Displaced Workers: Differences in Nonmetro and Metro Experience in the

Mid-1990s. Karen S. Hamrick. Food and Rural Economics Division, Economic

Research Service, U.S. Department of Agriculture. Rural Development Research

Report Number 92.

Abstract

During 1995-97, 3.4 million workers were displaced from their jobs, of whom

500,000 (15 percent) were nonmetro workers. This report examines the displaced

workers' experience in metro and nonmetro areas using survey and administrative

data. Although nonmetro workers were less likely to be displaced than metro

workers, they had a lower probability of finding employment after losing their

jobs. Nonmetro workers were less likely to be covered by legislation providing

advance notice of job loss and providing retirement and health insurance benefits

after being laid off. A variety of programs are available to assist displaced workers

in nonmetro areas.

Keywords: Rural unemployment, displacement, dislocation, unemployment,

dislocated worker programs, Trade Adjustment Assistance.

Acknowledgments

The author thanks Bo Beaulieu, Doug Bowers, Amy Carr, Robert Gibbs, Bob

Goldfarb, Charlie Hallahan, Andrew Haughwout, Brendan Kelly, Lorin Kusmin,

Jack Runyan, Steven Hipple, Leslie Whitener, Tim Wojan, Peg Young, and Steven

Zahniser for their generous and helpful comments on drafts of this research. And

also thanks to Calvin Beale, Don Beale, Zen Choma, Gary Gortenburg, Michael

Hope, Curtis Kooser, William Lindamood, Haiping Luo, Bob McIntire, Barbara

Schrader and Kevin Thompson for their generous and helpful program, technical,

and data assistance. I am grateful to Lindsay Mann for excellent editing and

Wynnice Pointer-Napper for design and final production.

1800 M Street, NW

Washington, DC 20036-5831 October 2001
ii ◆ Displaced Workers: Differences in Nonmetro and Metro / RDRR-92 Economic Research Service/USDA

Contents

Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iii

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

What Is Displacement? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Displaced Workers: What Do We Know? . . . . . . . . . . . . . . . . . . . . . . . . . . 1

The Rural Perspective . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Need for Research on Nonmetro Displaced Workers . . . . . . . . . . . . . . . . . . 3

Displaced Worker Supplement Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Displaced Workers: Who Are They? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Displacement Rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Post-Displacement: Employment, Unemployment, or Not in the 

Labor Force . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Hardship Groups . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Models and Estimates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Probability of Displacement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Probability of Employment after Displacement . . . . . . . . . . . . . . . . . . . . . . 16

Earnings Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Policies To Assist Displaced Workers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

Unemployment Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

Trade Adjustment Assistance Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

The Worker Adjustment and Retraining Notification Act . . . . . . . . . . . . . . . 26

Economic Dislocation and Worker Adjustment Assistance Act 

and Workforce Investment Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

Benefit Protections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

Evaluation of Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

Conclusions: Displacement Rates Low, but Rural Displacement 

Still a Concern . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

Endnotes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Economic Research Service/USDA Displaced Workers: Differences in Nonmetro and Metro / RDRR-92 ◆ iii

Summary

During 1995-97, 3.4 million workers lost their jobs because their plant or company

closed or moved, their employer had insufficient work, or their position or shift was

abolished. Of these displaced workers, 500,000 (15 percent) were nonmetro residents. The nonmetro displaced worker experience was generally the same as that of

metro displaced workers; however, a large share of nonmetro displaced workers

dropped out of the labor force and also a large share of nonmetro displaced workers

were in low-income households. In addition, Federal programs and legislation to

assist and protect displaced workers unevenly serve nonmetro workers.

Economic restructuring can cause economic dislocation as workers lose their jobs.

Technological advances, firm downsizing, and shifts in consumer product demand

cause restructuring as these factors change the pattern of job-skill demand.

Displacement occurs even though the economy is expanding. Displaced workers

may experience hardship in the form of joblessness and lower earnings once a new

job is found. Analysis on displacement in nonmetro areas is a component of ERS

research in understanding how changing market conditions affect rural economies,

and how Federal programs affect rural areas. Past research found that metrononmetro residence is an important factor in analyzing displacement, as disproportionately more displaced workers were from nonmetro areas than from metro areas

in the early to mid-1980s. During that time, nonmetro displaced workers experienced greater hardship from losing their jobs than did metro displaced workers.

