What do we know about Job Loss in the United States? Evidence from the Displaced Workers Survey, 1984-2004

The ability of employers to shed workers in response to cyclical or secular changes in demand is an important part of an efficient market economy. However, workers who lose jobs bear substantial uncompensated costs. I examine the experience of jobs losers between 1981 and 2003 using data from the Displaced Workers Surveys (DWS) from 1984-2004. In the most recent period, 1) about 35 percent of job losers are not employed at the subsequent survey date, 2) about 13 percent re-employed full-time job losers are holding pert-time jobs, 3) full-time job losers who find new full-time jobs earn about 13 percent less on average on their new jobs than on the lost job, and 4) counting foregone earnings increases enjoyed by non-losers, full-time job losers who find new full-time jobs earn to 17 percent less on average on their new jobs than they would have had they not been displaced. This makes job loss an expensive and damaging event on average, and programs to help displaced workers with the transition need to be implemented and expanded.