Profile of Displaced Workers

There’s an interesting new research report from Statistics Canada, by Ping Ching Winnie Chan, Rene Morissette, and Marc Frenette, profiling the workers who were displaced in the recent recession, and comparing the outcomes to previous recessions in earlier decades (the downturns of the early 1980s and 1990s).  “Workers Laid Off During the Last Three Recessions,” part of StatsCan’s Analytical Studies series.

I haven’t been through the report in detail and can’t comment on the methodology, but here are some of the interesting (and often surprising) findings:

* The risk of being laid-off in the past recession was 2%, somewhat lower than in the 1980s (2.9%) or 1990s (2.7%) recessions. I wonder if the data is missing some of the new ways that disemployment occurs — like simply not having your contract renewed?

* Curiously, laid-off workers in this recession were older, better-educated, and less likely to have been employed in manufacturing than in previous recessions.  Maybe that’s in part because so much of the reduction in manufacturing employment in Canada in this cycle occurred before the onset of the “official” recession in the fall of 2008.  By then, most of the lost manufacturing jobs had already disappeared (in a downturn that dates back to 2004).

* Half of laid-off workers in this recession found another job within 4 months of lay-off — somewhat higher than the 42% average re-employment success in earlier recessions.  This reflects the fast (but partial and ultimately stalled) rebound in employment that typified this downturn.

* The average wage for those who found new work declined by about 5% (from $734 per week to $703).  But for one-quarter of those who found new work, the wage fell by 23% or more.  By the same token, some re-employed workers saw their wages increase.

* Those who experienced the biggest wage drops in their new job, not surprisingly, are former union members, those who used to work for large firms (over 100 employees) and ended up in smaller firms, and those who had to change both their industry and their occupation to attain a new job.

* Of course, the drop in incomes was all the worse for the large proportion of laid-off workers who did not find new work.

Clearly we’re not out of this crisis yet, and the data in this report indicate that hundreds of thousands of Canadians are still suffering badly from the 2008-09 recession.  That will make the next downturn all the more painful.

4 comments

  • This is something I’ve always wondered:
    Why do big businesses always seem to have more money per capita than small businesses? This seems to be true from top to bottom–small businesses can’t afford to spend as much on equipment, software licenses, insurance, pay, or compensation for the ownership. Small businesses can’t afford all the topheavy bureaucratic structures big businesses can, and so on.

    I don’t think efficient-market-oriented theories can account for this at all. I don’t think all the industries involved have that huge of returns to scale, and even if they did, theoretically competition would take those returns away from them. Off the top of my head I’d tell a story about barriers to entry and non-competitive advantages created by branding, marketing and so forth due to consumers’ poor information, but is there any research about it?

  • Working class incomes shrunk but what about corporate profits for the same time frame? I’m willing to bet they rose steadily.

  • Some initial remarks on this paper.

    1) I agree with Jim, the periods used to measure the current recession may have missed a substantive component of actual change. I am inclined to conclude there is a proportion of bias that was needlessly introduced.

    2) One of the main conclusions states that manufacturing was less pronounced as a source of layoff than the previous two periods. Again, a good chunk of bias enters into study due to the fact that the industrial classification changes used in quantifying manufacturing related activities are not static over these periods. A good chunk of manufacturing from the 80’s and 90’s cross section has disappeared due to changes in the value chain and the boundaries of the firm. That is fluidity in the production process is for the most part static and maintained, however the form of organization of business entities is dynamic over the period. Essentially a lot of the value adding to manufacturing has been hived off into industries that are no longer classified as manufacturing, but in reality this change is but an artifact of legal operation structural changes that have been a major part of corporate strategy over the past 30 years.

    3) I do think some of the massive short to medium term layoffs in the auto sector were a lot more exceptional to the latest recession, and impacted the data during the period they used to measure, whereas we witnessed major downsizing during the last two recessions as defined in the study.

    Methods wise, I have one comment, the variability of income variable captured by the LFS makes me cringe a bit when people start using it in this fashion. As outlined in the LFS public releases, the income measure suffers from a high level of non-response.

    However if these researchers feel inclined to use
    the measure then so be it. Just using what is in the public realm.

    Paul

    Paul

  • I should clarify the second point- overall there is indeed a drop in manufacturing but my point – it becomes overstated due to the issue raised. So yes there is some change in manufacturing as denoted by the study, but to me it suffers from an over estimate due to the bias as detailed. To what extent- WHO KNOWS- it is difficult to assess, but I imagine some sort of study could be done, I am not aware of any. Hence my mantra over the last few years, manufacturing matters more than the statistics make it out to be.

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