Economic Report President

JOB DISPLACEMENTWorkers are considered displaced if they leave their jobs involuntarily,because of a plant closing, insufficient or slack work, abolition oftheir position or shift, or some other, similar reason. Since 1984 theBureau of Labor Statistics (BLS) has conducted a biennial, nationallyrepresentative survey of workers who have been displaced from theirjobs sometime in the 3 years prior to the survey (in the early years ofthe survey the period was 5 years). Data from the 1996 survey showedjob displacement to be unusually high given the overall strength of theeconomy. Extrapolation of the survey’s findings indicated that about 15percent of the work force had been displaced at some time between1993 and 1995. This figure was up from 12.8 percent in 1991-93,despite a drop in the overall unemployment rate from 7.5 percent in1992 to 6.1 percent in 1994 (Chart 3-12). This rise in job displacementled some analysts to argue that the employer-employee relationshiphad changed and that displacement was on a rising trend.Chart 3-12 Job Displacement RateThe displacement rate fell to 12 percent for the 1995-97 period, but it is still a thirdhigher than in 1987-89, when unemployment was about the same.Percent108Unemployment rate(left scale)Displacement rate(right scale)Percent1561045201981-1983 1983-1985 1985-1987 1987-1989 1989-1991 1991-1993 1993-1995 1995-1997Sources: Henry S. Farber, "Education and Job Loss in the United States: 1981-1997," PrincetonUniversity, 1998, and Department of Labor (Bureau of Labor Statistics).Results from the 1998 survey, however, suggest that this interpretationmay have been premature: that survey showed a substantialdecline in job displacement, to 12.0 percent for the 1995-97 period. Allmajor groups of workers experienced improvements: men and women,younger and older workers, high school dropouts and college-educatedworkers, and workers in manufacturing as well as those in professionalservices. Nevertheless, the rate of job displacement in 1995-97 was still0122