This article was first published on May 15, 2009. It is one of the most read stories of 2009.
A California database that lists company layoffs and plant closures is on the most-watched list for news services and employment bloggers. As an indicator of the state’s economic health, recent numbers on WARN mirror the general business downturn in all industry sectors:
• USS Steel-Posco in Pittsburg, CA to lay off 877 workers in December, 2009
• Nabors Well Services in Bakersfield to lay off 780 workers on May 16, 2009
• Spansion Inc. in Sunnyvale, reduction in force of 615 workers in March, 2009
• Irvine Regional Hospital closure with layoff of 510 in January, 2009
According to WARN, industries with the most projected layoffs and closures for 2009 (as of May, 2009) are:
3 Healthcare and Biotech
4 Banking and Finance
5 Technology and Telecommunications
From Chula Vista to Marysville, the list of layoffs and plant closings runs to 38 pages and approximately 1,140 entries already on this year’s database. Entries will continue to appear; companies that plan to file for closure or layoff in late 2009 or early 2010 won’t trigger the 60-day reporting deadline for several months. It isn’t yet possible to know whether this year’s entries will outpace 2008, but the indicators are positive.
Companies list each layoff or closure location separately on WARN, and a look at some 2009 closure listings gives a clearer picture of the statewide impact: JPMorgan/Chase Bank: 105 sites (in addition to its 2008 layoffs in 12 sites); DHL Courier: 23 sites; Circuit City: 43 sites; Gottschalks: 42 sites.
The database is a legal compliance tool and an indicator of what could happen, but many factors influence how the numbers play out in the final analysis. Companies that file a WARN notice may have an upswing in business and cancel all or part of the layoff. Employees who retire or transfer to other departments lower the total further.
People who search the database for definitive closures and layoffs — including their own — don’t see the total picture, according to Patrick Joyce, information officer with the Employment Development Department. “It doesn’t necessarily pan out that those people get laid off. WARN notices are future looking. The numbers don’t always match up.”
Since companies with less than 50 employees aren’t required to file with WARN, an exact number of layoffs is impossible to determine from the database, Joyce said. “A lot of companies could be laying off 25 people, but they wouldn’t turn up on the WARN. They’re not required to notify us that they didn’t lay people off.”
The WARN numbers aren’t an exact match with unemployment statistics. Civil service employers are exempt from filing under WARN; self-employed persons and those in the “shadow economy” (who are paid in cash or navigate through a barter system) aren’t reflected in any data collection process except census. While the total number of layoffs per month won’t ever equal total unemployment claims for the same period, some parallels do exist between filings on WARN and unemployment numbers.
In its Mass Layoffs & Unemployment Report of Nov. 21, 2008, The Department of Labor, Bureau of Labor Statistics, reports the number of WARN filings increased every year since 2006, and the number of reported layoffs in California in 2008 exceeded the number of layoffs in 2006. A subsequent DOL Report of April 23, 2009 finds California had the highest number of mass layoff events of any state in 2009, with 16,318 filings for unemployment benefits.
State unemployment rates continue to rise; in October, 2008, the unemployment rate was 8.2, and a just-released EDD Industry Employment & Labor Force Benchmark showed a March, 2009 unemployment rate of 11.5%.
The EDD monitors WARN compliance and funds job retraining and placement services for laid-off workers through its One-Stop job sites throughout California. This is one less expense for local governments already burdened by lost revenues from business taxes and decreased spending on housing, recreation and retail purchases.
Warn at the Local Level
Nabors Well Services is a maintenance provider for the Kern Valley’s oil drilling operations. After filing a WARN notice of a May 16 layoff of 780 employees in its Bakersfield offices, the company released a letter stating its intent to seek contracts that would enable it to continue its business operations. At this time it isn’t known whether the company has been successful in its attempt to find alternate funding.
Donna Kunz, economic development director for the City of Bakersfield, attributed the WARN filing to the drop in oil prices since 2008. “The company hired a lot of people when oil prices were high,” she said, “but the price of oil has dropped so much the past year.” Kunz anticipates the layoff will affect more areas than Bakersfield; the oil wells are placed throughout the central valley from Bakersfield up to Fresno. Loss of income will have some effect on the local economy since many of the Nabors Well employees are Bakersfield residents. “We hate to see this happen because those people make good money,” she said.
Kunz is confident the City has planned well for loss of income due to layoffs by diversifying its sources of income and employment opportunities. “We have quite a few infrastructure projects for roads and freeways that will pick up in the city.”
The San Francisco Housing Authority seems an unlikely entry on WARN, but the quasi-federal agency followed the lead of other housing authorities in the United States when it needed to trim its budget. The Housing Authority, funded by grants from the Department of Housing and Urban Development, doesn’t fall clearly into any of WARN’s required reporting groups. Even so, Roger Crawford, human resources director for the Housing Authority, decided a WARN filing was the right thing to do.
“There have been cutbacks in funding for Housing Authorities,” he said. “We’ve been funded at 75% or 80%, and even if things were going well in the economy, the Housing Authority needs to balance its budget.”
After discussions with legal counsel, the Housing Authority filed a WARN layoff notice in late 2008 for 73 employees on February 13, 2009. “It’s better to be safe than sorry,” Crawford said. “It was a good thing to do for people to give them time to find another job.” Fortunately some employees were able to remain employed through transfers to other agencies, so the final layoff was 27 employees instead of the much higher number.
Three California hospitals have filed WARN layoff/closure notices for 2009: Irvine Regional Hospital and Medical Center — 510 employees; Community Hospital of Los Gatos — 500 employees; and South Coast Medical Center in Laguna Beach — 580 employees. Tenet Healthcare, owner of the Irvine facility, closed the Regional Hospital on January 15, but the other two hospitals have each been sold to different healthcare organizations and plan to reopen later this year under new ownership.
Alicia Gonzalez, spokeswoman for South Coast Medical Center, said employees are being offered outplacement assistance such as job search resources, resume writing and interview skills workshops. They will also have the opportunity to apply for positions within Adventist Health, South Coast’s current owner, as available.
Community Hospital of Los Gatos will reopen in November as El Camino Hospital of Mountain View after significant upgrades to the older facility. Former employees of Community Hospital are eligible for hire by El Camino Hospital, and interviewing has already begun for open positions.
These healthcare workers have better prospects than many in other industries. In its Feb.17, 2009 Forecast, the Los Angeles County Economic Development Corp. predicts healthcare services, nursing care and hospitals will add 15,700 jobs in 2009 and 16,000 jobs in 2010. It’s possible laid-off healthcare employees will experience far less time unemployed than those in other areas like manufacturing and retail sales.
What’s new with WARN? Take a few minutes and search the database. Unfortunately, there’s always something.