Mass layoff ... what? 

This article was published in the May 2007 South Dakota e-Labor Bulletin.

Mass Layoff Statistics. Sound kind of scary?  The word “mass” does have a negative connotation  – mass destruction, mass confusion, mass chaos, massacre. What about the word “layoff?" The mere mention of the word is sometimes enough to send any worker into a panic, and why not? It could happen to anyone, anywhere, anyplace, anytime. Statistics. This isn’t necessarily as scary as it is boring, at least to most people. Although the mere thought of any of these words might make the average person cringe, when combined they represent an important program used by various government officials, as well as private companies, to help people.   

The data produced by the Mass Layoff Statistics (MLS) program is used for sub-state allocations of federal funds for dislocated workers through the Economic Development and Worker Adjustment Assistance Act. Analyzing ailing industries or geographic areas, identifying the causes and scope of worker dislocation, and tabulating dislocated worker characteristics are just a few of the uses for this data. Designed by the Bureau of Labor Statistics to track the closing, downsizing and outsourcing of companies in the United States, the Mass Layoff Statistics program is also an important tool for monitoring the well-being of our economy.

The MLS program is a nationwide program used to identify, describe and track the effects of major job cutbacks in the United States by using data from each state’s unemployment insurance database. The MLS program is a cooperative program between the U.S. Bureau of Labor Statistics and state agencies. It has been in operation since 1995. The Labor Market Information Center of the South Dakota Department of Labor is the administrator of the MLS program in South Dakota.

The MLS program uses establishment information from the Quarterly Census of Employment and Wages (QCEW) in conjunction with unemployment insurance claims data to detect possible layoff events, which are called MLS events. Establishments are identified according to industry classification and location, and unemployment insurance claimants are identified by such demographic characteristics as age, race, sex, ethnic group and place of residence.

A potential MLS event is triggered in the computer system used for the MLS program when an establishment has at least 50 initial claims for unemployment insurance benefits filed against it during a consecutive five-week period. An initial claim occurs when an unemployed person initiates a request for either determination of entitlement to or eligibility for unemployment insurance (UI) compensation. After an event is triggered, the employer is contacted by the state agency to determine whether those separations lasted 31 days or longer. If the event did exceed 31 days, information is obtained on the reason for the layoff, total number of persons separated, worksite status, pre-layoff employment, recall expectations and movement of work. 

The movement of work questions are one of the latest additions to the MLS program.

These questions are used to aid in the collection of additional information on outsourcing and offshoring through the employer interviews. Outsourcing is the movement of work formerly conducted in-house by employees paid directly by a company to a different company. The different company can be located inside or outside of the United States. The work can occur at a different geographic location or remain onsite. Offshoring is the movement of work from within the United States to locations outside of the United States. “Offshoring” can occur within the same company and involve movement of work to a different location of that company outside of the United States, or to a different company altogether (offshoring/outsourcing). Instead of referring to the data collected as outsourcing and offshoring since those terms may be open to interpretation, BLS decided to define these economic actions in terms of “movement of work.”    

The movement of work data was first collected in January 2004. In order to collect this data accurately, BLS has come up with two basic questions for the interviewer to ask the employer during the phone interview. One pertains to movement of work within the company and the other pertains to movement of work to another company under contractual arrangements:

1. “Did this layoff include your company moving work from this location(s) to a different geographic location(s) within your company?”

2. “Did this layoff include your company moving work that was performed in-house by your employees to a different company, through contractual arrangements?”

If an employer responded “yes” to either of those basic questions, then the respondent is asked to indicate the specific geographic area to which work was moved and the number of separated workers associated with that action.

Although the MLS program is an important tool for tracking outsourcing and offshoring, it is important to realize there are components of these two instances beyond the scope of the MLS program. The MLS program does not collect statistics on small establishments (those employing fewer than 50 workers). In those establishments employing 50 or more, MLS does not collect data on layoffs of fewer than 50 people in a five-week period. Also, MLS does not collect information when there is not direct job loss (where employers initiate of transfer work elsewhere without laying off workers).

Both monthly and quarterly data reports are available on the BLS website (http://www.bls.gov/mls/home.htm) for all 50 states, the District of Columbia and Puerto Rico. The monthly releases are available back to September 1996, but there is MLS data available beginning in April 1995. The monthly data released by BLS contains information on the number of establishments and workers the layoffs affected in demographic and industry detail. Quarterly releases date back to second quarter 1996. These reports include data on private sector nonfarm establishments and contain information on the total number of persons separated, reasons for separation, worksite closures, recall expectations,and socioeconomic characteristics on UI claimants, such as gender, age, race and residency. In addition to the monthly releases available on the BLS website, data seekers are also able to use queries to extract precise data for their specific needs.

The following tables represent just a few examples of the types of MLS data available on the BLS website. Because South Dakota is a small state in which the majority of businesses employ less than 50 people, there is little data available due to confidentiality reasons. However, there is a good collection of data for the nation and the Midwest region.

Table 1 represents the total number of layoff events for all industries and the total initial claimants for the United States, the Midwest region and South Dakota.

Table 2 represents the number of layoffs for South Dakota and its surrounding states in the manufacturing industry. The N/D represents data not releasable due to confidentiality reasons. There must be three or more layoffs in order for data to be released by the Bureau of Labor Statistics.  

These are just a few examples of some of the data available from the MLS program.

For more information on the MLS program or to obtain data, visit the Bureau of Labor Statistics website at http://www.bls.gov/mls/home.htm or contact Mandy Worth at the South Dakota Department of Labor, Labor Market Information Center at Mandy.Worth@state.sd.us.

If you have questions or need more information, contact Mandy Walberg of the Labor Market Information Center at (605) 626-2314 or e-mail her at mandy.walberg@state.sd.us.