Jobless claims linked to big companies rise 25%

USA Today

The pace of mass layoffs picked up sharply in the first quarter as the economy slowed, according to government data.

Unemployment insurance claims linked to big companies were up 25 percent in the first quarter of 2001 over the same period last year, according to a report released yesterday by the Labor Department's Bureau of Labor Statistics (BLS).

The study, which tracks layoff announcements of more than 50 people, then follows initial unemployment insurance claims, found there were 4,550 big layoff announcements in the first three months of the year.

Those resulted in 544,717 workers filing the paperwork to get unemployment benefits. In the same period last year, when the economy was still growing strongly, there were 3,965 such announcements sending 433,968 into unemployment offices.

"The unemployment rate is headed to 5 percent," said Ed Hyman of International Strategy and Investment. Joblessness was 4.3 percent in March. Even so, based on declining consumer confidence, rising unemployment claims and surging layoff announcements, Hyman said unemployment is "set to spike."

Economists say unemployment has been tame because there is a lot of "churn" in the economy. That means laid-off employees have been moving to new jobs easily, because the economy is creating openings fast enough to bring them back into the workforce quickly.

California saw the largest number of layoffs in March, coming in at 48,576.

While the BLS report offers a good look at the nation's employment picture, it is only a snapshot because it measures mass layoffs, which, for the most part, involve large companies. The report does not include layoffs in small businesses, where most of the nation's labor force works.