Long-Tenured Displaced Workers

Long-Tenured Displaced Workers

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Updated September 19, 2018
Long-Tenured Displaced Workers
Job separations are a part of most workers’ careers. Some
Figure 1. Number and Re-employment Rates of Long-
workers leave jobs to pursue other opportunities; others are
Tenured Displaced Workers
fired for poor performance or because they are otherwise
not a good fit. In some cases, workers experience job
displacement (i.e., involuntary job separations that occur
when businesses shut down, move, or cut back shifts). Job
displacement is of particular interest to policymakers
because the separations tend to be caused by worsening
economic conditions or changing production patterns (as
opposed to worker performance), and can permanently alter
local job prospects. Costs of such job loss can be

particularly high for long-tenured workers, whose
Source: BLS Worker Displacement, news release, various years.
investments in job-specific skills do not transfer completely
Notes: Displacement is measured over a three-year period (i.e.,
to, and do not result in higher wages in, new jobs.
workers are classified as displaced if they indicate that they were
displaced from a job at some point over the three years preceding
The Bureau of Labor Statistics (BLS) defines long-tenured
the survey interview). Re-employment is assessed in the January that
displaced workers as workers age 20 or older who held
follows the end of the period (e.g., re-employment for workers
their job for at least three years before separating due to the
displaced over the 2005-2007 period is assessed in January 2008).
closure or relocation of a company or worksite, insufficient
Despite finding replacement employment, displacement had
work, or the elimination of a position or shift. BLS reports
lasting financial effects for substantial shares of workers. In
that in the three-year interval from 2015 to 2017, 3 million
each period shown in Figure 1, more than 34% of workers
long-tenured workers and 3.8 million short-tenured (less
displaced from full-time jobs and re-employed in full-time
than three years of tenure) workers were displaced. While
jobs reported lower earnings in their new jobs. This occurs
these losses were significant, most job loss is not a result of
when workers are re-employed at lower work hours, lower
displacement. Using broader estimates of job loss, BLS
wage rates, or both. Earnings losses were particularly large
estimates that there were 57.8 million layoffs or discharges
for some workers; more than 21% of all workers displaced
over the same period. (Different from long-tenured
from and re-employed in full-time jobs reported earnings
displaced workers, layoffs and discharges include workers
losses of 20% or more.
fired for cause and workers with fewer than three years of
job tenure, and are not limited to one observation per
Worker Characteristics
worker). An additional 113.2 million workers willingly left
Men were somewhat disproportionately displaced from
their jobs (e.g., quit, retired), illustrating that job
their jobs, particularly around the Great Recession. For
separations are frequent and largely voluntary.
example, men made up 53.4% of employed workers over
Displacement and Re-employment
2007-2009, and 60.3% of displaced workers over that same
period. More recently, men made up 53.3% of employed
Figure 1 shows the number of long-tenured workers who
workers and 56.4% of displaced workers over 2015-2017.
were displaced from their jobs at some point over a three-
This trend is driven in part by high representation of men in
year period and the re-employment rates of those groups of
manufacturing, an industry that accounted for large but
workers. Re-employment rates of displaced workers moved
declining shares of displacement over 2005-2017.
in an inverse pattern to job loss (i.e., re-employment rates
declined when displacement rose, and vice versa).
Figure 2. Labor Force Status after Displacement
Clearly, workers experience job displacement throughout
(Percentage of long-tenured displaced workers)
the business cycle (i.e., not just during recession), as
illustrated by the several million displaced workers over the
2005-2007 period and other periods of expansion.
However, the more than 3 million worker increase between
the 2005-2007 period and 2007-2009 period illustrates the
impact of recession (in this case, the Great Recession of
2007-2009) on displacement. The elevated numbers
through 2013 suggest the effect of the Great Recession
lasted into the recovery, at least for seasoned workers.
Displacement subsided after that—by 2015-2017, there

Source: BLS Worker Displacement, news release, various years.
were fewer long-tenured displaced workers than during the
Notes: Post-displacement labor force status is assessed in the
previous expansion (2005-2007).
January that follows the end of the period; see Figure 1 notes.
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Long-Tenured Displaced Workers
Figure 3. Labor Force Status after Displacement (Percentage of Long-Tenured Displaced Workers)

