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Layoffs Continue to Impact the Economy

POSTED: August 29, 2008, 12:00 am

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On the heels of data that showed the nation’s unemployment rate at 5.7 percent in July, a four year high, comes data from the U.S. Bureau of Labor Statistics (BLS) indicating that employers are continuing to downsize their workforces in the face of the slumping economy.

Last month there were 1,512 mass layoff actions, each action accounting for at least 50 workers from a single employer. In real numbers those actions represent 151,171 workers. The July numbers were an actual improvement over June, with 131 fewer layoff actions and 14,526 fewer individual claims. Still, the July figures point to an economy that is still unsettled with no real recovery in sight.

The manufacturing sector continued to be the hardest hit, with 443 layoff actions and 57,470 initial individual claims. Still, those numbers are a slight improvement over the previous month. The sector accounted for 40 percent of all mass layoffs and 54 percent of all individual claims in July. The highest number of claims in the sector was in transportation equipment manufacturing and fabricated metal products manufacturing.

Next in line generating the greatest number of layoff actions and initial claims was administrative and waste services, with most of the loss in temporary help services. In fact, temporary help services was the industry with the highest number of initial claims with 14,068, followed by light truck and utility vehicle manufacturing with 8,825. The latter two industries have been particularly affected by the economic slowdown. As companies have cutback the delivery of services, there has been less of a need to hire temporary workers who are often hired to fill the gaps when there is work that regular employees cannot complete in a timely fashion. In the current economic climate, many companies have cut back employee hours and products and services. The same can be said for the impact on the automotive industry as high gas prices has consumers surrendering trucks and SUVs that are not fuel efficient. Detroit has been hit hard as automobile manufacturers have had to cope with high oil prices and foreign competition.

The impact of mass layoffs has been felt to different degrees regionally. The Midwest bore the greatest brunt of layoffs, with 84,535 initial claims and was followed by the South with 48,440 claims. The West had 41,901 initial claims and the Northeast was least impacted, with 25,506 claims.

Among states California led the way with 33,250 claims, reportedly due to layoffs in administrative and support services and in educational services. The states with the next highest number of initial layoff claims in July were Michigan (27,672), Ohio (19,402) and Kentucky (11,907).

BLS mass layoff figures for August are set to be released on Tuesday, September 23.

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