Originally published 2/23/2007
Freer trade and globalization will surely mean firms will face more competition. Some of these firms will lose out in competition to others and be forced to layoff workers or close their doors. On the business pages of newspapers it is common to see reports of this or that company laying off 50 or 500 or 5000 workers. (CLICK HERE to see the latest news stories on layoffs. ) The more these layoffs are associated with companies facing import competition, the more likely support for free trade will wane.
However, it is very important to put layoffs in perspective. For every news story reporting layoffs, it is unlikely there’s another one next to it reporting job hires. (In fact when you search for “job hire” stories you see stories about individual hires).
Every month the Labor Department reports the aggregate employment changes by industry. In this report we learn that in January 2007 employment fell in many industries: motor vehicles and parts lost 23,000 jobs, furniture and textile mills both lost 4,000 jobs and computer and peripheral equipment lost 6,000 jobs. However, in the same one month period health care employment rose by 18,000 jobs, professional and business services was up 25,000 jobs, while food services employment rose by 21,000 jobs. The net effect for the month was a gain of 111,000 jobs. This follows a net increase in December 2006 of 206,000 jobs. The total number of payroll jobs in the US economy is 137.3 million.
The point here is that the layoff stories are dwarfed by the typical churning of job gains and losses in the entire economy. Even these statistics don’t report all of the churning taking place within an industry. Every industry loses many workers each month and immediately replaces them with new hires. These numbers only report the net effect in each industry.