This report examines the displaced workers' experience during 1995-97 in metro

and nonmetro areas. First, data from the Bureau of Labor Statistics survey on

displaced workers was used to answer the two questions:

◆ Are nonmetro workers displaced more or less often than metro workers?

◆ Is the hardship for nonmetro displaced workers greater or less than for metro

displaced workers?

Analysis includes descriptive statistics on the demographic and job characteristics

of displaced workers. Detail is presented on three groups: those age 55-64, those

without a high school diploma, and those in low-income households. Models and

their resulting estimates are presented for the probability of displacement, the

probability of employment after displacement, and the earnings loss experienced.

This analysis finds that nonmetro workers were at a slightly lower risk of displacement than metro workers during 1995-97. However, once displaced, nonmetro

workers were less likely to find a new job than metro displaced and more likely to

drop out of the labor force. Women, workers with long tenures on their lost job,

and low-skill workers had lower probabilities of finding a new job compared with

other displaced workers. About half of the employed displaced workers, both

metro and nonmetro, found a new job but with lower real weekly earnings. The

main reason for earnings loss was the reduction in hours worked—displaced

workers who had been working full time but could only find a part-time job.

Displaced workers who had longer tenures on their lost job had more earnings loss

than other displaced workers who had found a new job.
iv ◆ Displaced Workers: Differences in Nonmetro and Metro / RDRR-92 Economic Research Service/USDA

The second part of this analysis used administrative data on Federal programs to

assess how well nonmetro workers are served by Federal programs and legislation

designed to assist and protect displaced workers. Several Federal programs assist

workers who lost their jobs as a result of structural change in the economy. The

Unemployment Insurance Program (UI) is the main income assistance program for

displaced workers, and nonmetro workers were found to have the same rate of UI

use as metro workers. Also, the training and employment programs of the

Workforce Investment Act appear to be equally accessible to nonmetro and metro

displaced workers. However, nonmetro workers are less likely to be covered by the

advance notice and benefit portability legislation designed to protect displaced

workers. Trade adjustment assistance programs were greatly utilized by nonmetro

communities during 1994-98; 40 percent of all certifications of benefit eligibility

were in nonmetro areas.

Despite the strong economic expansion of the 1990s with tight labor markets,

layoffs continue at a relatively high rate, and some groups face disproportionate

hardship. The implication of these findings is that continued assistance is needed

for workers who lose their jobs from structural or technological change.
Economic Research Service/USDA Displaced Workers: Differences in Nonmetro and Metro / RDRR-92 ◆ 1

Introduction

Economic restructuring can cause economic dislocation

as workers lose their jobs. Technological advances, firm

downsizing, and shifts in consumer product demand

cause restructuring as these factors change the pattern of

job-skill demand. Displacement occurs even though the

economy is expanding. Indeed, large layoffs by major

companies continued during the record expansion and

tight labor market of the 1990s. Workers may experience

hardship in the form of joblessness and lower earnings

once a new job is found. During 1995-97, 3.4 million

workers lost their jobs due to economic restructuring.

This report first examines the displaced worker experience during 1995-97 in metro and nonmetro areas

using data from the Bureau of Labor Statistics survey

on displaced workers.1 Are nonmetro workers

displaced more or less often than metro workers? Is

the hardship for nonmetro displaced workers greater or

less than for metro displaced workers? This report also

analyzes programs and legislation designed to assist

and protect displaced workers. Are nonmetro workers

well served by these programs and protections?

What Is Displacement?

Displaced workers are “individuals with established

work histories who have lost their jobs through no

fault of their own and who are likely to encounter

considerable difficulty finding comparable employment” (Browne, 1985). Displacement is considered

structural unemployment, not unemployment due to

economic cycles or due to the normal matching

process between workers and employers, but instead

unemployment due to skills or geographical demandsupply mismatches. Fallick (1996) defines displacement as having three characteristics: (1) there is a

structural cause for the job loss; (2) those displaced

have limited ability to attain a comparable job soon

after job loss; and (3) displaced workers have a strong

attachment to the sector of their lost job.

Past research suggests that metro-nonmetro residence

is an important factor for understanding the displaced

worker experience. In the early to mid-1980s, disproportionately more displaced workers were from

nonmetro areas than from metro areas (Swaim, 1990).

