Workers Displaced From Employment, 1997-1999: Implications for Employee Benefits and Income Security

February 2002
EBRI Issue Brief #242
Paperback, 24 pp.
PDF, 97 kb
Employee Benefit Research Institute, 2002

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Executive Summary

  • This Issue Brief examines displaced workers in the United States. It provides a snapshot of displaced workers between 1997 and 1999, a period of strong economic growth, and compares it with displaced workers between 1993 and 1995.
  • Using estimates from the February 2000 Displaced Worker Survey supplement to the CPS, it finds that between 1997 and 1999, 7.5 million workers reported losing a job for negative economic reasons. This represents 6 percent of the employed population between 1997 and 1999. In contrast, 9.4 million workers reported losing a job for negative economic reasons between 1993 and 1995, or 8.2 percent of the employed population.
  • Among the 9.4 million displaced workers in 1993-1995, 35 percent attributed the job loss to a plant or company move or closure, 40 percent to insufficient work, and 26 percent to a job shift or abolished position. In comparison, among workers displaced during 1997-1999, 42 percent attributed their job loss to a plant or company move or closure, 33 percent to insufficient work, and 25 percent to a job shift or abolished position.
  • Displaced workers have very few options when it comes to continuing health insurance coverage. One option is to continue to participate in the health insurance they already had on their job through so-called COBRA benefits, but which the ex-worker must pay for individually. Congress has been debating an economic stimulus package, which would include a provision for subsidizing health insurance for laid-off workers. While improved affordability of health insurance for laid-off workers may be achieved through either direct federal subsidies for COBRA coverage or tax credits, both options may have very little affect on coverage expansion efforts.
  • Temporary displacement from employment may or may not have a long-term impact on retirement income security. Given that 71 percent of displaced workers had tenure levels of less than five years, many of those displaced potentially could have lost retirement benefits if they were plan participants. However, displaced workers are younger, on average, than the workers in the labor force and retirement plan participation tends to be low among younger workers. This means that not all displaced workers will be in a position of losing retirement benefits from their current job since they may not have any retirement benefits to begin with. It is also unclear how many workers would have remained with their employer long enough to vest if they were participating in a retirement plan and had not been displaced.