BUSINESSWEEK ONLINE : MARCH 5, 2001 ISSUE
ECONOMIC TRENDS What's Lost Between Jobs Earnings gains are forfeited The tight labor market of the past seven years made it easier for workers to find new jobs when they were hit by a permanent layoff. And the average pay cut they took at their new jobs got smaller. Nevertheless, those who found new jobs still saw their weekly income fall when compared with the wages of those workers who kept their old jobs. These are the conclusions of a new paper by economist Henry S. Farber of Princeton University. Using the Labor Dept.'s Displaced Workers Survey, which is conducted every two years, Farber finds that the percentage of workers reemployed after a spell without a job rose sharply during the 1990s (chart). By February, 2000, the date of the most recent survey, 75% of workers who lost their jobs from 1997 to 1999 had landed new ones. In contrast, only 61% were reemployed by early 1992 after losing work from 1989 to 1991. Workers were also increasingly able to find new jobs at a pay level closer to that of the job they lost. Farber estimates the average real weekly earnings loss at 12% for reemployed full-time workers who were displaced from 1989 to 1991. Yet those who were displaced from 1997 to 1999 lost an average of only 2% upon finding new employment. But Farber's work also shows that losing a job exacts a price even in boom times. Although those workers who were reemployed in the most recent survey had gotten back to near their previous wage level, they missed out on wage gains enjoyed by those who didn't suffer a spell of unemployment. Workers who stayed employed during the 1997-1999 period saw their weekly earnings rise an average of 10% during that time--an increase that the displaced workers never realized. EDITED BY CHARLES J. WHALEN _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ BACK TO TOP					RELATED ITEMS What's Lost Between Jobs CHART: Finding Another Job Is Easier Now INTERACT E-Mail to Business Week Online

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