Volume 4, No.1
Spring 1998

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HOW LAID OFF WORKERS FARED IN THEIR
REEMPLOYMENT EFFORTS
By: Rich Reinhold

In each issue of the Illinois Labor Market Review, we publish quarterly totals of layoffs by industry, including the number of workers separated, as reported by the Illinois Mass Layoff Statistics (MLS) unit. What we don't describe, however, is the economic impact layoffs have on workers. For example, what percentage of displaced workers find new jobs and how soon? To what extent are those who find new employment able to earn as much as they did in their previous jobs? What follows is an attempt to answer these questions using administrative data obtained through Illinois quarterly Unemployment Insurance (Ul) tax reports and weekly claims for Ul benefits.

For our analysis we selected 2,786 workers who were displaced due to plant closures during the third quarter of 1996 (as reported by Illinois MLS) and filed for Ul benefits (see the table below). The social security numbers (SSNs) included on Ul claims records for this group of workers were matched against SSNs on employer UI administrative records to obtain their quarterly wages during the period of 1st quarter 1996 through 3rd quarter 1997. Our primary objective was to compare the employment status and wages for the displaced workers before and one year after the closures (i.e. before 3rd quarter 1996 and during 3rd quarter 1997).

The 2,786 workers were employed across a range of major industries including: Mining, Manufacturing, Transportation-Communications-Public Utilities (TCPU), Wholesale Trade, Retail Trade, Finance Insurance-Real Estate (FIRE), and Services. The largest percentage of displaced workers (31 percent) was formerly employed in Manufacturing.

Receipt of Unemployment Compensation

As stated earlier, all of the workers included in the analysis filed for Unemployment Insurance (Ul) benefits. Among the 2,786 claimants, 75 percent claimed at least three months of Ul benefits and about half exhausted their Ul benefits after six months. At 66 percent, mining and TCPU tied for the greatest percentage of displaced workers exhausting Ul benefits.

Reemployment Replacement of Former Earnings

Of the entire group of displaced workers, more than two-thirds were employed one year after being laid off. Employment, in this instance, is defined as having wages greater than zero reported by their new employers during 3rd quarter 1997. (see the table below)

Just under a third of the displaced workers found jobs that paid less than half of their previous earnings while 28 percent met or exceeded their previous earnings. On average, workers who were reemployed during 3rd quarter 1997 were able to replace 73 percent of their previous quarterly earnings. Previous quarterly earnings are defined as the average earnings during Ist and 2nd quarter 1996. The two-quarter average was used to minimize seasonal influences on earnings and special compensation, such as severance payments. For the sake of comparison, the pre-layoff average earnings include only those workers who were employed during 1st and 2nd quarter 1996 and 3rd quarter 1997.

The workers with the highest reemployment rates were formerly employed in Wholesale Trade (76 percent), FIRE (74 percent), and Services (72 percent). At 98, 84, and 77 percent respectively, these workers also averaged the highest quarterly earnings replacement rates (see the table below).

Workers formerly employed in Mining and Retail Trade had the lowest reemployment rates (50 and 51 percent, respectively). However, former Retail Trade workers, on average, saw 90 percent of their earnings replaced, while workers displaced from the Mining industry experienced an average earnings replacement percentage of only 52 percent.

Illinois Workers aged 30 and under had both the highest reemployment rate and earnings replacement rate

REEMPLOYED ILLINOIS WORKERS IN TRADE CAME CLOSEST TO MATCHING THEIR PRE-LAYOFF EARNINGS

	1st-2nd Qtr 1996 #Employed	3rd Qtr 1997 #Employed	% Reemployed	1st-2nd Qtr 1997 Average earnings	3rd Qtr 1997 Average earnings	% of Pre-layoff earnings replaced
INDUSTRY
MINING	431	217	50%	$11,162	$5,800	52%
MANUFACTURING	870	610	70%	$7,574	$4,959	65%
TCPU*	130	87	67%	$5,988	$4,449	74%
WHOLESALE TRADE	421	322	76%	$6,833	$6,695	98%
RETAIL TRADE	93	47	51%	$2,020	$1,813	90%
FIRE**	229	169	74%	$7,290	$6,154	84%
SERVICES	612	443	72%	$5,947	$4,564	77%
ALL WORKERS	2,786	1,895	68%	$7,243	$5,263	73%

