Where Are The Jobless?
March 12, 2001
Large companies have been announcing massive layoffs. But the dismissed workers aren't showing up in the jobless statistics. What's going on here?
- In the fourth quarter alone there were 1,905 mass layoffs -- each of which consisted of at least 50 jobs -- for a total loss of 374,320 jobs, according to the Labor Department.
- But there has been no surge in claims for unemployment benefits and Friday's jobs report showed 135,000 new jobs created in February.
Financial analysts make the point that Wall Street investors like to see companies in which they have a stake announce cuts. It shows they are watching their costs -- and in that sense it can be a public relations tool.
But other factors must be at play which are masking the layoffs. Here are some possibilities:
- Labor experts say many companies are stretching out the job-cutting process over years so they can halt it quickly and retain valuable employees when the economy turns around.
- Laid-off employees often become consultants to their former companies.
- Some who are given pink slips were nearing retirement anyway.
- Finally, since the labor market remains relatively tight, workers relocate to new companies in a short time.
In fact, the median duration of unemployment in February was only six weeks. That compares with 9.3 weeks during the recession in 1992.
Source: Donald H. Gold, "If Firms Keep Laying People Off, Why Aren't Jobs Data Showing It?" Investor's Business Daily, March 12, 2001.
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