentage pointsless likely than men to be reemployed, holdingother factors constant, and nonwhites wereabout 11 percentage points less likely thanwhites to be reemployed. The relatively lowerlikelihood of reemployment among womenappears to be attributable to their greater ten-dency to withdraw from the labor force. At thetime of the surveys, for instance, 20 percent ofwomen were out of the labor force, comparedwith just 8 percent of men. There was no dif-ference between whites and nonwhites inparticipation in the labor force at the time ofthe surveys.

Because plant shutdowns are readily iden-tifiable events, they have received widespreadattention as a possible way to pinpoint work-ers in need of assistance. One surprising find-ing, therefore, is that workers who reportedbeing displaced because their employersclosed or relocated facilities were more likely-albeit only slightly--to be reemployed thanworkers who lost jobs because of slack work.An explanation may be that such workers areimmediately confronted with the reality oftheir situation and have absolutely no reasonto delay looking for new work in the hope thatthey may regain their old jobs.

In general, one would expect workers dis-placed from declining industries, and thosewho must seek work in a relatively poor labormarket, to fare worse than others. The analy-sis bears out this supposition: workers dis-placed from jobs in higher-growth industries


Table 4.Effects of Workers' Characteristics and Circumstanceson the Likelihood of Reemployment for All Displaced

Workers' Characteristics andCircumstances of Displacement

Age18-3435-4445-5455-5960 and older


Blue-Collar Worker


Female

Nonwhite

Reason for Job LossEmployer closed facilityJob or position abolishedSlack work

Employment Change in Old Industry(Average value 0.84 percent)

Difference Between State and NationalUnemployment Rates (Average value 2. 15 percent)

National Unemployment Rate(Average value 7.20 percent)

of DisplacementWorkers

Percentage inCategory

552313

54

19442215

57

50161716

37

14

501436

n.a.

n.a.

n.a.

Effect onLikelihood of

Reemployment(Percentage points)3

b1.3c

-5.1-16.6-46.2

-11.4b

3.510.4

-6.0

b2.94.6

-0.5<

-12.5

-10.6

5.82.7

b

0.4

-0.2

-0.5


NOTES: Logistic equation estimated using an unweighted sample of 11,385 people with valid data. The average of the dependentvariable is 73 percent, n.a. = not applicable.

a. Effect in relation to the omitted category for each characteristic.

b. Category omitted for regression.

c. Not statistically significant at a 90 percent level of confidence.


were more likely to be reemployed than thosedisplaced from slow-growing or declining in-dustries, and workers displaced in states withbelow-average unemployment rates fared bet-ter than other workers.9 These effects aresmall, however, even though both are statis-tically significant.

Combined Effects

The effects discussed above are independenteffects, with older workers, for example, beingless likely to be reemployed than youngerworkers regardless of their level of schooling.The combined effects are also interesting, notonly because they illustrate the types of work-er most likely to have trouble finding a newjob, but also because they illustrate how theeffects of different characteristics can offset orreinforce one another. For example, the com-bined effect of being 60 or older and not havingcompleted high school is a reduction of morethan 50 percentage points in the likelihood ofreemployment compared with the average dis-placed worker (see Figure 5). In contrast, thecombined effect of being aged 45 to 54 andhaving completed 16 or more years of school-ing is an increase of about 8 percentage pointsin the likelihood of being reemployed.

Joblessness and Lossesin Earnings forReemployed WorkersThe analysis of joblessness and reemploymentin the preceding section is complicated by thepresence of older workers-and, to a lesser ex-tent, women~who withdrew from the laborforce after losing their jobs. Although the tim-

9. Data at the level of the local labor market would bepreferable to state-level data, but are not available. Inthis analysis, state refers to workers' current residences,not necessarily the states in which they lost their jobs.

ing of retirement for such workers almost cer-tainly differed from what they would havechosen had they not been displaced, the dura-tion of joblessness is arguably a poorer mea-sure of economic loss for retired workers thanfor others. Some, for example, may have re-ceived special compensation or pension eligi-bility to retire early.

Thus, another approach to identifyingworkers likely to experience difficulties is toexamine what happened to those who foundnew jobs. How long did it take them to findjobs? How did the earnings in their new jobscompare with the earnings in the jobs theylost?

In general, the characteristics associatedwith difficulties in adjustment among all dis-placed workers are also important factors de-termining the duration of joblessness amongreemployed workers. That is, long-tenuredworkers, older workers, and less-educatedworkers were less likely to find jobs, and thosewho did find jobs took longer to do so (seeTable 5). Compared with displaced workers asa whole, the average duration of joblessnessfor reemployed displaced workers is lower andthe differences among groups much smaller,but the same patterns are apparent. For ex-ample, workers with 10 or more years of jobtenure took about seven weeks longer to findjobs than workers with less than three years oftenure.

Job tenure, age, and schooling are also im-portant in explaining losses in earnings, andtheir effects generally work in the same direc-tion as their effects on joblessness. For ex-ample, almost half of the workers with thelongest job tenure had new weekly earnings atleast 20 percent below their old ones; this fig-ure compares with about 30 percent of work-ers with the shortest tenure.

As before, these findings are based on cross-tabulations that do not take into accountrelationships among workers' characteristicsor the circumstances of their job loss. Al-though the basic findings remain unchanged,the next two sections provide a more detailed


Figure 5.Illustrative Relative Effects of Schooling and Age on the Likelihood ofReemployment for All Displaced Workers

Less Than 12 Years of SchoolingPercentage Points

18-34 35-44 45-54 55-59 60+Age

12 Years of SchoolingPercentage Points

60+

20

10

0

-10

-20

-30

-40

-50

-60

13-15 Years of SchoolingPercentage Points

18-34 35-44 45-54Age

55-59 60+

20

10

0

-10

-20

-30

-40

-50

-60

16 or More Years of SchoolingPercentage Points

18-34 35-44 45-54

Age

55-59 60+


NOTES: For each schooling and age category, the figure shows an estimate of how the likelihood of reemployment among displacedworkers in that category compared with the average likelihood for all displaced workers. For example, the top left panelshows that workers aged 18 to 34 who had completed less than 12 years of schooling would have been about 9 percentagepoints less likely to be reemployed than a typical displaced worker. The average likelihood of reemployment for all displacedworkers was 73 percent. These estimates are based on the regression coefficients reported in Table 4.


analysis of which workers have the greatestdifficulty in finding new, sufficiently well-pay-ing jobs.

Duration of Joblessnessfor Reemployed Workers

When other factors are taken into account, theeffects of age on the duration of joblessness forthose who were reemployed were slightlysmaller than a simple cross-tabulation sug-gests. Workers aged 55 to 59 took about fourweeks longer to find a new job, on average,than did those aged 18 to 34, and those 60 andolder took about eight weeks longer (see Table

6). However, because they had a lower like-lihood of finding work at all, workers 55 andolder accounted for only about 6 percent of re-employed displaced workers.

Schooling also had a very small impact onthe duration of joblessness among workerswho found new jobs, once other factors aretaken into account. High school dropouts tookonly about two weeks longer to find a job thandid workers with exactly 12 years of schooling,and the difference between high school andcollege graduates was not statistically signi-ficant. This small effect probably reflects sam-ple selection: high school dropouts were gen-erally less likely than other workers to findnew jobs and thus to appear in this sample.

Table 5.Joblessness and Earnings Losses Among Reemployed Displaced Workers,by Selected Characteristics, 1981-1990

Characteristic


Age18-3435-4445-5455-5960 and older


SexMaleFemale

Total

SOURCE: Congressional

Percentage ofReemployed

Workersin Category

50171714

57241242

15442318

6634

100

Budget Office estimates based on data from

AverageNumberof WeeksJobless

16202223

1719222326

23191617

1820

19

the January 1984, 1986,

Percentagewith NewEarnings

Less Than 80Percent of

Old Earnings

28293846

2934374352

39333224

3134

32

1988, 1990, and 1992 Current Popu-lation Surveys.


Table 6.Effects of Workers' Characteristics and Circumstances of Displacementon the Duration of Joblessness for Reemployed Displaced


Age18-3435-4445-5455-5960 and older

Schooling CompletedLess than 1 2 years12 years13-1 5 years16 or more years

Blue-Collar Worker


Female

Nonwhite



Difference Between State and NationalUnemployment Rates (Average value 0.86 percent)


SOURCE: Congressional Budget Office estimates based on data fromlation Surveys.

Workers

Percentagein Category

57241242

15442318

53

50171714

34

12

511435

n.a.

n.a.

n.a.

the January 1984, 1986, 1988,

NOTES: Ordinary least squares estimate using an unweighted sample of 8,184 people with valid data.variable is 19 weeks, n.a. = not applicable.




Effect onJoblessness

(Weeks)a

b1.64.14.57.6

2.4b

-1.5-O.Sc

3.1

b3.24.45.1

3.4

4.0

-4.4-1.5C

b

-0.3

0.1

1.8

1990, and 1992 Current Popu-

The average of the dependent


Those who did may have had other skills notmeasured in the GPS data that compensatedfor their lack of formal schooling.

Lengthy job tenure was not a statisticallysignificant factor in determining whetherworkers found new jobs, but among those whodid, it was an important determinant of howlong it took.10 Holding other factors constant,a worker with 10 or more years of experiencetook about five weeks longer to find work thanone with less than three years on the job.

