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_______________________________
Institute for Workplace Studies----------------- Professor Samuel B. Bacharach
School of Industrial & Labor Relations-------- Director, Institute for Workplace Studies
Cornell University
16 East 34th Street, 4th floor---------------------- Stuart Basefsky
New York, NY 10016 -------------------------------Director, IWS News Bureau
________________________________________________________________________

Congressional Research Service (CRS)

Unemployment Through Layoffs and Offshore Outsourcing

Linda Levine, Specialist in Labor Economics

December 22, 2010

http://opencrs.com/document/RL30799/2010-12-22/download/1005/

[full-text, 9 pages]

Summary

Unemployment can come about in a number of ways, but the form of unemployment that

policymakers have shown they are most concerned about involves workers who have

involuntarily lost jobs through no fault of their own. Unemployment through layoffs ebbs and

flows with the business cycle, but involuntary job loss is ever-present because firms displace

workers for reasons other than temporarily weak demand. Employers also layoff employees for

reasons specific to the firm or the industry in which the firm lies (e.g., corporate restructuring and

seasonality).

One means of restructuring work—namely, outsourcing—has spread from employers contracting

out functions to other affiliated or nonaffiliated employers in the United States, to employers

contracting out activities to affiliated or nonaffiliated employers located outside U.S. borders. The

latter business practice is referred to as offshore outsourcing or offshoring.

Until the eleventh postwar recession began in December 2007, offshoring had driven much of the

interest in job loss and economic insecurity more generally. Some members of the public policy

community have been suggesting that offshoring has contributed to the sluggish pace of job

growth thus far in the recovery period since the recession’s end in June 2009. But, no database

exists that provides anything approximating a complete count of workers separated from payrolls

because their company relocated their functions beyond U.S. borders.

Starting in 2004, the U.S. Bureau of Labor Statistics (BLS) Mass Layoff Statistics program began

to query firms in the private nonfarm sector that call long-lasting large-scale layoffs about

whether these events involve the offshoring of work. In addition to excluding layoffs at small

firms and in the public sector, the statistical series does not cover layoffs in which fewer than 50

employees are terminated. It thus is likely to understate layoffs associated with offshore

outsourcing generally and with those involving white-collar workers in the service sector

particularly (e.g., accounting clerks at financial services firms, radiologists at medical services

providers).

This report briefly reviews the various databases that provide information on layoffs. It then

examines the trend in mass layoff activity generally before focusing on quarterly outsourcing data

derived from the above-described BLS program on extended mass layoffs.

In brief, mass layoff activity is up markedly which reflects the lingering impact of the 2007-2009

recession on the labor market. With regard to outsourcing—particularly of work moving

offshore—the BLS series shows it is uncommon in extended mass layoffs and accounts for fairly

few separated workers. Relocation of work most often occurs within the United States and within

the same company. Most workers separated in extended mass layoffs involving domestic or

offshore outsourcing had been employed by manufacturers. In extended mass layoffs associated

with the movement of work offshore, jobs most often are shifted to Mexico and China.

Contents

Introduction ...............................................................................................................................1

Restructuring Work for Competitive Purposes .............................................................................1

Sources of Information on Layoffs ..............................................................................................2

Layoffs ................................................................................................................................3

Current Population Survey (CPS)....................................................................................3

Job Openings and Labor Turnover Survey (JOLTS).........................................................3

Mass Layoffs ........................................................................................................................3

Employer Announcements of Large Staff Cuts ................................................................3

Mass Layoff Statistics (MLS) Program............................................................................4

Tables

Table 1. Short- and Long-Term Mass Layoff Activity, Selected Years ..........................................5

Contacts

Author Contact Information ........................................................................................................6

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This information is provided to subscribers, friends, faculty, students and alumni of the School of Industrial & Labor Relations (ILR). It is a service of the Institute for Workplace Studies (IWS) in New York City. Stuart Basefsky is responsible for the selection of the contents which is intended to keep researchers, companies, workers, and governments aware of the latest information related to ILR disciplines as it becomes available for the purposes of research, understanding and debate. The content does not reflect the opinions or positions of Cornell University, the School of Industrial & Labor Relations, or that of Mr. Basefsky and should not be construed as such. The service is unique in that it provides the original source documentation, via links, behind the news and research of the day. Use of the information provided is unrestricted. However, it is requested that users acknowledge that the information was found via the IWS Documented News Service.

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Stuart Basefsky                   
Director, IWS News Bureau                
Institute for Workplace Studies 
Cornell/ILR School                        
16 E. 34th Street, 4th Floor             
New York, NY 10016                        
                                   
Telephone: (607) 255-2703                
Fax: (607) 255-9641                       
E-mail: smb6@cornell.edu                  
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