Economics Stack Exchange Archive

Why Unemployment Rate and Layoff Rate are not synced anymore?

During good times unemployment is due to people quitting their jobs more than layoffs. During recessions it’s the other way around.
A common result, but an obsolete one:

What happened in the new millenium?

You can see how the relationship between layoffs and unemployment disappeared after the 90s. Why during the worst recession of 60 years there are so few unemployed who were fired for business conditions?

Answer 824

Well one contributing factor is that young adults are just not being hired. So rather than losing jobs they never have them in the first place.

In July, 51.1 percent of Americans between the ages of 16 and 24 years old were unemployed

...

Among major demographic groups in the U.S., the jobless rates for young men (20.5 percent), young African-Americans (33.4 percent), and young Asian-Americans (21.6 percent)

Another reason is that many companies avoided or reduced layoffs through attrition and early retirement. Basically when people left the companies filled their jobs with people already at the company and did not hire anyone to replace them. Some even offered early retirement packages to entice some veteran and more highly paid employees to leave. In normal times these departures would create at least entry level positions as people in the company move up to fill the void. But in the current economy companies are simply distributing the work to other current employees.

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