The American economy is changing rapidly, with retail employment slowing and technology impacting many facets of traditional work. Even with a growing job market, some workers are particularly vulnerable to economic change. Understanding the key characteristics of worker displacement can inform the efforts of communities, policymakers, and employers to re-train talent for the in-demand jobs of today and create economic resilience for their communities.

Displaced Workers Survey

To help, we decided to take a deep-dive look into the U.S. Bureau of Labor Statistics’ Displaced Workers Survey, which examines “persons 20 years of age and over who lost or left jobs because their plant or company closed or moved, there was insufficient work for them to do, or their position or shift was abolished.”

Here’s what we found.

Displacement by Race

Diving into the data, we found that African American and Latino workers are more likely to be displaced due to insufficient work rather than their company closing or position abolished, whereas White workers are more likely to see their positions shift or abolished.

Graph: Reason for Job Loss of Displaced Workers by Race

Displacement by Tenure

Long-tenured workers are more likely to be displaced due to a plant/company closing as well as having their position abolished. Not surprisingly, short-term displaced workers are more likely to be displaced due to insufficient work (i.e., weak demand).

Graph: Reason for Job Loss of Displaced Workers by Tenure

Displacement by Earnings

When examining the status of displaced workers, it’s important to look at what they earn both before and after displacement. The survey finds that displaced workers often earn less in their subsequent jobs. Notably, this earnings gap grows for older workers. Only displaced workers between 20-34 years of age earn more in their subsequent job, which suggests a lack of opportunity or pathways, particularly for jobs with equivalent skills, for workers displaced due to no fault of their own.

Graph: Median Weekly Earnings of Displaced Workers on Lost and New Jobs by Age

Combined Characteristic Displacement

The study indicates that displacement is particularly hard for long-tenured (at least 3 years) workers. Many of these workers built a life around their earnings and job security, so it’s extremely disruptive when they lose their jobs but do not find subsequent employment with similar earnings. Long-tenured African American workers suffer the most in terms of lost earnings after displacement, earning only 69% of their previous salaries. White long-tenured workers also suffer lost wages, only receiving 86% of their previous salaries.

Graph: Median Weekly Earnings of Displaced Workers with Tenure of 3+ Years on Lost and New Jobs by Race

One noteworthy finding is the significant racial difference in terms of tenure at a job for displaced workers. Almost a third of African Americans are displaced within the first year of a job. Half of White workers are in a job for at least three years or more prior to displacement, compared with only 35% of African Americans. These gaps in tenure contribute to the earnings gap between African American and White workers, as well as potential issues relating to retention and inclusion that employers have when it comes to African American workers.

Graph: Percentage of Job Tenure of Displaced Workers by Race

Impacts on the Workforce System and Communities

Important observations can be made based on the survey:

  • Even in a good economy, disruption and displacement can upend lives of many communities.
  • As the economy changes and technology advances, some of this disruption could increase.
  • Displacement is particularly hard on African Americans and older workers.

Currently, the American workforce system  is not adequately addressing the problem of workers who are displaced through no fault of their own. If a skilled factory worker must accept a low-wage job due to outsourcing, there’s a failure of the workforce system to provide that skilled worker with a pathway to another skilled occupation with similar earnings.

In addition, displacement is not just a concern for the workforce system; it also puts stress on local communities. The findings from surveys like this one can help policymakers address what the data suggests is a clear need and concern over the efficacy of adult training and education; learning more about displaced workers and how to create meaningful career pathways to good jobs is an avenue for economic mobility.

How Nexight Helps

Nexight works with in-demand industries that are creating the workforce of tomorrow in energy, advanced manufacturing, and health and medicine. We leverage this kind of workforce information to work with our clients to engage in partnerships with workforce systems, educators, and community groups to create broader opportunities for all workers, particularly those who are most prone to displacement.

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