The Magnitude of Job Loss from Plant Closings and the Generation of Replacement Jobs: Some Recent Evidence

Abstract

The convergence of the recent recession, a secular decline in the rate of growth, and the accelerating structural reorientation of the U.S. economy produced serious employment problems in the late 1970s and early 1980s. Since the mid-1970s, plant closings in large manufacturing firms have eliminated over 900,000 jobs a year, with rates of loss doubling in 1980-82 over the previous two-year period. Perhaps more important than the jobs lost are the number and nature of new employment opportunities created. Between 1976 and 1982 large manufacturing firms replaced jobs lost in closings at the rate of only 9 new jobs for each 10 lost. Further, the industries and geographic regions in which businesses are generating new jobs differ markedly from those losing jobs in plant closings and major layoffs. This mismatch in the loci of growth and decline has resulted in pockets of serious economic distress.