Mass Layoffs Approached Normal Levels in May

Companies curbed mass layoffs in May to near non-recession levels, according to the Bureau of Labor Statistics. Layoffs involving at least 50 employees dropped to 1,412 incidents last month. That's a 24% drop from April's level of 1856 actions. This is a very positive sign.

Here's a chart showing how this number has moved since 2004:

mass layoff actions 2010-05.PNG

The red line above shows mass layoff actions each month. The green line is the average from January 2004 through November 2007, before the recession. As you can see, the red line is quickly approaching the green one. May's number is the lowest we've seen since April 2008.

The number of initial claims resulting from these mass layoffs shows the return to pre-recession levels even more clearly:

mass layoff workers 2010-05.PNG

The May number of 135,789 workers involved in those mass layoffs is just a few thousand above the pre-recession average of 131,528. That number is a 32% decline from the month prior. It's also the lowest since April 2008.

This strengthens the narrative that companies are mostly done aggressively reducing jobs in response to the downturn. Of course, that's only half of the labor market's problem. This report, unfortunately, says nothing about employers beginning to hire more workers. If May's unemployment report is any indication, then job growth remains quite weak. Still, it's good to see that the corporations are slowing their layoffs.