Back to Work: United States

Improving the Re-employment Prospects of Displaced Workers

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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.



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.


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