Women and nonwhites generally took long-er to find new jobs than did men and whites.Women were jobless three weeks longer, onaverage; nonwhites were jobless four weekslonger. As with schooling, the relatively weakrelationship betv/een sex or race and the dura-tion of joblessness-compared with the effectson likelihood of reemployment—may reflectsample selection. That is, both women andnonwhites were relatively less likely to be re-employed; those who found new jobs may havehad unmeasured skills that helped reduce theeffects of sex and race on joblessness.

Employment changes in a worker's previousindustry and the unemployment rate in his orher state also affected the length of time ittook to find a job. The effects of these factorswere quite small, however, as they were withthe likelihood that a worker found a new job atall. For example, a worker displaced from anindustry with rapid annual growth in employ-ment-say, 5 percent a year-would have beenjobless only about three weeks less than aworker displaced from an industry that wasreducing employment at the same rate.

The effects of the business cycle on thelength of time it took workers to find new jobsshow up very clearly, with each percentagepoint in the unemployment rate translating

into almost two additional weeks of jobless-ness. A worker displaced in a year of high un-employment (say, 1982) would thus havetaken about two months longer to find a jobthan a similar worker displaced in 1988.

The results above indicate that amongpeople who found new jobs, older workers andthose with the longest job tenure took the mosttime to do so. It is illustrative to look at thecombined effects of these characteristics toassess which workers are likely to experiencethe most difficulty finding new jobs. For ex-ample, the few workers aged 55 to 59 with 10or more years of job tenure who were reem-ployed took about seven weeks longer to findnew jobs than the typical displaced worker,and those 60 and older took almost 10 weekslonger (see Figure 6).

Likelihood of Earnings Loss

Over half of the displaced workers who foundnew jobs earned at least 95 percent of whatthey did before. About one-third of all workerswho found new jobs earned less than 80percent of their old wages, however, and manyin this group had very low earnings ratios.11

To examine the characteristics associatedwith substantial earnings losses, this analysisis based on estimates of the likelihood that aworker had new earnings less than 80 percentof his or her old ones.

Age, schooling, and job tenure had strongindependent effects on the likelihood that aworker incurred an earnings loss. For ex-ample, workers aged 55 to 59 were 7 per-centage points more likely than workers aged18 to 34 to have new earnings less than 80 per-cent of their old earnings (see Table 7). Al-though workers 55 and older were much morelikely to incur a substantial earnings loss,

10. The small effect that tenure had on likelihood of findinga new job may reflect the fact that the two groups mostlikely to withdraw from the labor force-older workersand women-were likely to have very different levels ofjob tenure.

11. This figure includes a relatively small number of work-ers who found part-time jobs. Excluding such workerswould reduce to just under 30 percent the proportion ofreemployed workers with earnings less than 80 percentof their previous level.


Figure 6.Illustrative Relative Effects of Job Tenure and Age on the Durationof Joblessness for Reemployed Displaced Workers

Less Than 3 Years of Tenure

15

10

Weeks

18-34 35-44 45-54 55-59 60+

Age

15

10

Weeks

3-4 Years of Tenure

18-34 35-44 45-54 55-59 60+

Age

15

10

Weeks

5-9 Years of Tenure

18-34 35-44 45-54

Age

55-59 60+

10 or More Years of Tenure

15

10

Weeks

18-34 35-44 45-54

Age

55-59 60+


NOTES: For each job tenure and age category, the figure shows an estimate of how the duration of joblessness among reemployeddisplaced workers in that category compared with the average duration for all reemployed displaced workers. For example,the top left panel shows that workers aged 18 to 34 who had less than three years of job tenure would have been joblessabout three weeks less than a typical reemployed displaced worker. The average for all reemployed displaced workers was19 weeks. These estimates are based on the regression coefficients reported in Table 6.


Table 7.Effects of Workers' Characteristics and Circumstances of Displacement on the Likelihoodof Having New Weekly Earnings Less Than 80 Percent of Previous Earningsfor Reemployed Displaced Workers


Age18-3435-4445-5455-5960 and older

Schooling CompletedLess than 12 years12 years13-15 years16 or more years

Blue-Collar Worker


Female

Nonwhite


Percentage inCategory

57241242

15442318

53

50171714

34

12

511435

Effect onLikelihoodof Earning

at Least20 Percent Less

(Percentage points)3

b1.1C

3.77.3

14.5

4.0b

1.5-4.6

3.4

b1.97.8

16.8

5.1

-2.2c

-4.3-1.7<:

b


Difference Between State and NationalUnemployment Rates (Average value 0.86 percent)


n.a.

n.a.

n.a.

-0.5

0.1


NOTES: Logistic equation estimated using an unweighted sample of 7,010 people with valid data. The average of the dependentvariable is 32 percent, n.a. = not applicable.





Figure 7.Illustrative Relative Effects of Job Tenure and Age on the Likelihood of Having New WeeklyEarnings Less Than 80 Percent of Previous Earnings for Reemployed Displaced Workers

30

20

10

Less Than 3 Years of TenurePercentage Points

-1018-34 35-44 45-54 55-59 60+

Age

30

20

10

3-4 Years of TenurePercentage Points

-1018-34 35-44 45-54 55-59 60+

Age

30

20

10

5-9 Years of TenurePercentage Points

-1018-34 35-44 45-54

Age55-59 60+

30

20

10

10 or More Years of TenurePercentage Points

-1018-34 35-44 45-54

Age

55-59 60+


NOTES: Foreach job tenure and age category, the figure shows an estimate of how the likelihood of having new weekly earnings lessthan 80 percent of old weekly earnings among workers in that category compared with the average likelihood for alldisplaced workers. For example, the top left panel shows that workers aged 18 to 34 who had less than three years of jobtenure would have been about 5 percentage points more likely to have lower weekly earnings than a typical reemployeddisplaced worker. The average likelihood for all reemployed displaced workers was 32 percent. These estimates are basedon the regression coefficients reported in Table 7.


they accounted for only a very small fraction(6 percent) of reemployed workers.

Compared with high school graduates, drop-outs were 4 percentage points more likely tohave low earnings, other factors being equal,and college graduates were about 5 percent-age points less likely. Blue-collar workers,many of whom were also likely to have hadless than 12 years of schooling, were about 3percentage points more likely than white-collar workers to have lower earnings. Theseresults, combined with the previous resultsabout the effects of schooling on length of job-lessness, may indicate that workers with moreschooling are more knowledgeable about howto search for work, are better able to assess thedistribution of wages they face, or have skillsthat are more easily transferred.

The effects of job tenure on subsequentearnings are consistent with the theory of spe-cific human capital. As discussed in Chapter1, this theory holds that a (possibly large) frac-tion of a worker's earnings in a job reflectsskills of value only to the current employer. Aworker who loses a job would thus be expectedto have a difficult time replacing his or herformer earnings level and, in general, thelonger the previous employment, the greaterthe loss in earnings would be. Workers withfive to nine years' job tenure were about 8 per-centage points more likely to incur a substan-tial loss in earnings than those with less thanthree years' job tenure; those with 10 or moreyears' tenure were 17 percentage points morelikely.

Women were about 5 percentage pointsmore likely to have new earnings less than 80percent of their old earnings, a result that mayreflect a greater tendency of women to workpart-time in their new jobs. There was nostatistically significant difference betweenwhites and nonwhites in the likelihood ofhaving lower earnings. Nonwhites were lesslikely to be reemployed, however.

Labor market conditions had a small butsignificant effect on the earnings that dis-placed workers attained in new jobs. Workersdisplaced from jobs in growing industries wereless likely to have a reduction in earnings,other things being equal, and those living instates with relatively high unemploymentrates were generally more likely to have a re-duction. As discussed earlier, there was noevidence that the business cycle affected sub-sequent earnings; there was no statisticallysignificant relationship between the nationalunemployment rate and the likelihood that areemployed worker incurred an earnings loss.

The combined effects of age and job tenureon subsequent earnings were quite large. Aworker aged 18 to 34 with 10 or more years ofjob tenure was 12 percentage points more like-ly to incur an earnings loss of at least 20 per-cent than the typical displaced worker (seeFigure 7). A worker aged 55 to 59 with similartenure was 20 percentage points more likely toincur a loss than the average worker. Givenan average likelihood of 32 percent, thismeans that about half of reemployed olderworkers with long tenure saw their earningsdrop by 20 percent or more. Again, these cate-gories were also associated with the longestamount of time needed to find a new job.

Chapter Four

Programs to Provide Income andReemployment Assistance

W hen workers are displaced, they of-ten look to government for help inmeeting a fundamental need: tem-

porary income assistance until they find an-other job. Some also need help in preparingfor and finding that new job. Others simplyleave the job they lost on Friday and start anew job on Monday, with no need for any in-come or reemployment assistance.

The federal government, together withstate governments, offers a wide range of pro-grams to assist displaced workers who need in-come assistance or other help. The largestsuch program is the federal/state Unemploy-ment Insurance (UI) system. Two smallerprograms specifically designed for displacedworkers are the Economic Dislocation andWorker Adjustment Assistance program, au-thorized by Title III of the Job Training Part-nership Act, and the Trade Adjustment Assis-tance program.

UnemploymentInsuranceThe UI program provides weekly cash benefitsto experienced workers who lose their jobs,whether or not the job loss is permanent.About three-quarters of the states require aone-week waiting period before benefits begin,and the rest generally require no waitingperiod. Work histories determine the specificduration and weekly amount of workers'

benefits, but benefits are available for no morethan 26 weeks in most states. The averageweekly benefit in 1992 was about $170.

In the late 1980s, about 7 million unem-ployed workers a year received a total of $14billion in benefits under regular state pro-grams, l That amount increased to $17 billionin 1990, $24 billion in 1991, and $26 billion in1992, reflecting the effects of the recession.

