Mass Layoffs Dip in January

February 28, 2002 (PLANSPONSOR.com) - There were 2,146 mass layoffs in January 2002 involving 263,821 workers, down slightly from the 2,440 mass layoffs in December, the Department of Labor's Bureau of Labor Statistics (BLS) reported.

The number of initial jobless claims for unemployment insurance, on which the BLS report is based, was the highest for the month of January since the series began in April 1995, the BLS said.

BLS researchers warned that year-over-year comparisons would be difficult starting with the latest data because of a recent change in the series’ classification system.

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By Industry

The largest increases in initial claims, from January 2001 numbers, were in:

  • professional and technical services, which rose 11,180,
  • computer and electronic products manufacturing, which rose 9,831,
  • apparel manufacturing, which was up 7,485,
  • administrative and support services, which rose 6,852, and
  • textile mills, up 6,644

The largest annual decrease in initial claims was in transportation equipment manufacturing, which declined -14,638.

Also, according to the BLS:

manufacturing industries were responsible for 42% of the mass layoffs and 49% of January’s initial unemployment claims – flat from a year earlier in terms of mass layoffs and down slightly from January 2001’s 53% of first-time claims,

administrative and waste-services accounted for 11% of layoffs and 10% of initial claims filed during the month, with layoffs concentrated in administrative and support services, particularly temporary help services.

Geographically, the West had the highest number of mass layoffs-related jobless claims at 83,103. The South had 79,608 and the Midwest 71,176.

The Northeast region had the lowest number of mass layoffs claims at 29,934.

September 11 Related Layoffs

The September terrorist attacks sparked 125,637 layoffs in the 18 weeks between September 15 and January 12, the BLS said. The statistics showed that 61% of the terrorist-related layoffs took place in California, Nevada, Illinois, New York, Texas, and Washington.

The September 11 layoffs included:

  • 36% or 44,861 in the commercial airline industry, and
  • 26% or 32,803 in hotels or motels
      

IMHO – Pocket 'Picking'

February 27, 2002 (PLANSPONSOR.com) - There may be another Enron pension surprise coming - but taxpayers shouldn't reach for their wallets just yet, despite early reports. The online version of the February 27 Wall Street Journal cautions that 'US taxpayers could be on the hook' for losses in Enron's pension plan.

Based on 2000 SEC filings, the Journal report estimates that the Enron pension plan might be underfunded by $4 million, rather than overfunded by the $112 million reported in those same filings. Of course, the article goes on to say that the real damage could be much greater – all under a headline that screams “U.S. Taxpayers May Have to Pay Enron Workers’ Pension Benefits.”

Come on.

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OK, should the Enron plan actually turn out to be underfunded (and it might), the Pension Benefit Guaranty Corp. (PBGC) – insurer of the nation’s private pension plans – might have to step in.  Of course, the PBGC has been running a healthy surplus since the late 1990s.  And while the market has been rough on all portfolios, last May PBGC Acting Executive Director John Seal noted that the agency ended Fiscal Year 2000 with a $9.7 billion surplus – the 5th year consecutive year of surpluses in a row, by the way.

Prior to those surpluses, the PBGC racked up 21 consecutive years of deficits – none of which translated into a taxpayer bailout, mind you.  The PBGC does not draw federal funding.  Instead, it is funded by premiums paid by defined benefit programs.  However, in the unlikely event that the PBGC was drawn into a financial crisis, presumably the federal government would step in in some fashion – and I suppose one must concede that ultimately taxpayers might have to shoulder that burden.

Still, the headline seems disingenuous at best, particularly since there appears to be a real pension crisis looming elsewhere.

Steel Deal

While it hasn’t yet engendered the same kind of sweeping Congressional interest drawn by Enron, the burgeoning financial problems of the nation’s steel industry threaten to have a much larger impact – both in terms of workers and the security of the pension system overall.   In fact, the top five steel producers account for more than $10 billion in unfunded pension and health care obligations (see Steel Exec: Consolidation Depends on Government Benefits ).  We’re not talking about millions or even hundreds of millions – we’re talking BILLIONS.

And there are real live people out there now – current workers and retirees – who are confronted with no retirement, no health care, no job (see LTV Retiree Health Plan Running Out of Cash, Time ) – and, unlike many Enron workers, pretty dim prospects for future employment.  Enron laid off just 4,000 of its 21,000 workers – and continues to operate under the temporary ‘shelter’ of Chapter 11.  LTV Steel recently laid off 7,600 – but the firm’s recent acquisition by private investment firm W. L. Ross is expected to impact the size, if not the availability – of health and pension benefits of some 85,000 LTV retirees and their dependents. 

Misleading statements and practices are what got Enron into trouble in the first place.  It’s time we quit obsessing about Enron – and started taking a serious look at the bigger picture. 

– Nevin Adams           editors@plansponsor.com

See also The PBGC – Friend or Foe? 

See also Enron’s Pension Approach Draws Scrutiny

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