Economic Snapshot | Health

Mass layoffs at highest level since at least 1995

Economic Snapshot for July 1, 2009

Mass layoffs at highest level since at least 1995

by Anna Turner and John Irons

Mass layoffs — job cuts of 50 or more people by a single employer — are at their highest since continuous tracking began in April 1995, according to recently released data from the U.S. Department of Labor. In May there were 2,933 mass layoffs, representing 312,880 of the jobs lost that month. The chart below shows how the number of these mass layoff events has been dramatically rising since the start of the recession.


Plant closings and mass layoffs usually mean a decline in the standard of living, limited future prospects, and significant psychological effects, such as low self-esteem and depression. Studies of mass layoffs find that job displacement raises mortality rates by as much as 15 to 20%, lowers consumption, and significantly decreases later earnings in the long-run.1

Besides the hardship of job loss on individual workers, mass layoffs affect the health of the community, especially those which depend on a single firm to employ a substantial portion of a local population. The closing of a plant or several mass layoffs in the same area also erode the community’s tax base, resulting in a ripple effect, such as decreased funding for schools or falling property values.2

It is clear that employers are still cutting jobs at record levels, and that the potential long-term effects of concentrated worker displacement could have a lasting impact on communities.


1. Sullivan, D. and T. V. Wachter. 2007. Mortality, Mass-Layoffs, and Career Outcomes: An Analysis Using Administrative Data. Cambridge, National Bureau of Economic Research.

2. 1990. Legislative History of S. 2527. One Hundred First Congress Second Session. Washington, D.C., U.S. Government Printing Office: 721-724.

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