When insured unemployment is sufficientlyhigh in a state, the federal/state ExtendedBenefit (EB) program automatically providesup to 13 additional weeks of benefits to eli-gible unemployed workers.2 UI recipients innine states became eligible for EB in variousperiods during the 1990-1991 recession.

In 1991, the Congress enacted the Emer-gency Unemployment Compensation (EUC)program, which temporarily extended themaximum duration of benefits. That pro-gram, which was amended in July 1992, en-ables unemployed workers who have ex-hausted their entitlement to regular UI bene-fits to receive up to 20 or 26 weeks of emer-gency benefits, with the maximum number ofweeks depending on the extent of unemploy-

2.

The figure of 7 million unemployed workers includes notonly permanently displaced workers but also people whowere temporarily laid off by their employer.

The "insured unemployment rate" in a state is the shareof workers covered by the state's Unemployment Insur-ance program who are receiving regular benefits.


ment in their state.3 About one-third of the 5million UI recipients in early January werereceiving EUC benefits.

The emergency program expires in March1993, but an expansion of the permanent EBprogram will go into effect then. States willhave the option of using a new method of trig-gering extended benefits-one that may gen-erate a substantial increase in the number ofunemployed workers eligible for these bene-fits. Under the new option, moreover, recipi-ents in states that take up the option and havesufficiently high unemployment rates will beeligible for 20 weeks of additional benefits,rather than the 13 weeks allowed under thecurrent EB program. Nonetheless, far fewerunemployed workers are likely to receive pay-ments under the EB program than did so un-der the emergency program. CBO forecaststhat about 240,000 people will receive EB pay-ments in 1993 and fewer in 1994. By compari-son, about 2.3 million people are expected toreceive EUC payments in 1993.

Displaced workers are much more likelythan other UI recipients to exhaust their

3. The Unemployment Compensation Amendments of1992, enacted in July, provide workers who exhausttheir entitlement to regular benefits with up to 26 weeksof additional benefits in states in which the adjustedinsured unemployment rate is at least 5 percent or thetotal unemployment rate is at least 9 percent. At thetime of enactment, 15 states, including many of thelargest ones, met the criteria. Unemployed workers inall other states became eligible for up to 20 weeks ofadditional benefits. Unlike EB, these benefits areentirely paid for by the federal government. (The federalgovernment pays half of the cost of EB payments.)

4. These findings are based on the exhaustion rate of UIrecipients among the displaced workers in the CurrentPopulation Survey supplements discussed in Chapters 2and 3 and on the exhaustion rate of all UI recipientsreported in UI administrative records. A similarcontrast was found in a study of people who received UIbenefits in 1989, using a somewhat different set ofcriteria for identifying displaced workers. In that study,36 percent of UI recipients who did not expect to berecalled at the time they were laid off exhausted theirbenefits, compared with 8 percent of those who expectedto be recalled and had a definite recall date, and 26percent of those who expected to be recalled and did nothave a definite date. See Walter Coraon and MarkDynafski, A Study of Unemployment Insurance Recipi-ents and Exhaustees: Findings from a National Survey(Princeton, N.J.: Mathematica Policy Research, Septem-ber 1990), republished as Department of Labor, Unem-ployment Insurance Occasional Paper 90-3 (1990).

benefits without having found another job.During the 1980s, about half of the displacedworkers who received UI benefits exhaustedthem. In contrast, roughly one-third of all UIrecipients ran out of benefits during thatdecade.4

A substantial share of displaced workers donot receive UI benefits. Data from the Cur-rent Population Survey supplements dis-cussed in the preceding chapters indicate thatonly about three of every five displaced work-ers reported receiving UI benefits after losingtheir jobs. This is particularly surprising inview of the fact that UI benefits are anentitlement: all workers who lose jobs and whomeet eligibility requirements can get cashassistance while they look for work (generallyup to a maximum of 26 weeks). The questionthus arises whether extending the duration ofUI benefits would help these workers.

One key reason that many displaced work-ers did not receive UI benefits appears to bethat many of them were jobless only a shorttime. Almost one-third of displaced workerswere jobless less than five weeks, and onlyabout 25 percent of these workers reportedreceiving benefits (see Figure 8). In contrast,more than 70 percent of workers jobless for atleast five weeks reported getting benefits,with the percentage generally rising with thelength of time without work.5

Workers who were jobless for only one weekmay not have been eligible for benefits—because of the waiting period—and thosejobless for slightly longer periods may nothave bothered to apply for benefits.6 It is less

5. The exception to this statement is that the recipiencyrate among displaced workers who were jobless for morethan 52 weeks was slightly lower than that of displacedworkers jobless for 27 to 52 weeks (71 percent versus 82percent). This may reflect the former's greater likeli-hood of retiring after being displaced.

6. Based on data for all people who lost jobs, not just dis-placed workers, Wayne Vroman estimates that onlyabout half of those who lost jobs in late 1989 and early1990 applied for benefits and that only about 70 percentof the UI applicants received benefits. See The Declinein Unemployment Insurance Claims Activity in the 1980s(Washington, D.C.: Urban Institute, December 1990).

CHAPTER FOUR PROGRAMS TO PROVIDE INCOME AND REEMPLOYMENT ASSISTANCE 29

Figure 8.Displaced Workers' Receipt and Exhaustion of UnemploymentInsurance Benefits, by Duration of Joblessness

Percentage of Displaced Workers Who Received Benefits100

80

60

40

20

0

100

80

60

40

20

ft .JS *c\. x d% \ V. yf.Q % ,

S« % v * X\

0-4 5-14 15-26 27-52Weeks Jobless

53+

Percentage of Ul Recipients Who Exhausted Benefits

1 *•. % "<\ *VA %•. . . .\ V.SS SSSS SS S

0-4 5-14 15-26 27-52Weeks Jobless

53+

Percentage of Displaced Workers Who Exhausted Benefits100

80

60

40

20

0K «.\v

0-4 5-14 15-26 27-52Weeks Jobless

53+

SOURCE: Congressional Budget Office tabulations of data from the January 1984,1988,1990, and 1992 Current Population Surveys.

NOTE: Data on exhaustion of benefits are not available for workers displaced in 1983 and 1984.


clear why workers who were jobless more than15 weeks would not have received benefits.Some may have exhausted their entitlementto benefits during temporary layoffs that pre-ceded their permanent layoff, or they mayhave still been receiving payments from theiremployer, or they may not have worked longenough to qualify for benefits. Others mayhave withdrawn from the labor force followinglayoff and chosen not to apply for benefits.

More than half of the displaced workers whodid receive unemployment insurance ex-hausted their entitlement to benefits, and aswould be expected, the likelihood of exhaus-tion rose with the duration of joblessness.About half of UI recipients who were jobless15 to 26 weeks exhausted their benefits, com-pared with over 70 percent of those jobless 27to 52 weeks and more than 80 percent of thosejobless 53 or more weeks.

The relatively high rate of benefit exhaus-tion among workers who were jobless 15 to 26weeks-fewer weeks than benefits are gen-erally available-provides support for the no-tion that these workers had used up some oftheir entitlement before being laid off per-manently. At the same time, it is puzzlingthat the exhaustion rate is not closer to 100percent for workers who were jobless longerthan 26 weeks. The relatively low rate ofbenefit exhaustion among these workers mayreflect withdrawal from the labor force, be-cause workers would not continue to receivebenefits-even if they were otherwise eligible-if they did not actively seek work. Anotherpossible explanation is that some of the long-term unemployed had delayed receiving UIbenefits. Yet another possibility is that re-spondents to the GPS interpreted questionsabout the receipt and exhaustion of UI bene-fits to include payments from their companiesor from other federal programs.7

Given the relationship between exhaustionof benefits and the duration of joblessness, it is

not surprising to find that the characteristicsof workers and the circumstances of displace-ment that are associated with lengthy jobless-ness are also associated with a greater like-lihood of exhausting benefits. Older workers,for example, are much more likely to exhausttheir entitlement to benefits, as are those withless schooling. There is no statistically signifi-cant relationship, however, between the na-tional unemployment rate and the likelihoodof exhausting UI benefits, which may reflectthe availability of extended benefits in thehigh-unemployment years of the early 1980s.8

The EconomicDislocation and WorkerAdjustment AssistanceProgramUnder Title III of the Job Training Partner-ship Act (JTPA), as amended by the EconomicDislocation and Worker Adjustment Assis-tance (EDWAA) Act of 1988, states are pro-vided with federal funds to help displacedworkers obtain employment through trainingand related services. Each state is required todesignate a dislocated worker unit that hasthe ability to respond rapidly to major layoffsand plant closures. Affected individuals canreceive job search assistance, retraining, and(in some cases) cash payments.

Eighty percent of the money appropriatedfor EDWAA is distributed to states through anapportionment formula based on various mea-sures of unemployment. The states, in turn,distribute the majority of their allotments tolocal agencies. Twenty percent of the total ap-propriation is reserved for distribution by theSecretary of Labor, largely for discretionarygrants for projects serving workers displaced

7. Trade Adjustment Assistance or supplementary unem-ployment benefits from their former employer, for ex-ample.

8. Data for workers displaced in 1983 and 1984 are not in-cluded in the analysis of UI recipiency and exhaustionbecause these workers were not asked about benefit ex-haustion.


by mass layoffs and for multistate or indus-trywide projects.