Nonmetro displaced workers also experienced greater

hardship from losing their jobs than did metro

displaced workers. Because nonmetro areas lagged

metro areas according to several economic indicators

during the 1980s—lower employment growth, higher

unemployment rates, and slower growing incomes and

earnings—nonmetro displaced workers were more

likely to experience difficulty finding a new job and

maintaining their previous earnings level.

However, the general economic situation in rural areas

during the early 1990s was much improved over that of

the 1980s. After the recession of 1990-91, nonmentro

areas showed strong economic performance and outperformed metro areas by several measures during the

recovery years of 1991-94. In particular, nonmetro

employment growth was strong and unemployment was

low. In 1995, however, nonmetro employment growth

slowed, while metro employment growth increased.

Nonmetro employment growth dipped in 1997-98 as

the global financial crisis caused a decline in the

growth of U.S. goods exported. As goods exports

rebounded in late 1998 and the crisis ended, the shock

to the nonmetro labor market subsided. This favorable

economic environment in the 1990s raises questions

about the level of hardship experienced by nonmetro

displaced workers in the 1980s.

Displaced Workers: What Do We Know?

Hipple (1999) found that, nationally, job displacement

in the 1980s occurred primarily in the goodsDisplaced Workers

Differences in Nonmetro and Metro 

Experiences in the Mid-1990s

Karen S. Hamrick

1 See Endnotes beginning on p. 33.
2 ◆ Displaced Workers: Differences in Nonmetro and Metro / RDRR-92 Economic Research Service/USDA

producing industries. By the mid-1990s, a broader

range of industries was affected. However, workers in

goods-producing industries, and nondurable goods

manufacturing in particular, continued to have a higher

rate of displacement than workers in the service sector.

A broader range of occupations was represented as

well, with an increased risk of displacement for whitecollar workers. He also found that, over the past

decade, job loss due to plant closings or moves was

fairly constant, accounting for roughly half of

displaced workers, while the proportion reporting that

their position or shift had been abolished doubled to

39 percent in 1995-96. Comparing the 1995-96 experience with 1993-94, he found that “[n]ot only were

long-tenured workers less likely to lose their jobs in

the 1995-96 period, but those who did were more

likely to find new jobs, and they spent fewer weeks

without work. Moreover, among those reemployed in

full-time jobs, earnings losses were much less severe

than those found in the previous period.”2

Farber’s (1997) article is a comprehensive presentation

of the concept of displacement, the data issues associated with displaced worker research, and his own

research employing both univariate and multivariate

analysis. His particular focus is on analyzing displacement by the reason for job loss: plant closings, slack

work, position/shift abolished, or other. He found,

using probit estimates of displacement rates, that older

workers and more educated workers were less likely to

be displaced. He also found that older workers were

less likely to be displaced due to slack work or “other”

reasons; workers with a college education were less

likely to be displaced by plant closings or slack work;

and college-educated workers were more likely to be

displaced because their position was abolished. Those

who were displaced had a large probability of not

being employed when surveyed, and when they found

a new job, it was, on average, at lower real earnings

than that of their lost job.

Two recently published literature reviews comprehensively summarize research questions on displacement,

recent research results, and policy issues: Kletzer

(1998) and Fallick (1996). Kletzer concluded from her

review of the literature that job loss rates of the mid1990s were the highest of the 14-year period of the

Displaced Worker Supplement data; that less educated

workers are more likely to be displaced than more

educated workers; that historically displacement

mainly affected the production occupations, but more

recently job loss has spread more evenly across occupations; that goods-producing industries had a higher

risk of displacement than service industries; that black

men were more likely to be displaced than white men;

that displaced workers have different demographic

characteristics than other unemployed workers; that

more educated workers are more likely to be employed

after displacement; that displaced women were less

likely to be employed after displacement than

displaced men; that real earnings were on average 13

percent less on the post-displacement job; that longer

job tenures were associated with more earnings loss;

that many displaced had difficulty finding full-time

work and were working part time; and that import

competition is associated with displacement.

Fallick’s review of the literature found that “worker

displacement is a widespread, counter-cyclical event.

While there has been no secular rise in the frequency

of displacement over the 1980s, displaced workers

have come to look more like the general work force.

