Wage Reductions for Laid-Off Workers

http://www.statcan.ca/Daily/English/070116/d070116a.htm

One thing we don’t know about the current round of manufacturing job losses is what is happening to laid-off workers – though employment rates are slipping for older male workers in Ontario and Quebec, and even a supposedly “tight” job market is generating little if any real wage growth for most workers. This suggests that many affected by layoffs are not finding new jobs at comparable wages
This study released by Stats Can today suggests there were big wage reductions in new jobs found by laid off workers in the 1990s

Study: Earnings losses of displaced workers

1988 to 1997

High-seniority employees who lost their job during the 1990s as a result of firm closures and mass layoffs suffered substantial losses in earnings, even five years after they were displaced, according to a new study.

The study found that, five years after being displaced, workers who lost their job through firm closures and mass layoffs experienced average earnings losses that represented at least 9% of their pre-displacement earnings. Losses incurred by workers with substantial seniority were more pronounced.

Five years after they lost a job, male workers who had at least five years of seniority and found another job experienced losses that represented between 18% and 28% of the earnings they received before their job loss.

For their female counterparts, the losses ranged between 24% and 26% of their pre-displacement earnings.

In 2000 dollars, the average loss in earnings for high-seniority males five years after losing their job varied between $7,100 and $10,900. The corresponding range for women was between $5,500 and $6,100.

The study examined the earnings trajectories of workers who lost their job in the private sector between 1988 and 1997 as a result of firm closures or mass layoffs, and who were aged 25 to 49 at the time.

In any given period, regular economic activity leads to resource reallocation resulting from technological changes, changes in trade patterns and consumer preferences, and numerous other factors.