The criteria for qualifying as a displaced (or"dislocated") worker eligible for services un-der EDWAA are quite broad. Individuals areeligible who:

(A) have been terminated or laid off or whohave received a notice of termination or lay-off from employment, are eligible for orhave exhausted their entitlement to unem-ployment compensation, and are unlikely toreturn to their previous industry or occu-pation;

(B) have been terminated or have received anotice of termination of employment, as aresult of any permanent closure of or anysubstantial layoff at a plant, facility, or en-terprise;

(C) are long-term unemployed and havelimited opportunities for employment or re-employment in the same or a similar occu-pation in the area in which such individualsreside...; or

(D) were self-employed . . . and are unem-ployed as a result of general economic con-ditions in the community in which they re-side or because of natural disasters... .9

Although these criteria for eligibility arefar reaching, available funding is not enoughto serve all workers eligible for EDWAA. For1993, $517 million has been appropriated forthe program. The Department of Labor esti-mates that this amount should enable morethan 200,000 displaced workers to participatein training and other activities. The level of

9. Title m, section 301(a) of the Job Training PartnershipAct, as amended in 1988 by the Trade and Competitive-ness Act (102 Stat. 1524,29 U.S.C. 1651). These criteriaapply to the main program authorized by this title, gen-erally referred to as the EDWAA program. Three small-er programs for workers displaced because of the CleanAir Act or defense cutbacks, described later in the text,have their own specific eligibility criteria. A thoroughdescription of all four programs is provided in Congres-sional Research Service, "Training for Dislocated Work-ers Under the Job Training Partnership Act," CRS Re-port for Congress 92-901 EPW (December 1992).

funding is about the same as was appropriatedfor the program in 1991 and 1992. Fundingfor retraining displaced workers under TitleIII of JTPA has grown substantially since theenactment of EDWAA. In 1987 (the year be-fore the EDWAA amendments were enacted),only $200 million was appropriated for em-ployment and training activities for displacedworkers under JTPA.

After the enactment of EDWAA, the JobTraining Partnership Act was again amendedto provide reemployment assistance to severalgroups of displaced workers whose job losseswere related to implementing the Clean AirAct or cutting defense spending. The CleanAir Act Amendments of 1990 authorized theClean Air Employment Transition Assistanceprogram as a new section of Title in of JTPA.The total authorization for 1992 through 1997is $250 million, $50 million of which was ap-propriated for 1993.

The Defense Economic Adjustment, Diver-sification, Conversion, and Stabilization Act of1990 authorized $150 million to assist dis-placed defense workers. The funds were ap-propriated to the Department of Defense andtransferred from the Defense Department tothe Department of Labor under a memoran-dum of agreement signed in August 1991.These funds must be obligated by September30,1997. Through the end of September 1992,25 grants totaling about $30 million had beenawarded under this program. About 15,000displaced workers were expected to participatein the activities funded by these grants. Morerecently, the National Defense AuthorizationAct for Fiscal Year 1993 authorized the De-fense Diversification program, which wouldalso provide reemployment assistance to dis-placed defense workers. Former military andcivilian employees of the Defense Department,as well as displaced employees of defense con-tractors, would also be eligible.10

10. The Defense Department's appropriation for 1993 pro-vides $75 million to fund this new program.


The funds for all of these programs aremainly used to provide classroom training, on-the-job training, and job search assistance tothe participants. Almost 40 percent of thedisplaced workers whose participation endedin program year 1990 (July 1990 throughJune 1991) had taken part in classroom train-ing, which is often provided through localschool systems and community colleges. Thelength of stay in the program for these par-ticipants was about 25 weeks. About 25 per-cent of the participants were enrolled in jobsearch assistance, and 15 percent participatedin on-the-job training activities, which weretypically of shorter duration. H

The limited information available about theEDWAA program indicates that few partici-pants have received income support (asidefrom their entitlement to Unemployment In-surance benefits) and that, perhaps as a con-sequence, few have participated in long-termtraining programs.i2 Data from administra-tive reports of the Department of Labor showthat three-quarters of the participants in 1990found jobs soon after leaving the program, atan average starting wage of $8.20 per hour.But no evaluations of the program's impacthave yet been conducted. Thus, it is notknown how many of the participants wouldhave found jobs on their own without theprogram, or whether the program helped themfind a higher-paying job.

11. The data for this paragraph come from the Job TrainingQuarterly Survey data base maintained by the Depart-ment of Labor, as reported in Department of Labor, Em-ployment and Training Administration, "Job TrainingQuarterly Survey: JTPA Title HA and IH Enrollmentsand Terminations During Program Year 1990 (July1990-June 1991)" (January 1992).

12. General Accounting Office, Dislocated Workers: Com-parison of Assistance Programs, Briefing Report to Con-gressional Requesters (September 1992); and Depart-ment of Labor, Employment and Training Administra-tion, Study of the Implementation of the Economic Dis-location and Worker Adjustment Assistance Act, pre-pared by SRI International (1992). In addition, the lat-ter study (p. VII-12) found that relocation assistance todisplaced workers, although authorized by EDWAA, wasnot offered by many of the local programs. Only five ofthe 30 local areas visited provided any relocation assis-tance; among these five, the assistance usually consistedmerely of providing information about job openings out-side the area.

Trade AdjustmentAssistanceTrade Adjustment Assistance (TAA) is thelargest of the special programs that have beencreated for displaced workers whose job lossesare associated with specific federal policies.TAA offers income replacement benefits,training, and related services to workers un-employed because of import competition. An-nual outlays for this program have been be-tween $150 million and $250 million in recentyears. (The combined cost of other special pro-grams~for workers displaced by the enlarge-ment of the Redwood National Park, the reor-ganization of several railroads into Conrail,and the deregulation of the airline industry-isless than $2 million a year.) 13

To obtain TAA benefits, workers from afirm must first petition the Secretary of Laborfor certification and then meet other require-ments for eligibility. In order for a group ofworkers to qualify, the Secretary must con-clude that a significant share of the firm (or asubdivision) is threatened with displacement;sales or production have decreased; and in-creased imports have "contributed important-ly" to the reductions in employment and insales or production.14

Cash benefits are available to certifiedworkers, but only after their UI benefits runout. The weekly TAA benefit is generallyequal to the amount of the UI benefit that theindividual had been receiving. A displacedworker can receive up to 52 weeks of benefitsfrom TAA if he or she is participating in anapproved training program. In 1991, 25,000

13. These and other federal programs for displaced workersare described in Congressional Research Service, "In-come Support for Workers Dislocated by Federal PolicyInitiatives," CRS Report for Congress 90-330 EPW (July1990).

14. A recent report by the General Accounting Office under-'scores the difficulty of making accurate determinations.See Dislocated Workers: Improvements Needed in TradeAdjustment Assistance Certification Process (October1992).


displaced workers received cash assistance.They got an average weekly benefit of about$170 for 23 weeks. Total outlays for thesebenefits were $116 million.

Displaced workers certified for TAA are eli-gible for training and other reemployment as-sistance. Training is paid for by the program,either directly or through a voucher, if theprogram determines that no suitable employ-ment is otherwise available and that the in-dividual can reasonably expect to benefit fromparticipating in the training.15 About 20,000displaced workers received reemployment as-sistance-mostly training-through this pro-gram in 1991. In addition, about 500 workersreceived job search allowances to seek workoutside their commuting area, and about 800

15. Other conditions are a reasonable expectation that theindividual can be employed following completion of thetraining, the approved training is available, the workeris qualified for the training, and the training is suited tothe individual's needs and available at a reasonable cost.For more detailed information about this and other as-pects of the TAA program, see Congressional ResearchService, "Trade Adjustment Assistance: The Programfor Workers," CRS Report for Congress 92-73 EPW(December 1991).

workers got relocation assistance to take anew job in another area. Total outlays for re-employment assistance were $65 million in1991.

TAA differs from EDWAA in two criticalways. First, the eligibility criteria for TAAare much more restrictive; only displacedworkers whose job losses are linked to importsare covered. Second, the majority of the fundsare used to extend the duration of UI benefitsfor eligible workers who exhaust regular bene-fits and are participating in training pro-grams, whereas few EDWAA participants re-ceive income assistance from that program.

Although the TAA program is now rela-tively small, it was once much larger and hasbeen suggested as a model for new programs toassist workers displaced for a wide variety ofother reasons. Annual outlays in 1980 and1981 were about $1.5 billion, with about500,000 people receiving benefits in 1980 and300,000 in 1981. Subsequent restrictions oncertification requirements and benefitamounts, as well as other changes, consid-erably diminished the scale of the program.

Chapter Five

Policy Implications

T he 103rd Congress is likely to considerwhat new measures, if any, should betaken to help displaced workers. This

issue could take on particular urgency as theCongress considers the North American FreeTrade Agreement, which it is expected to doin early 1993. Similarly, any deliberationsover further reductions in defense spendingwill probably include considering proposals toaid workers displaced because of the cuts.The Congress might wish to consider increas-ing the amount of income support available todisplaced workers or providing them withadditional reemployment assistance.

The three programs described in Chapter 4provide the starting point for this debate. Un-employment Insurance is the main programthat gives income assistance to displacedworkers (as well as to other workers who losetheir jobs). The Economic Dislocation andWork Adjustment Assistance program and theTrade Adjustment Assistance program pro-vide reemployment assistance and are oftenused as models for legislative proposals to ex-pand aid to displaced workers. For example,in August 1992 President Bush announcedthat the Administration was developing a newprogram for displaced workers-AdvancingSkills through Education and Training Ser-vices (ASETS)--that would largely be based onwhat it viewed as the best features ofEDWAA.1 Other advocates have proposed ex-panding TAA coverage to encompass workers

For a comprehensive description of the ASETS proposal,including a comparison with EDWAA and TAA, seeCongressional Research Service, "Job Training: ThePresident's Proposals," CRS Report for Congress 92-741EPW (September 1992).

who lose their jobs because of NAFTA, defensecuts, or other government policies. New pro-posals can be expected from the Clinton Ad-ministration.

