Mass layoffs on the decline in Arkansas

Editor’s note: Roby Brock, with our content partner Talk Business, wrote this report. He can be reached at [email protected]

After nearly 3 years of a battered economy, Arkansas is seeing fewer mass layoffs and is certainly faring better than its sister states.

New data released by the Arkansas Department of Workforce Services and the Bureau of Labor Statistics show that the number of mass layoffs from Arkansas firms reached a peak of 117 in 2009 affecting more than 12,000 workers.

Mass layoffs are defined when at least 50 initial unemployment insurance (UI) claims are filed against a particular business or company during a consecutive 5-week period.

Between 2005 and 2010, mass layoffs in Arkansas ranged from a low of 40 in 2006 to the 2009 high. The year 2008 was also an unusually high period with the number of mass layoffs hitting 116. In 2010, there were only 71 mass layoff events.

In the first quarter of 2011, Arkansas had recorded 12 mass layoffs putting it on a pace to hit around 48.

THE PEOPLE BEHIND THE NUMBERS
While the number of mass layoff events is intriguing, there can be fluctuation in the number of people impacted. For instance, one mass layoff event could involve 75 workers or 750, depending on the employee base affected.

During the peak mass layoff years of 2008 and 2009, more than 24,000 Arkansans filed for unemployment. There were 11,914 in 2008 and 12,353 in 2009.

By 2010, the number of Arkansans filing for jobless benefits after a major layoff fell to 7,748, a decline of 37%.

So far this year (Jan.-March), 1,283 workers have filed for UI from the 12 mass layoff events.

JOBLESS CLAIMS
The mass layoffs seen in Arkansas during 2008 and 2009 are a major reason the state’s unemployment trust fund went deep into debt with the federal government. Today, the amount borrowed from the feds stands at nearly $360 million; however, business leaders and workforce officials see a resolution to the debt if current conditions hold.

"Cash flow into the trust fund has dramatically improved," Arkansas State Chamber President Randy Zook said earlier this month.

A new analysis from DWS showed that with fewer claims, improving economic conditions, and legislative changes to shore up the fund, it could be debt-free by early 2015.

"More and more people are going back to work and their employers are paying back into the system," Zook said. “That’s the best news, that’s the best possible outcome."

SISTER STATES
Often, state business leaders including Gov. Mike Beebe tout that Arkansas has fared better than other states. Arkansas’ March 2011 unemployment rate of 7.8% remains lower than the national rate of 8.8% and is lower than 5 of its 6 sister states. Oklahoma has a lower rate at 6.1%.

Arkansas also had fewer mass layoff events than the 6 states that surround it. Part of the reason for the positive comparison is that Arkansas has a significantly smaller population.

Still, it is obvious that Arkansas’ better showing during the recession and subsequent slow recovery is reflected in regional numbers. This year’s first quarter numbers show that Arkansas’ sister states are seeing more and larger layoffs than the Natural State.

Louisiana has experienced 46 mass layoffs affecting 4,066 residents in the first quarter of 2011. Mississippi saw 35 first quarter mass layoffs resulting in 3,022 seeking jobless benefits. To the north, Missouri’s mass layoffs have reached 93 already this year impacting 3,370 of that state’s workers.

In Oklahoma, 25 mass layoff events have occurred in the first quarter of 2011 resulting in 2,430 newly unemployed workers. Tennessee has experienced 40 mass layoffs so far impacting 3,442 workers.

Texas — with a population nearly 9 times larger than Arkansas — has recorded 140 mass layoff events affecting 15,477 of that state’s workforce. Texas’ first quarter UI claims exceeds all of Arkansas’ worst year during the recession of 2009 when more than 12,000 were laid off in big numbers.

The statistics don’t cushion the blow for the 1,283 workers laid off in Arkansas’ 12 mass layoff events so far this year, but it does offer some perspective that things could be worse.