Wage Reductions for Laid-Off Workers
One thing we don’t know about the current round of manufacturing job losses is what is happening to laid-off workers – though employment rates are slipping for older male workers in Ontario and Quebec, and even a supposedly “tight” job market is generating little if any real wage growth for most workers. This suggests that many affected by layoffs are not finding new jobs at comparable wages
This study released by Stats Can today suggests there were big wage reductions in new jobs found by laid off workers in the 1990s
Study: Earnings losses of displaced workers
1988Â toÂ 1997
High-seniority employees who lost their job during theÂ 1990s as a result of firm closures and mass layoffs suffered substantial losses in earnings, even five years after they were displaced, according to a new study.
The study found that, five years after being displaced, workers who lost their job through firm closures and mass layoffs experienced average earnings losses that represented at leastÂ 9% of their pre-displacement earnings. Losses incurred by workers with substantial seniority were more pronounced.
Five years after they lost a job, male workers who had at least five years of seniority and found another job experienced losses that represented betweenÂ 18% andÂ 28% of the earnings they received before their job loss.
For their female counterparts, the losses ranged betweenÂ 24% andÂ 26% of their pre-displacement earnings.
InÂ 2000Â dollars, the average loss in earnings for high-seniority males five years after losing their job varied betweenÂ $7,100Â andÂ $10,900. The corresponding range for women was betweenÂ $5,500Â andÂ $6,100.
The study examined the earnings trajectories of workers who lost their job in the private sector betweenÂ 1988Â andÂ 1997Â as a result of firm closures or mass layoffs, and who were agedÂ 25Â toÂ 49Â at the time.
In any given period, regular economic activity leads to resource reallocation resulting from technological changes, changes in trade patterns and consumer preferences, and numerous other factors.