Are the ExistingPrograms Sufficient?Two sets of findings are relevant to this ques-tion. The first relates to whether the existingprograms are sufficient to serve the number ofpeople who already need help. The second re-lates to whether there is likely to be a sub-stantial increase in the number of displacedworkers in the next few years or in the sever-ity of the problems they will face.

The information provided in this study andelsewhere about workers displaced during the1980s indicates that roughly half of the dis-placed workers who received UI benefits ex-hausted their benefits without having foundanother job, compared with about one-third ofall UI recipients. (Options for expanding theduration of UI benefits are discussed below.)

The analysis also indicates that many of thedisplaced workers who found new jobs in-curred substantial reductions in earnings,thus raising the question of whether a suf-ficient number of retraining opportunities areavailable. Eligibility for TAA is limited to thesmall group of displaced workers whose joblosses are linked to imports, and the amountappropriated for EDWAA activities is onlyenough to help a modest portion of all dis-placed workers. In principle, retraining of thesort offered by these programs could prepare


displaced workers for new jobs with earningslevels comparable with their previous compen-sation. (Evidence about the effectiveness ofthese programs in doing so is also discussedbelow.)

The number of workers who will be dis-placed during the next few years may be some-what larger than the number displaced in thelate 1980s, because the economy is likely to beweaker than it was at that time and becausedefense-related employment is expected toshrink further. The Congressional BudgetOffice (CBO) forecasts a gradual recovery,with the unemployment rate falling from 7.4percent in 1992 to 6.0 percent in 1996. Thelatter rate would still be one-half of one per-centage point above the unemployment rate in1990, the final year of the 10-year periodanalyzed in Chapters 2 and 3, but well belowthe 9.7 percent unemployment rate of 1982.

The downsizing of the defense sector thatbegan in the late 1980s is expected to con-tinue. CBO projects that the sector will losemore than 1 million jobs over the next fiveyears, with much of this reduction occurringin 1993 and 1994.2 Defense-related employ-ment already fell by about 1 million jobs from1987 to 1992. (The extent to which future re-ductions will require displacements, ratherthan being achieved through attrition, is notknown.) Implementing NAFTA could add tothe number of displacements, but estimatedjob losses in industries that would be ad-versely affected by the agreement are muchsmaller and spread out over a longer period.3

On the whole, however, the analysis of year-by-year levels of displacement during the1980s, and of the consequences for the workers

2. As reported in Chapter 1, CBO's estimate of the reduc-tion in defense-related jobs over the next five years un-der current law includes cuts of about 400,000 jobs in1993 and again in 1994.

3. Estimates of NAFTA'a employment effects are subject toconsiderable uncertainty. As reported in Chapter 1, pre-dictions of the number of jobs lost in the industries thatwould be adversely affected if NAFTA is implementedrange from about 100,000 jobs to more than 500,000 overthe next decade.

who were displaced, provide no evidence tosupport fears that the displacement problem isabout to get substantially worse, althoughsuch changes are notoriously hard to predict.A key finding from that analysis is the sta-bility in the composition of displacement dur-ing the last decade and in the extent of thelosses for the workers involved.

Potential ChangesAmong the options that have been discussedfor helping displaced workers in general, orworkers displaced specifically because ofNAFTA, defense cuts, or other changes in fed-eral policies, are modifications in the threeprograms described in the preceding chapter.For example, the potential duration of UIbenefits could be increased for all displacedworkers or for specific groups of them. Appro-priations for EDWAA activities could be in-creased in order to serve more displaced work-ers. The additional funds could be earmarkedfor particular groups of workers (as was donefor those displaced by the Clean Air Act or byreductions in defense spending). Finally, theeligibility criteria for TAA benefits could bebroadened to encompass workers displaced forreasons other than imports.

Income Support

One option that the Congress might want toconsider is expanding the duration of UI bene-fits for all or some displaced workers. In ef-fect, the Trade Adjustment Assistance pro-gram already does this for one small group ofdisplaced workers-those whose job losses arecertified to have been linked to increased im-ports and who meet the other eligibility cri-teria. An important difference between TAAand UI, however, is that TAA generally re-quires participation in a training program as acondition for receiving the maximum durationof benefits. This requirement could be in-cluded in any new program as well.

CHAPTER FIVE POLICY IMPLICATIONS 37

Extending the maximum duration of UIbenefits for all or some displaced workerswould help cushion the losses that many ofthem would otherwise incur. Workers whowill not be recalled generally face a more dif-ficult time than do workers on temporarylayoff. Providing them with more time to findanother job before their benefits run out wouldrecognize this fact, in the same way that theExtended Benefits program does for UI recipi-ents seeking work in a state with relativelyhigh unemployment. Allowing recipients whoare participating in a training program to re-ceive UI benefits for a longer period might en-able more of them to undergo more extensiveretraining.

Opponents of longer potential durationsmaintain that the availability of additionalbenefits would, to some degree, encourage re-cipients to remain unemployed longer. More-over, the additional benefits would go topeople who had already received up to 26weeks of UI benefits and were not necessarilythose most in need of assistance. For example,job seekers who had not worked long enoughto qualify for UI benefits would not be helpedby such an approach, regardless of their needs.An earlier CBO study of long-term UI recipi-ents who were not working three months aftertheir benefits ended found that about two-thirds of them were living in families with in-comes above the poverty line, largely becausesomeone else was working.4

One option would be to provide additionalweeks of UI benefits only to people who had anespecially strong attachment to their previousjobs as indicated by long job tenure. Displacedworkers with relatively long tenure generallytake longer to find new jobs than those withshorter tenure, as shown in Chapter 3. More-over, some people argue that workers withlong service have, in effect, "paid their dues"and deserve additional benefits. Because this

group is likely to have more assets than work-ers with shorter tenure, however, this optionwould not target additional benefits towardthose with the least means of support. In addi-tion, administering such an eligibility cri-terion could be difficult.

Another option would be to tie eligibility foradditional UI benefits to participation in someactivity such as a job club or other programthat helps participants find new jobs faster.There is strong evidence that such assistanceis effective in shortening the length of timethat participants receive UI benefits.5Launching a large-scale, mandatory programwould be a major undertaking, however, andwould add significantly to the administrativecosts of the UI program.

Yet another option would be to broaden theeligibility criteria for TAA to encompassworkers displaced for reasons other than im-ports. For example, some observers have ar-gued that workers who are displaced becausetheir employer closes down and reopens inanother country should be covered by TAA,even though their displacement was notcaused by increased imports. This actionwould put such workers on an even footingwith those currently eligible for TAA. Identi-fying these workers, however, could be quitedifficult. Moreover, issues regarding the fair-ness of providing help to some unemployedworkers who exhaust their UI benefits, butnot to others who face similar problems, wouldremain. For example, workers who lose theirjobs because their employer closes down andreopens in another part of the country or goesout of business may be in equal need of assis-tance.

Reemployment Assistance

EDWAA and TAA already provide reemploy-ment assistance to some displaced workers.

4. Congressional Budget Office, Family Incomes of Unem-ployment Insurance Recipients and the Implications forExtending Benefits (February 1990). This study alsoprovides a fuller discussion of the proa and cons of ex-tending the potential duration of UI benefits, particu-larly in recessions.

5. See, for example, Department of Labor, The New JerseyUnemployment Insurance Reemployment DemonstrationProject Follow-Up Report, Unemployment Insurance Oc-casional Paper 91-1 (1991).


President Bush essentially proposed replacingEDWAA and TAA with a much-expandedversion of EDWAA. Other advocates, includ-ing the AFL-CIO, have stressed the impor-tance of providing income support as well asreemployment assistance and have recom-mended that eligibility criteria for TAA bebroadened and its benefits increased.6

As described in Chapter 4, the two pro-grams take quite different approaches to serv-ing the needs of displaced workers. EDWAAemphasizes reemployment assistance, mainlythrough short-term training and job searchassistance. Few participants receive incomesupport. In contrast, TAA essentially extendsthe duration of UI benefits for eligible workerswilling to participate in a training program,with about two-thirds of the outlays for thisprogram going for income support. The debateover whether to use EDWAA or TAA as amodel for developing a new displaced-workerprogram largely centers on the merits of pro-viding a longer duration of income supportthan is normally available through the UIsystem.

The findings about the wage losses incurredby many displaced workers, reported in Chap-ter 3, provide support for ensuring that re-training assistance is available, whetherthrough EDWAA, TAA, or an entirely newprogram. About one-third of the displacedworkers who found new jobs had weekly earn-ings at least 20 percent below the earningsthey had in their old jobs. Temporary incomesupport, by itself, helps tide them over untilthey find new jobs, but it does nothing to

rebuild their human capital. In principle, theretraining assistance provided by EDWAA orTAA could help displaced workers developnew skills or adapt their old ones, makingthem more valuable to their new employers.

Despite widespread support for retrainingdisplaced workers, very little is known aboutthe effectiveness of the current nationalprograms in increasing the earnings of theirparticipants. The effectiveness of the EDWAAprogram has not been evaluated. A study ofthe effects of TAA, sponsored by the Labor De-partment, is expected to be completed shortly.Preliminary results suggest that the trainingreceived by its participants has not increasedtheir average earnings or their likelihood ofbeing employed.7 Evaluations of earlierdemonstration projects for displaced workersin specific sites provide considerable basis foroptimism about the effectiveness of job searchassistance, but not of short-term retraining.