* Transportation-Communications-Public Utilities
** Finance-Insurance-Real Estate

Multiple Job Holding Higher than Average

It should be pointed out that many of the workers held multiple jobs during the four quarters following the layoffs. Among the entire group, an average of 10 percent held more than one job during 1st and 2nd quarter 1996, while during 3rd quarter 1997, 22 percent of those reemployed held at least two jobs. The industry distribution of multiple job holding percentages during 3rd quarter 1997 ranged from 19 percent in TCPU and 31 percent in Retail Trade. By comparison, according to the Bureau of Labor Statistics, only 5.7 percent of Illinois residents employed in 1996 held more than one job simultaneously.

Demographic Characteristics of Displaced Workers

The reemployment and earnings replacement percentages for men and women were nearly identical and essentially mirrored the behavior of the entire group of displaced workers. However, women (on average) earned just under 75 percent of men's quarterly earnings both before and after being laid off (see the table below).

Illinois Workers aged 30 and under had both the highest reemployment rate and earnings replacement rate

REEMPLOYMENT AND EARNINGS REPLACEMENT PERCENTAGES BY SELECTED DEMOGRAPHIC CHARACTERISTICS

	1st-2nd Qtr 1996 #Employed	3rd Qtr 1997 #Employed	% Reemployed	1st-2nd Qtr 1997 Average earnings	3rd Qtr 1997 Average earnings	% of Pre-layoff earnings replaced
TOTALS	2,786	1,895	68%	$7,243	$5,263	73%
GENDER
Men	1,610	1,087	68%	$8,191	$5,949	73%
Women	1,176	808	69%	$5,967	$4,340	73%
RACE
White	1,892	1,278	68%	$8,069	5,669	70%
Black	503	345	69%	$5,079	$3,847	76%
Hispanic	263	172	65%	$5,636	$4,408	78%
Data not available	128	100	78%	$6,915	$6,441	93%
AGE GROUP
Age 30 or under	447	326	73%	$5,054	$4,022	80%
31-44 years old	1,260	887	70%	$7,436	$5,387	72%
45-54 years old	702	480	68%	$8,453	$6,282	74%
Age 55+	377	202	54%	$7,051	$4,301	61%

Blacks and Hispanics were able to find employment and replace previous earnings at rates similar to or greater than those for White displaced workers. On the other hand, Black and Hispanic workers had relatively low pre-layoff earnings as compared with Whites and thus were more likely to replace their previous earnings at higher percentages.

The youngest displaced workers (30 years old and under) were able to find work and replace their previous earnings at rates higher than their older counterparts, although yournger workers earned less. Workers aged 55 and older fared the worst in terms of reemployment and earnings replacement, but some of them may have opted to retire instead of reentering the labor market.

Although unemployment rates in many parts of Illinois are at their lowest levels in more than two decades, the economic hardship resulting from workplace closures to workers and their communities is still very real. This article will hopefully serve to demonstrate the potential value of using state Ul wage records, in conjunction with Mass Layoffs Statistics data, for measuring the economic impact of worker displacement and targeting resources for reemployment assistance.

Caveats for Readers

• Individuals counted as employed before or after the layoffs must have earned wages from an Illinois employer and been covered by Ul. Examples of excluded individuals include the self-employed, retirees, out of state residents no longer employed in Illinois, and persons who worked for employers who didn't report wages covered by UI.
• Only workers who filed for Ul benefits were included in the study. There were a total of 4,728 workers separated in the 21 plant closures examined but only 59 percent actually filed for Ul benefits. The 41 percent who were separated but didn't file for UI benefits may have been ineligible for UI, found new employment shortly after being displaced, or filed for Ul outside of Illinois as an interstate claimant.
• This analysis is just a "snapshot" of the economic behavior for a select group of displaced workers. The reemployment and average wage replacement rates of the displaced workers in this study should not be interpreted as representative of all displaced workers or even of all workers displaced from the industries and demographic groups reported.
• The quarterly earnings replacement percentages described for industry and demographic groups are averages. This means that some of the workers may have been reemployed during 3rd quarter 1997 at wages higher than the average for their group, while others may have found jobs that paid lower than average for their respective group.