Back to Work

2306-3831 (online)
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Workers who are involuntarily displaced from their jobs can face long periods of unemployment. Wages also tend to be lower once they find a new job, especially when they are unable to find a new job in the same occupation as their pre-displacement job or in occupations using similar skills. Helping displaced workers back into work quickly and minimising the income losses they face is therefore an important challenge for employment policy. This series of reports provides new empirical evidence from a comparative perspective on the incidence of displacement and the risk displaced workers subsequently face of a long spell of unemployment and large wage losses when re-employed. It also identifies the main labour market programmes providing help to these workers and assesses how adequate and effective they are. Policy recommendations for further action are presented.


Nine countries are participating in the review: Australia, Canada, Denmark, Finland, Japan, Korea, New Zealand, Sweden and the United States.

Back to Work: United States

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Back to Work: United States

Improving the Re-employment Prospects of Displaced Workers You do not have access to this content

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06 Dec 2016
9789264266513 (PDF) ;9789264266506(print)

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Job displacement (involuntary job loss due to firm closure or downsizing) affects many workers over their lifetime. Displaced workers may face long periods of unemployment and, even when they find new jobs, tend to be paid less and have fewer benefits than in their prior jobs. Helping them get back into good jobs quickly should be a key goal of labour market policy. This report is part of a series of nine reports looking at how this challenge is being tackled in a number of OECD countries. It shows that the United States has a relatively high rate of job displacement and that only one in two affected workers find a new job within one year. Older displaced workers and those with a low level of education fare worst. Contrary to most other OECD countries, displaced workers have long been a target group for policy intervention, and a number of system features, like rapid response services, are promising. But the success of US policies is limited because overall funding for the workforce development system is insufficient and because only trade-related job displacement comes with generous entitlement for training and better benefits.

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  • Foreword

    OECD labour markets are characterised by their dynamism. Each year, more than 20% of jobs, on average, are created and/or destroyed, and around one third of all workers are hired and/or separate from their employer. These large job and worker flows are driven by a continuous process of labour reallocation, both across industries and between declining and growing firms within industries. This reallocation is an important source of productivity gains, since more productive firms expand at the expense of less productive firms and earnings rise on average for workers changing jobs, particularly workers who voluntarily quit one job in order to move to another. However, high job turnover is also a source of insecurity for workers, especially those who are displaced from their jobs because their employer downsizes its workforce or goes out of business altogether. A common challenge facing OECD governments is to nurture labour market dynamism while keeping the adjustment costs that are borne by displaced workers as low as possible.

  • Acronyms and abbreviations
  • Executive summary

    Many workers who lose their jobs involuntarily in the course of economic transformation and restructuring face substantial personal costs as a result of the considerable time spent out of work and/or lower wages when they do find a new job. In the flexible and dynamic labour market of the United States, around 4% of all workers with tenure of one year or more are displaced from their job each year. Around half of them find a new job again within one year but the other half struggles much longer. And among those who find a new job, many have to accept considerable wage cuts. Older workers, those with long job tenure, and those with low educational qualifications struggle most in finding a new job after displacement and have to accept the largest wage losses.

  • Assessment and recommendations

    Worker displacement, or worker dislocation as the more commonly used term in the United States for job losses due to restructuring, downsizing and plant closure, is a long-standing policy issue. This is reflected in the United States in a range of earmarked programmes and additional funding targeted on dislocated workers, especially for those who have lost their jobs for trade-related reasons. This is different from many other OECD countries in which dislocated workers are treated just like all other unemployed people.

  • Job displacement in the United States and its consequences

    This chapter examines the prevalence and consequences of job displacement in the United States, and the impact of recent cyclical and structural evolutions in the US economy. Restructuring in the United States is often done through layoffs but the flexible labour market also means that many displaced workers find adequate jobs again. Nevertheless, only about one in two of them find a new job within one year and many suffer great damages in the form of long periods of unemployment and significant wage losses.

  • Early intervention and prevention of job displacement in the United States

    This chapter analyses the most important policy measures in the United States that take effect before workers are dismissed and aim to prevent excessive job displacements. This is done by looking at the role of employment protection legislation which determines the process through which employers can dismiss workers, short-time work and layoff aversion strategies. The chapter also looks into rapid response transition services aimed at connecting displaced workers to employment support to help them find new jobs quickly.

  • Access to and adequacy of income support for displaced workers in the United States

    This chapter examines the sources and adequacy of income support available for displaced workers in the United States, with focus on the post-2008 recession period. Initially, unemployment insurance plays a critical role for displaced workers to cushion income losses; insofar, the immediate and repeated extension of the relatively short duration of unemployment insurance payments was critical. However, not everyone claims such benefit and of those who do, many exhaust their entitlement. Many of those workers depend on means tested income support which is rather minimal in the United States by international standards. As a consequence, a large share of displaced workers touches poverty at some point at least during a short period.

  • Programmes promoting the re-employment of displaced workers in the United States

    This chapter provides an assessment of the employment and training programmes available in the United States to help displaced workers back to employment. The US policy approach is unique in singling out displaced workers for help. Targeting services can be very effective but there is too little money in the system to help everyone who needs help and training supply in particular falls short of demand. The chapter also discusses the distinction made in the US system between trade related displacement and other job displacement, with the former group being entitled to a much larger array of services and benefits than other displaced or unemployed workers.

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