For example, an experiment conducted in1984 and 1985 evaluated the costs and resultsof a combination of job search assistance andretraining in three sites in Texas. The prin-cipal investigator concluded that the experi-ment "demonstrated that a relatively inex-pensive mix of job-search assistance andlimited occupational skills training can be acost-effective means of assisting some dis-placed workers."8 But the retraining did notappear to provide any additional benefit, be-cause, according to the author, the particulartraining offered was not well suited to many ofthe participants. As stressed by the author, itslack of success provides a lesson about the

6. The Labor Policy Advisory Committee for Trade Negoti-ations and Trade Policy rejected the Administration'sworker adjustment proposal for helping workers dis-placed because of NAFTA. Instead, it called for in-creases in the level and duration of TAA benefits, in-cluding health insurance and a special "bridge benefit"for workers who would have been eligible to retire with-in four years after they were displaced. See Report of theLabor Policy Advisory Committee for Trade on the NorthAmerican Free Trade Agreement (September 16,1992).

7.

8.

Mathematica Policy Research, Inc., is conducting thisevaluation under a contract from the Department ofLabor. The results reported here are from a presentationmade by the authors in January 1993 and are subject torevision.

Howard S. Bloom, Back to Work: Testing ReemploymentServices for Displaced Workers (Kalamazoo, Mich.: W.E.Upjohn Institute for Employment Research, 1990), p. vii.

CHAPTER FIVE POLICY IMPLICATIONS 39

importance of identifying suitable training forparticipants.9

These findings are supported by a recentsurvey of a large number of previous evalu-ations in the United States and elsewhere.The author concluded that the evidence todate strongly supports programs that providejob search assistance to displaced workers, but

9. Bloom, Back to Work, p. 165. The retraining was pro-vided in a classroom setting and appears to have beenoriented toward white-collar workers with relativelyhigh educational attainment. They appeared to benefit,but the participants who had been in blue-collar jobs andhad not completed high school appear to have incurredlosses by being in the program.

the findings regarding retraining programswere "not as conclusive."1** For example, fourseparate demonstration projects (includingthe Texas study) found that job search assis-tance increased the short-term earnings ofparticipants and reduced their UI benefits.The effects of providing classroom training inaddition to job search assistance, however, didnot appear to be very large. Whether a better-designed, and possibly more extensive, train-ing program would be more effective is a mat-ter of conjecture.

10. Duane E. Leigh, Does Training Work for DisplacedWorkers? (Kalamazoo, Mich.: W.E. Upjohn Institute forEmployment Research, 1990), p. 108.

Appendixes

Appendix A

Data Accuracy andAnalytic Methods

T he estimates about displaced workersreported in this study are based ondata from supplements to the Current

Population Survey (CPS). This appendix de-scribes the supplements, some potential prob-lems associated with the original data, andthe techniques used to ameliorate those prob-lems.

Description of theDisplaced WorkerSupplementsThe CPS is a monthly survey of approximately60,000 households administered by the Cen-sus Bureau for the Bureau of Labor Statistics(BLS). It is the primary source of labor forcedata for the United States. In addition to thebasic questionnaire, the January 1984, 1986,1988, 1990, and 1992 CPS included a series ofsupplemental questions that were intended tomeasure the extent of permanent job lossesand to provide information about the charac-teristics of displaced workers and their experi-ences after layoff. Data based on these supple-ments have been widely cited since they re-flect the only nationally representative sam-ple of people who lose jobs permanently.1

Adults aged 20 and older at the time of thesurvey were asked whether they had "lost orleft a job because of a plant closing, an em-ployer going out of business, a layoff from

which [they were] not recalled or other similarreason" during the five years preceding thesurvey.2 The BLS defined people who re-sponded yes to this question as displacedworkers, with the exception of people who lostjobs because a self-operated business failed orbecause they had completed a seasonal job.

In addition to the information regularlyavailable from the CPS—respondents' age, sex,educational attainment, and other charac-teristics~the displaced worker supplementsalso provide information about the following:

o the nature of the job losses (when theyoccurred and why);

1. Reports prepared by BLS analysts include Paul O. Flaimand Ellen Sehgal, Displaced Workers of 1979-83: HowWell Have They Fared? Bulletin 2240 (Department ofLabor, Bureau of Labor Statistics, July 1985); FrancisW. Horvath, The Pulse of Economic Change: DisplacedWorkers of 1981-85, Bulletin 2289 (Department of Labor,Bureau of Labor Statistics, September 1987); and DianeE. Herz, "Worker Displacement in a Period of Rapid JobExpansion: 1983-87," Monthly Labor Review (May1990), pp. 21-33. Other studies based on the displacedworker supplements include Michael Podgursky andPaul Swaim, "Job Displacement and Earnings Loss:Evidence from the Displaced Worker Survey," Industrialand Labor Relations Review (October 1987), pp. 17-29;Marie Rowland and George E. Peterson, "Labor MarketConditions and the Reemployment of Displaced Work-ers," Industrial and Labor Relations Review (October1988), pp. 109-122; and John T. Addison and PedroPortugal, "Job Displacement, Relative Wage Changes,and Duration of Unemployment," Journal of Labor Eco-nomics (July 1989), pp. 281-302.

2. For this study, age is estimated at the time of job loss.People 20 and older could thus have been as young as 17when they lost their jobs.


Figure A-1.Number of Displaced Workers per Year, by Year of Survey, 1979-1991

4.000Thousands of Workers

1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991


characteristics of the jobs lost (includinghow long respondents had worked fortheir previous employer and their indus-try, occupation, earnings, and health in-surance coverage);

their experiences following job loss (howlong they were jobless and their indus-try, occupation, and earnings on a newjob, if any);3 and

3. Joblessness is defined in this study as the total numberof weeks that displaced workers reported being withoutwork following the loss of their jobs. Because the surveyquestion changed, CBO adjusted the data to makeestimates of the duration of joblessness more consistent.Specifically, workers displaced before 1985 were askedfor the cumulative number of weeks without work (up to99) after displacement. For workers displaced in 1985and later years, however, weeks without work was re-corded only for people who returned to work and does notreflect any weeks without work that might have oc-curred after losing a new job. For workers who did notreturn to work, CBO estimated the duration of jobless-ness as the average number of weeks elapsed since dis-placement (up to 99 to conform with the maximum forprior years).

Because displaced workers were not asked whetherthey had been seeking work, joblessness is not synony-mous with unemployment. In addition, limitations inthe original data mean that the average duration of job-lessness for workers who did not return to work may beunderstated. First, only joblessness up to the date of thesurvey is measured; workers who had not yet found workwould eventually have completed jobless spells longerthan they reported. Second, the maximum duration ofjoblessness recorded was 99 weeks, although some of theworkers could have been jobless much longer.

o whether they received and exhaustedUnemployment Insurance (UI) benefitswhile they were jobless.4

Based on data from the January 1992 sup-plement, the BLS reported that 5.6 millionworkers with job tenures of at least threeyears were displaced from their jobs betweenJanuary 1987 and January 1992. This com-pares with 4.3 million such tenured workersdisplaced in the five-year period ending inJanuary 1990. About 60 percent of bothgroups said their plant or company had closeddown or moved.

The Accuracy of the DataAnalysis of data from the five supplementsindicates that the number of workers who re-ported being displaced in any one year de-pends systematically on how much time haspassed since the displacement occurred: theshorter the interval, the larger the number.The magnitude of the discrepancy is very

4. The January 1986 survey asked respondents how longthey had received UI benefits, but not whether they hadexhausted their entitlement to benefits.

APPENDIX A DATA ACCURACY AND ANALYTIC METHODS 45

large: data from the January 1992 survey, forexample, indicate that about 1.3 million work-ers were displaced from full-time jobs in 1987(see Figure A-l). In contrast, data from theJanuary 1990 survey indicate there wereabout 1.6 million such displaced workers in1987, and data from the January 1988 surveyindicate the number to have been about 2.3million in 1987. Similar discrepancies existfor every year of overlap among the five sur-veys.

Two factors appear to explain these dis-crepancies: the inclusion of workers on tempo-rary layoff (who, at the time of the survey,may not know whether their layoff is perma-nent) and the problem of recall bias (a situa-tion in which survey respondents rememberpast events incorrectly). These factors havesimilar effects on estimates of the timing ofdisplacement over the past decade, but theyhave different implications for the overalllevel of displacement and the characteristicsof displaced workers.

The Inclusion of Workerson Temporary Layoff

The relatively large number of displacedworkers in the latest year of each survey ap-pears to reflect workers who lost their jobs butwere subsequently rehired by their formeremployers.5 The survey responses thus over-state what would normally be considered jobdisplacement, in part because layoff withoutrecall is one of the bases for a positive re-sponse. This effect is most likely to occur forworkers whose employers continue to operate,but evidence from other sources indicates thatover 10 percent of workers displaced becausetheir employer closed, moved, or abolishedtheir job or shift are subsequently rehired.6

The Problem of Recall Bias

The CPS supplements are retrospective; re-spondents are asked to describe events thatmay have occurred up to five years in the past.Although problems associated with describingevents can be expected in any survey, theretrospective nature of the CPS supplementsraises the possibility of bias, with errors thatare nonrandom. Recall bias could arise for anumber of reasons.7

First, and most important, some respon-dents may simply not recall-or think suffi-ciently important to mention-displacementsthat occurred several years earlier. This byitself would imply that the number of workersfound to be displaced in a given year will berelated to the elapsed time between that yearand the date of the survey. In addition, work-ers are probably most likely to recall beingdisplaced several years earlier only if theevent was especially traumatic or costly.

