NCPA - National Center for Policy Analysis

Fewer Layoffs Than Numbers Suggest

February 19, 2001

For a variety of reasons, fewer American workers are experiencing the pain of being laid off their jobs than the headline numbers would suggest. "When a company announces 5,000 layoffs," says Bureau of Labor Statistics economist Patrick Carey, "sometimes 5,000 people aren't being laid off."

Here are some examples of how the perception and the reality can differ:

  • More than half of the 7,000 job cuts announced at Sara Lee will actually occur in other countries.
  • Of the 26,000 layoffs that DaimlerChrysler announced last month, the 12,000 hourly Chrysler workers subject to layoffs in the U.S. will continue to receive 95 percent of their pay -- due to a clause in their union contract.
  • Although companies announced plans to eliminate about 140,000 jobs last month, American businesses managed to add a net total of more than 200,000 employees in January.
  • Experts say that companies which announce layoffs are often in the process of hiring at the same time.

Personnel experts say that when companies announce layoffs, much of the reduction comes in the form of attrition and early retirement. While the economy can be affected when positions are eliminated, those who are dismissed experience considerably less pain than the numbers would suggest.

Source: David Leonhardt, "Behind Layoffs, Reality Is Often Less Severe in U.S.," New York Times, February 19, 2001.

 

Browse more articles on Economic Issues