The labor market as a whole always has both increasing and decreasing sectors due to economic environmental change. However, not much research has been done on how many people lose their jobs during a specific time period. Nor do we know what industries or geographic areas have the most layoffs. Are these layoffs seasonal or permanent, normal or unusual? Which industries have higher quality jobs and earnings security in terms of higher earnings and seasonally stable employment? There is no doubt that this kind of information is becoming more important to both policy makers and the public under current free trade conditions and global competition. Due to the lack of consistent historical unemployment insurance data, however, this article can only begin to answer some of these questions for Wyoming.
Unemployment Insurance (UI) is a temporary financial support program for people who lose their jobs and are looking for new employment. UI Statistics, just like other labor market indicators, can be used to measure what's going on in the economy. However, unlike measures of growth, such as the establishment survey employment estimates, UI Statistics provide information from another perspective.
The UI Initial Claim is the first step in the UI program. It is filed by people who have just been laid off from their jobs. The number of initial claims is the only statistic that can provide national or statewide information concerning how many layoffs occurred in a specific time period. Job loss and the number of Initial Claims are not exactly equal to each other for several reasons: some people choose not to collect UI payments, some people find another job immediately, and some people have unique UI eligibility problems. In this article the number of initial claims, the number of persons who lost their jobs, and the number of separations are treated as conceptually the same.
Graph 1 illustrates historic data for Wyoming UI initial claims from fourth quarter 1989 to fourth quarter 1994. In the first three years (1990-1992), the number of layoffs in Wyoming grew. The growth in claims from 1990 to 1992 may have been a function of the national recession. However, claims have decreased each quarter compared to the same quarter of the previous year since the first quarter of 1993. In 1994 the total number of Wyoming UI initial claims (27,020) reached the lowest level of the past five years. It was slightly higher in both second and third quarters compared to the same time period in 1993, but for the whole year this number decreased 1.1 percent from 27,332 in 1993 to 27,020 in 1994. This suggests that Wyoming's economy was improving in 1994 along with the national recovery.
What Wyoming geographic areas and which industries had the most layoffs in 1994? Table 1 gives the detailed information by region (see the counties associated with each region) and by major industry, excluding 481 records with missing data. About one-third (8,317) of the layoffs occurred in the Construction industry, with 27.7 percent of these in Southwest Wyoming. Both Southeast and Central Wyoming had a relatively higher percentage (16%) of layoffs in the Construction industry. Other industries with notable statewide layoffs were Services (18.3%) and Mining (17.1%). Central Wyoming had the highest percentage of Services industry layoffs. In Mining the highest percentage of layoffs was in Northeast Wyoming.
The separation rate is the mathematical result of the sum of initial claims during a year divided by annual UI average covered employment. It indicates the probability of being laid off for each industry in a specific time period. Graph 2 shows that the Construction industry had the highest separation rate (63.8%), with Mining and Manufacturing having the next two highest rates, but well below Construction. Industries like Construction and Mining have a higher proportion of seasonal workers compared to Manufacturing. However, it is hard to say at what level this rate should be considered normal for each industry due to the lack of historical data. The state average separation rate was 17.4 in 1994.
The Insured Unemployment Rate is the result of average weeks claimed during a year divided by annual average covered employment. The insured rate is affected by both the separation rate and the UI qualification rate (not everyone who files for unemployment compensation has sufficient prior earnings to qualify for benefits). By law, an unemployed worker has to make enough money during his or her base period in order to qualify for UI benefits. As a result, if an industry has a high separation rate but low insured unemployment rate, it may be because of low industry wages and/or unstable work opportunities. Thus, the separation rate and the insured rate may be used together to evaluate the quality of job holding and earnings security in terms of higher earnings and seasonally stable employment. People may want to consider this before they choose jobs among different industries. The insured unemployment rate for each major industry and statewide for 1994 is shown on Graph 2. Construction had the highest insured unemployment rate (5.9%) and the highest separation rate. Manufacturing had a separation rate lower than Construction or Mining but an insured unemployment rate higher than Mining. If we consider the relationship between the separation rate and the insured unemployment rate as job holding & earnings security rate, Graph 2 (which is ordered based on this security rate) shows that Wholesale Trade is ranked as the most secure one with a 7.0 security rate and Mining is ranked as the least secure one with an 11.6 security rate in 1994. The lower the rate the better job holding and earnings security. The statewide average for all industries is 9.7.
The UI Claims Average Duration represents the number of weeks the average unemployed worker stayed in the UI program before finding another job or exhausting benefits during a specific year. Usually, a longer average duration indicates that finding a job was difficult. As shown in Graph 3, the UI claims average duration in 1994, 13.5 weeks, was the shortest period for the past eight years. The shortening duration of unemployment, as measured by the average duration of claims, is consistent with measures of employment growth like the establishment survey.
As stated earlier, the dollar amount and weeks of benefit eligibility is a function of a person's earnings history. When an unemployed person draws unemployment benefits for a certain amount of time, his or her benefits will be exhausted. UI exhaustees are the number of unemployed workers who receive their last UI payments during the year and still can not find another job. The Exhaustion Rate is the percentage of total unemployed workers who have exhausted their benefits during the year. In 1994, both the number of exhaustees and the percentage of claimants who exhausted their benefits decreased, and were at their lowest level for the past four years (see Table 2). The number of exhaustees in 1994 was 4.1 percent less than it was in 1993 and 19.2 percent less than it was in 1992. The exhaustion rate on December 31 was 28.6 percent in 1994, which was 9.7 percent lower than it was in 1993 and 11.3 percent lower than it was in 1992. Both measures indicate that Wyoming's labor market was much better in 1994 when compared to the previous three years.
To sum up, all of the above UI statistics presented suggest that as the national economy continued growing in 1994, Wyoming's economy was getting stronger, too. There were fewer layoffs, and there were more job opportunities in the labor market so that unemployed workers went back to work more quickly than in the prior three years.
Xiaohong (Sherry) Yu is a Senior Economist specializing UI Trust Funds projections in Research & Planning.