Second, respondents may not accurately re-call the exact date of their layoff. Althoughrandom variation is to be expected in any sur-vey data, there is reason to believe that manyrespondents understated the length of timethat elapsed since the displacement actuallyoccurred. In contrast to random response er-rors, which do not introduce any bias, the phe-nomenon of "telescoping" would result in over-estimates of the number of workers displacedin years close to the survey date and under-estimates in earlier years.

Third, respondents who were displaced frommore than one job during the five-year periodmay choose to report only the most recentdisplacement. This potential source of error isa problem only for workers with less than fiveyears of job tenure, but it would result in un-derestimates of the number of workers dis-

5. For example, workers who lost jobs in December 1991may have been recalled after the January 1992 surveywas conducted.

6. Walter Corson and Mark Dynaraki, A Study of Unem-ployment Insurance Recipients and Exhaustees: Find-ings from a National Survey (Princeton, N.J.: Mathema-tica Policy Research, September 1990), pp. 122-124.

7. This section is largely based on conversations with BLSanalysts familiar with survey methods in general andthe displaced worker supplements in particular. Alsosee Francis W. Horvath, "Forgotten Unemployment: Re-call Bias in Retrospective Data," Monthly Labor Review(March 1982), pp. 40-43.


placed in the earliest years before the surveydate.

A fourth possible source of recall bias thatmay affect how many workers appear to havebeen displaced is the economic circumstancesat the time workers are surveyed. In particu-lar, the number of workers who reported beingdisplaced in 1989--and, to a lesser extent, in1990--is much larger than would be expectedon the basis of labor market conditions. Thedata for these two years are from the January1992 survey, the only one of the five in whichlabor market conditions were worse at thetime of the survey than they were during theyears covered by the survey.

Recall bias, if it is not taken into account,clearly can affect estimates of changes overtime in the number of displaced workers. Forexample, each of the GPS supplements showsdisplacement increasing over the five years ofeach survey, even though the number of work-ers displaced fell from one survey to the nextbetween 1984 and 1990 (see Figure A-l).Even where trends are not a major concern,however, recall bias complicates analyzing thecharacteristics of displaced workers and theirexperiences following layoff.

To the extent that workers for whom dis-placement was least serious do not recall theevent, the number of workers displaced is like-ly to be underestimated. At the same time,however, the exclusion of displaced workerswho did not incur significant losses impliesthat the average costs of displacement amongall displaced workers are likely to be over-stated.

Both of these possibilities are a concern forpolicies that would condition benefits on per-manent job loss. If the number of people whopermanently lost jobs was much larger thanindicated by the CPS, estimates of the costs ofprograms to assist them could be too low.Moreover, individuals would have a muchgreater incentive to identify themselves asdisplaced—whether or not they actually were--if benefits were contingent upon permanentjob loss. Further, if the average losses associ-

ated with displacement are overstated in theCPS data, resources might be targeted in waysthat were not in accord with policymakers'preferences.

Additional complications arise if recall biasis correlated with variables such as job tenure,and analysis of the distribution of job tenureamong displaced workers indicates that this isthe case. In each of the January surveys, thefraction of displaced workers with job tenureof three or more years was larger in the earli-est year covered by the survey than in thelatest year, suggesting that workers withlonger job tenure are more likely to recalltheir layoffs. Analysis based on only one sur-vey may therefore confuse the effects of jobtenure on postlayoff experience with the ef-fects of the business cycle.8

Procedures Used toReduce Data ProblemsThe data analyzed in this study are based on aprocedure designed to take advantage of therichness of the five CPS displaced-worker sup-plements and, at the same time, mitigate theproblems inherent in them. This procedureinvolves using data for workers displaced inthe second and third most recent years of eachsurvey. Thus, the observations for 1981 and1982 were drawn from the January 1984 sur-vey, the observations for 1983 and 1984 fromthe January 1986 survey, and so forth. Theresulting data set—which has more than11,000 observations representing almost 20million displaced workers—provides annualestimates of displacement from 1981 through1990.

8. During most of the 1980s, the unemployment rateshowed a downward trend. As a result, relatively morelong-tenured workers would show up in years withhigher unemployment rates. This possibility is takeninto account in the multivariate analyses that control forboth job tenure and the national unemployment rate.

APPENDIX A DATA ACCURACY AND ANALYTIC METHODS 47

Discarding observations from the otheryears available in each supplement reflectstwo judgments. The first, based on the evi-dence cited above, is that many of the workersdisplaced in the most recent year of each sur-vey are not permanently laid off. Includingthem would therefore bias conclusions devel-oped about workers who are truly displaced,both in terms of the workers' characteristicsand in terms of their experiences after layoff.Because workers who have only recently beenlaid off are much less likely to have found newjobs, for example, the reemployment rate oflaid-off workers is generally lower in studiesthat include the last year of data than it wasin this analysis.9

The second judgment is that the effects ofrecall bias can be minimized by focusing onworkers for whom roughly similar amounts oftime have elapsed since displacement oc-curred, without going any farther back in timethan is necessary. All of the data retained forthis analysis reflect workers who reportedbeing displaced between 13 months and 36months before the survey date. Some varia-tion in recall is likely to remain between even-numbered (second most recent) and odd-num-bered (third most recent) years.

9. This analysis found that 73 percent of displaced workers,on average, were reemployed at the time of the survey.In contrast, the average reemployment rate reported bythe BLS for the five supplements was 67 percent.

The validity of this procedure cannot be as-sessed with certainty, but the resulting year-by-year picture of displacements closely paral-lels movements in the number of new Unem-ployment Insurance recipients (see Figure A-2). Only in 1989 and 1990 do the CPS num-bers diverge significantly; this may reflect thetiming of the survey from which they weretaken.

Figure A-2.

Displaced Workers and First Unemployment

Insurance Payments, as a Percentage of

1981 Levels, 1981-1990

160

140

120

100

80

60

40

1981 = 100

First Ul Payments

1981 1984 1987 1990

SOURCES: Congressional Budget Office tabulations of datafrom the January 1984, 1986, 1988, 1990, and1992 Current Population Surveys; Department ofLabor, Unemployment Insurance Service, UI DataSummary, various issues, and Employment andTraining Handbook, No. 394.

NOTE: Data on first payments of Unemployment Insurancereflect benefits actually paid to recipients, not initialclaims for benefits.

Appendix B

Year-by-Year Datafor Displaced Workers

T he analysis in Chapters 2 and 3 isbased on data for workers who weredisplaced between 1981 and 1990, as

described in Appendix A. This appendixpresents tabulations of outcomes on a year-by-year basis that supplement that analysis.

For each year, the tables show selectedcharacteristics of workers who were displaced

in that year and how their employment statusat the time of the Current Population Surveysupplements varied with those characteristics.Employment status is defined as whetherworkers were employed, unemployed, or not inthe labor force. For those who were employed,the tables present information on their newweekly earnings as a percentage of their earn-ings in the job they lost.


Table B-1.Distribution of Displaced Workers by Selected Characteristicsand Employment Status at Time of Survey, 1981-1990

Characteristics

All Workers


Age18-3435-4445-5455-5960 or more

Schooling CompletedLess than 1 2 years12 years13-1 5 years1 6 or more years

SexMaleFemale

Reason DisplacedPlant closedSlack workJob abolished

Previous IndustryGoods-producingServices-prod uci ng

Previous OccupationWhite-collarBlue-collar

SOURCE: CongressionalSurveys.

NumberDisplaced

(Thou-sands)

19,230

9,6103,1003,2103,120

10,5604,3502,5201,020

790

3,7508,4404,1402,900

12,1807,050

9,6206,9802,630

10,1908,770

8,27010,840

Budget Office

Employment Statusat Time of Survey

(Percent)

For Employed Workers,Earnings in New Job as a

Percentage of Old EarningsNot in Less

Em-ployed

73

74777765

7679706132

58737987

7768

757076

7276

7969

tabulations

Unem-ployed

14

15131314

1413161612

2315107

1612

121813

1612

918

Labor ThanForce

12

119

1120

98

142356

1912106

820

131211

1212

1113

of data from the January

80

32

28293846

2934374352

39333224

3134

323431

3430

3035

1984,

80-94

13

12141314

1313141414

15131212

1313

131313

1313

1214

1986, 1988,

95-104

15

14171518

1417182015

12141620

1713

151516

1615

1714

1990, and

105-119

14

15161311

151413118

11141615

1316

151412

1415

1613

1992 Current

120or

More

25

30252212

2922181212

23252428

2624

252527

2327

2525

Population

APPENDIX B YEAR-BY-YEAR DATA FOR DISPLACED WORKERS 51

Table B-2.Distribution of Displaced Workers by Selected Characteristicsand Employment Status at Time of Survey, 1981

Characteristics

All Workers

Job TenureLess than 3 years3-4 years5-9 years1 0 or more years

Age18-3435-4445-5455-5960 or more

Schooling CompletedLess than 12 years1 2 years13-1 5 years16 or more years

SexMaleFemale


Previous IndustryGoods-producingServices-producing



NumberDisplaced

(Thou-sands)

2,000

1,070360290270

1,230330250

9090

450940360240

1,340670

830910260

1,170820

7001,300


(Percent)

Em-ployed

69

70756957

7472654632

55717186

7460

706967

6969

7566

Unem-ployed

16

15161818

151818238

2417126

1813

131816

1813

1118

Not inLaborForce

15

159

1325

1110173159

2213179

928

171317

1318

1416

LessThan

80

36

31344754

3539295377

50323930

3540

363543

3932

3438


Percentage of Old Earnings

80-94

20

19241623

2021259

14

20201724

2021

212115

1922

2219

95-104

9

11884

106

10170

611107

107

9107

108

910

105-119

13

15121111

131514140

8161015

1314

131313

1314

1214

120or

More

21

2423178

222022

89

16212324

2219

212122

1825

2419

Budget Office tabulations of data from the January 1984 Current Population Survey.