Tenure at a job still reduces a worker’s chances of

becoming displaced, and displaced workers continue

to come disproportionately from industries and States

doing relatively poorly and from occupations that

require less education. However, the protective influence of tenure has decreased, and displacement rates

have converged across industries and occupations”

(p. 8). He also found that “displaced workers experience more joblessness than other workers, but the

adverse effects of displacement appear to fade away

after about 4 years. The same is not true of the

substantial reductions in earnings, again relative to

nondisplaced workers, which appear to persist for a

very long time. Sector-specific human capital appears

to play a major role in explaining both the earnings

losses and patterns of re-employment of displaced

workers, as evidenced by the influences of tenure and

mobility. But individual- or firm-specific factors, such

as unionization and prior earnings, cannot be

discounted” (p. 12).

An older literature review by Hamermesh (1987)

continues to be useful in defining the research 

questions. He discussed both research on the

demand-for-labor side, such as the probability of a

plant closing, as well as the supply side, the worker

losses resulting from displacement. He outlined the

issues as (1) counting displaced workers and measuring displacement; (2) understanding why plants

close and why workers do not accede to wage cuts to

allow the plant to stay open; and (3) estimating the

losses from displacement.
Economic Research Service/USDA Displaced Workers: Differences in Nonmetro and Metro / RDRR-92 ◆ 3

The Rural Perspective

Swaim (1990) examined metro-nonmetro differences

of workers displaced during 1981-86. He found that

there were disproportionately more nonmetro workers

among the displaced. The length of joblessness

following displacement was longer for nonmetro

workers than for metro workers and nonmetro

workers’ earnings were less when they found a new

job. Nonmetro displaced workers were also more

likely to lose their health insurance benefits. The

nonmetro displaced had a higher unemployment rate

when surveyed than the metro displaced, and they

were, on average, less educated than metro displaced.

Swaim concluded that displacement was a greater

source of hardship for nonmetro workers than for

metro workers during 1981-86.

My previous research on displaced workers (Hamrick,

1999) examined differences in metro-nonmetro

displacement during 1993-95. I found that nonmetro

workers were displaced at the same rate as metro

workers and experienced slightly less hardship than

metro workers after displacement.

Two case studies focused on large layoffs in rural

areas. Beneria (1998) did a case study of the impact of

the Smith-Corona plant relocating from Cortland, New

York, to Tijuana, Mexico. In 1992, Smith-Corona

announced that it would move its plant that employed

1,200 workers in Cortland, a town of 20,000 residents.

Smith-Corona laid off 850 workers over the next 3

years. Beneria surveyed these workers during 1993-96.

Cortland received assistance from a variety of State

and Federal programs, including the Trade Adjustment

Assistance program (described below). Many of the

laid-off workers found new jobs, some at higher skill

levels. However, a majority experienced large earnings

losses and lower income levels. Women had the

greatest earnings losses, despite their higher degree of

participation in the training programs than men.

Beneria also found that “the demand-side problem is

reinforced by its location in a rural area with a stagnating or deteriorating economy. Earnings losses can

be substantially larger when a ‘congestion effect’ operates due to a large number of workers searching for a

job in a small labor market.... This points to the importance of local initiatives, perhaps with help from the

state and Federal level, to reinvigorate investment and

local development.”3

Leistritz and Root (1999) studied five rural communities

in Minnesota and North Dakota that faced the closure or

downsizing of a major employer between 1994 and

1998: Altura, MN, Courtland, MN, Worthington, MN,

Bowman, ND, and Grafton, ND. The authors state that

the fact that low unemployment rates have been maintained by Minnesota and North Dakota, “... does not

mean that all communities are doing well, or that there

aren’t difficult periods ahead for individuals who are

displaced from their jobs or their resident communities.

Our dynamic economy reflects the decline of some

industries and subsequent job loss in some communities, while simultaneously, other industries experience

relatively stable periods of prosperity.”4 Grafton was

considered the most successful of the five communities

in dealing with the loss of jobs. A State Developmental

Center cut 500 jobs over several years. The community

leaders found new uses for the vacant Developmental

Center buildings and created a new industrial park,

attracting new employers. 