Source: BLS, Worker Displacement, news release, various years.
Notes: See Figure 2 Notes. Hispanic workers may be of any race.
Despite a higher number of separations, displaced men
Generally, displaced workers—as defined by BLS—are not
were more successful at regaining employment than
provided targeted relief under current policies. However,
displaced women in each period (Figure 2). For some
some programs provide targeted support to certain job
periods, men were also more likely than women to be
losers. The Workforce Innovation and Opportunity Act
unemployed. These instances of higher re-employment and
authorizes Dislocated Worker Activities Grants, for
higher unemployment shares are reconciled by a greater
example, that fund state-provided job training and career
tendency for displaced women to exit the labor force (i.e.,
services to laid-off workers and those facing layoff. To
stop looking for work). For each period, about 20% of
qualify for certain services, a worker must lose his or her
displaced women were out of the labor force when
job due to worksite closure or a “substantial layoff” and
surveyed 0-3 years after job loss; for men, the rate ranged
meet other requirements. (For more information, see CRS
from 11.2% (January 2008) to 17.8% (January 2018).
Report R44252, The Workforce Innovation and Opportunity
Act and the One-Stop Delivery System, by David H.
White, black, Asian, and Hispanic workers’ shares of
Bradley.) Trade Adjustment Assistance (TAA) offers career
displacement were more or less proportionate to their shares
services, training benefits, a health care tax credit, and
of employment in each period. Figure 3 shows that until
extended unemployment insurance to qualifying workers
the 2015-2017 period, white and Hispanic displaced
displaced by international trade; older workers may qualify
workers had higher re-employment rates than their black
for wage insurance under TAA. (For more information, see
and Asian counterparts. Group differences in re-
CRS In Focus IF10570, Trade Adjustment Assistance for
employment rates narrowed by 2015-2017; when evaluated
Workers (TAA), by Benjamin Collins.)
in January 2018, the re-employment rate was 65.3% for
white workers, 65.9% for black workers, and 68.6% and
Some observers have argued that the government should
69.9% for Hispanic and Asian workers, respectively.
provide more expansive wage insurance to all displaced
Analysis of BLS data reveals higher displacement rates and
workers. Wage insurance protects workers against risks that
lower re-employment rates among less-educated workers;
their income would fall by providing compensation when a
see Henry S. Farber, Job Loss in the Great Recession and
new job pays less than their old job. (Wage insurance can
its Aftermath: U.S. Evidence from the Displaced Workers
be contrasted to unemployment insurance, which provides
Survey, National Bureau of Economic Research, 2015.
temporary income to qualified workers without a job.)
Private wage insurance is generally unavailable because of
Policy Considerations
adverse selection problems (i.e., it would be most desirable
Policymakers debate whether displaced workers (long-term
to workers most at risk of job loss, pushing up premiums)
or short-term) merit any special government assistance or
that the government could potentially neutralize by making
whether they should be treated the same as all unemployed
such insurance mandatory. Wage insurance could also
workers. On the one hand, job loss is detrimental to all
cause moral-hazard problems (e.g., insured workers might
workers, whether it is due to displacement or for other
behave in a way that increases the risk of job loss, because
reasons. On the other hand, displaced workers might find
wage insurance reduces job separation costs) unless it is
re-employment more difficult than other job losers. Job loss
limited to causes of job loss beyond the worker’s control.
due to the closure of a worksite or reduced shifts, for
The premiums required to finance federal wage insurance
example, may indicate depressed local economic
might also be deemed unaffordable, whether borne by the
conditions, and a general lack of work. It could also
recipient, the government, or both.
indicate production shifts away from the specific skills held
Sarah A. Donovan, Specialist in Labor Policy
by displaced workers (e.g., a shift from production to
Marc Labonte, Specialist in Macroeconomic Policy
service jobs). Further, displacement that results from
company closure may flood local labor markets with job
IF10984
seekers, making re-employment or finding comparable pay
more challenging.
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Long-Tenured Displaced Workers

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https://crsreports.congress.gov | IF10984 · VERSION 3 · NEW