Characteristics

All Workers


Age18-3435-4445-5455-5960 or more

Schooling CompletedLess than 1 2 years12 years1 3-1 5 years16 or more years

SexMaleFemale





NumberDisplaced

(Thou-sands)

2,680

1,380420460380

1,620490300160110

5901,250

500340

1,800880

1,0601,320

300

1,6201,050

9801,700


(Percent)

Em-ployed

65

66716453

6871624626

49647580

6957

656275

6269

7161

Unem-ployed

23

23182428

2219263828

35221713

2520

212618

2619

1528

Not inLaborForce

12

11101219

1010121546

161387

723

14128

1212

1411

LessThan

80

31

24383544

3033323433

39313024

3227

313323

3426

2435



80-94

13

12121714

1215151537

16141112

1315

151312

1511

1413

95-104

17

14231423

1719151421

14181815

1815

151720

1815

1716

105-119

13

159

1210

131217180

12111617

1314

131313

1215

1810

120or

More

26

3418219

2822211810

19272532

2429

252431

2132

2725




Characteristics

All Workers


Age18-3435-4445-5455-5960 or more


SexMaleFemale





NumberDisplaced

(Thou-sands)

1,680

770320290280

97034021010060

320770340250

1,040630

890560220

1,010660

6501,030


(Percent)

Em-ployed

76

79787663

7983705735

61778284

8167

767674

7676

7974

Unem-ployed

10

8121310

91115166

161095

119

10128

1011

712

Not inLaborForce

14

12101126

126

153759

22149

11

824

141218

1414

1414

LessThan

80

33

26334051

2935375588

46303727

3235

333823

3629

2936



80-94

10

1178

11

9121290

111365

911

1189

912

910

95-104

14

15151116

1315211112

17121617

1612

151512

1513

1514

105-119

16

15181513

151813200

10181515

1418

191212

1517

1615

120or

More

27

3327268

33191860

16272737

2824

222844

2530

3124




Characteristics

All Workers


Age18-3435-4445-5455-5960 or more


SexMaleFemale

Reason DisplacedPlant closedSlack workjob abolished



NumberDisplaced

(Thou-sands)

1,870

930280330310

1,06040023010090

410860350250

1,210670

950660260

1,070780

7401,130


(Percent)

Em-ployed

72

74747664

7579686133

56737889

7567

737075

7076

7868

Unem-ployed

15

16141317

1614141513

2315109

1712

151711

1812

919

Not inLaborForce

12

10121120

98

182453

2111122

821

121314

1212

1213

LessThan

80

30

29242940

2826404246

34342321

2735

312830

3029

2633



80-94

13

13131511

1410121813

15131014

1411

151013

1314

1114

95-104

17

16222012

171615249

14152320

1814

171718

1815

1816

105-119

13

10171217

1315109

10

10141312

1214

121511

1214

1511

120or

More

27

32242319

2833236

21

27243233

2825

253028

2628

3025

SOURCE: Congressional Budget Office tabulations of data from the January 1986 Current Population Survey.



Characteristics

All Workers


Age18-3435-4445-5455-5960 or more


SexMaleFemale




NumberDisplaced

(Thou-sands)

1,770

840270350290

9404302509070

340790360280

1,150620

1,030480260

900860

820950


(Percent)

Em-ployed

79

79828274

8286737739

64808392

8274

807684

7980

8476

Unem-ployed

9

11975

108934

18773

99

8127

99

711

Not inLaborForce

12

108

1121

86

182058

171210

5

917

12129

1211

1013

LessThan

80

34

28373647

2936416432

40392725

3238

353334

3236

3434



80-94

11

10111314

101219124

178

1312

1210

129

14

1310

1012

95-104

17

15191721

1519211026

10151627

1815

171519

1915

1915

105-119

13

1511139

1315978

8131315

1411

121611

1313

1313

120or

More

25

3223229

3318117

30

24243121

2426

252623

2326

2326




Characteristics

All Workers


Age18-3435-4445-5455-5960 or more


SexMaleFemale





NumberDisplaced

(Thou-sands)

1,860

890260350350

1,010460220

8080

350840410260

1,190670

960660250

950910

870990


(Percent)

Em-ployed

76

76788070

7880717133

67738384

7970

777278

7478

8072

Unem-ployed

14

16151111

1413121317

211678

1511

111811

1611

918

Not inLaborForce

11

879

19

77

171650

1211107

619

111011

1011

1110

Budget Office tabulations of data from the January

LessThan

80

36

30314546

3238454

56

44373231

3637

343935

3834

3339



80-94

13

13111513

1313111715

1713138

1214

131412

1214

1115

95-104

14

139

1122

1019141919

8131619

1412

141311

1413

1612

105-119

13

1423114

1514805

8131615

1118

141114

1215

179

120or

More

24

30261814

29162223

5

22242327

2718

242328

2424

2325

1988 Current Population Survey.



Characteristics

All Workers


Age18-3435-4445-5455-5960 or more

Schooling CompletedLess than 12 years12 years13-1 5 years1 6 or more years

SexMaleFemale




NumberDisplaced

(Thou-sands)

1,650

860280240250

9204001808060

270740370270

1,010640

950470230

760840

780830


(Percent)

Em-ployed

83

83888774

8786837332

70819192

8581

838483

8286

8880

Unem-ployed

7

7659

7786

11

11944

85

768

85

310

Not inLaborForce

10

978

17

779

2157

2010

55

714

1099

99

910

LessThan

80

28

26233341

2628363462

31313017

2633

263034

2928

2433



80-94

11

8111615

9151390

119

169

1210

137

10

1211

1211

95-104

14

11151423

1113193117

14121024

1511

141316

1314

1711

105-119

15

15171411

1613111810

17131712

1415

121819

1613

1614

120or

More

32

40342410

373122

811

27352738

3431

353321

3034

3232




Characteristics

All Workers

Job TenureLess than 3 years3-4 years5-9 years1 0 or more years

Age18-3435-4445-5455-5960 or more


SexMaleFemale




NumberDisplaced

(Thou-sands)

1,460

710220240260

7203802207070

270620310250

860590

840410210

670720

720690


(Percent)

Em-ployed

78

80848164

8182796630

66758588

8272

787780

7681

8274

Unem-ployed

10

1077

13

10101166

151156

910

1097

128

712

Not inLaborForce

13

109

1223

989

2863

1914106

918

121313

1211

1113

SOURCE: Congressional Budget Office tabulations of data from the January

LessThan

80

29

25243936

2630361941

26322529

2732

302334

2928

3126


Percentage of Old Earninqs

80-94

14

13179

23

1612131922

20151212

1316

121916

1613

1415

95-104

17

17161419

141727300

11151923

1815

191317

1717

1816

105-119

14

15151113

1612119

20

16141610

1513

141610

1711

1315

120or

More

26

3028279

2828142317

27242926

2724

253024

2131

2528




Characteristics

All Workers


Age18-3435-4445-5455-5960 or more


SexMaleFemale




NumberDisplaced

(Thou-sands)

2,030

1,020340290370

1,01052031012070

370770500390

1,220810

1,100650280

1,030970

9701,050


(Percent)

Em-ployed

77

75828371

7984716730

61768188

7875

787479

7679

8470

Unem-ployed

11

13116

12

11101515

5

181287

147

101313

139

616

Not inLaborForce

12

127

1117

97

141865

2212105

917

13137

1113

1014

SOURCE: Congressional Budget Office tabulations of data from the January

LessThan

80

31

29233149

2734413655

40323521

3132

303627

3330

2934



80-94

12

121888

1014141610

9121214

1212

121311

1311

1013

95-104

15

13221611

1317161912

8151422

1810

131719

1416

1812

105-119

16

19101612

1813156

24

10171715

1419

191213

1318

1813

120or

More

26

27273019

322315240

32252329

2527

272230

2725

2528




Characteristics

All Workers


Age18-3435-4445-5455-5960 or more

Schooling CompletedLess than 1 2 years12 years13-1 5 years1 6 or more years

SexMaleFemale




NumberDisplaced

(Thou-sands)

2,230

1,140360370350

1,09060035012070

370880630360

1,360880

1,020870350

1,0201,160

1,0301,180


(Percent)

Em-ployed

67

66687566

6973645634

48667184

6964

726071

6371

7561

Unem-ployed

20

22201517

2019261614

31221710

2217

162520

2516

1624

Not inLaborForce

13

12121017

119

112853

2112125

819

12159

1213

915

LessThan

80

33

29234149

2936354542

29344023

3136

303734

3631

3234



80-94

12

13151110

1212111517

11131311

1312

111216

1014

1312

95-104

19

18162025

1720232828

23171724

2215

211818

2118

1919

105-119

17

17281510

191618116

13171820

1619

211710

1618

1916

120or

More

18

2319127

231513

17

24201121

1718

181623

1620

1718


US GOVERNMENT PRINTING OFFICE : 1993 O - 346-151 QL 2

Displaced Workers: Trends in the 1980s and Implications ...

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