Need for Research on Nonmetro 

Displaced Workers

Because of the relatively high rates of layoffs in the

midst of a tight labor market, there is a continuing

need to comprehensively analyze the nonmetro

displaced workers’ experience. The research presented

here fills this need by providing not only descriptive

analysis, but also estimates of probability of job loss,

probability of employment after job loss, and earnings

loss for nonmetro residents. This analysis on nonmetro

areas has not been undertaken for several years and so

provides an update of Swaim’s research (1990) on the

nonmetro experience in the 1980s. 

Because nonmetro workers have different demographic characteristics than metro workers, and

because nonmetro jobs have a different industry 

distribution than metro jobs, nonmetro displaced

workers’ assistance needs are probably different 

than metro displaced workers’ needs. One question

addressed here is whether or not nonmetro workers

are well served by Federal programs and legislation

designed to assist and protect displaced workers. No

other research has addressed this question.

Displaced Worker Supplement Data 

Data used here are from the 1998 Displaced Worker

Survey (DWS) supplement of the Current Population

Survey (CPS). The CPS is a monthly survey of about
4 ◆ Displaced Workers: Differences in Nonmetro and Metro / RDRR-92 Economic Research Service/USDA

47,000 households, which is conducted by the Bureau

of the Census for the U.S. Department of Labor,

Bureau of Labor Statistics (BLS). The DWS was

started in 1984, and is conducted every other year.

BLS releases the data. The 1998 DWS was conducted

in February 1998, and all respondents were asked,

“During the last 3 calendar years, that is, January 1995

through December 1997, did (you/name) lose or leave

a job because a plant or company closed or moved,

(your/his/her) position or shift was abolished, insufficient work, or another similar reason?” If yes, the

respondent was asked a series of questions concerning

the job lost and subsequent labor market experience.5

These questions on displacement were in addition to

the demographic and labor force data collected in the

basic monthly CPS.

BLS defines displaced workers as those 20 years old

or older, who lost or left jobs because their plant or

company closed or moved, there was insufficient 

work, or their position or shift was abolished. Workers

on temporary layoff, those who quit, or those who

were fired for cause are not considered displaced.

Workers displaced from both full-time and part-time

jobs are included. Because BLS includes insufficient

work as a reason, displacement as measured has a

cyclical component.

This analysis includes only long-tenured workers,

those displaced workers with 3 or more years of tenure

with their employer. The purpose of this restriction is

to exclude short-tenured workers whose job loss may

be due only to a poor match between employer and

worker. The 3-or-more-years restriction also ensures

that those included have an established work history

and an attachment to their industry sector and their

occupation and thus presumably have developed

industry- and employer-specific skills that make it

costly for them to take another job. 

This analysis is restricted to workers under age 65,

because workers age 65 or older would be eligible for

full Social Security benefits, softening the hardship

from displacement. Consequently, displaced workers

under age 65 are more of a concern from a policy

standpoint. In addition, less than 5 percent of all

displaced workers are age 65 or older.

Workers displaced in nonmetro areas cannot be

precisely identified in the DWS. (See box for definition of metro/nonmetro.) Metro/nonmetro status of 

the respondent’s residence at the time of the interview

was recorded but not previous residence for those who

had moved in the previous 3 years. However, most

displaced workers—84 percent of nonmetro and 88

percent of metro—had not moved. Analysis of

nonmovers (not presented here) revealed essentially

the same results as those presented in table 1 for all

displaced workers. The lack of data on previous residence of movers does not substantively affect the findings presented here.

Definition of Metro and Nonmetro

Metro areas or Metropolitan Statistical Areas

(MSA’s) are defined by the Office of Management

and Budget (OMB) as core counties containing a city

of 50,000 or more people or an urbanized population

or at least 50,000 with a total area population of at

least 100,000. Additional contiguous counties are

included in the Metropolitan Statistical Area if they

are economically and socially integrated with the

core county. Nonmetro areas are counties outside

metro area boundaries. After each decennial census,

OMB reevaluates the metro/nonmetro status of each

county. In 1993, OMB issued a new metro/nonmetro

classification based on the 1990 census. In this last

reclassification, 13 counties that had been metro were

reclassified as nonmetro, and 111 counties that had

been nonmetro were reclassified as metro, resulting

in a net 98 new metro counties. Also after each

decennial census, BLS and the Census Bureau

redesign the CPS sample to better reflect the population. The new CPS sample and the new OMB

metro/nonmetro classification were phased into the

CPS during April 1994-June 1995. Because of this

phasing-in process, producing consistent CPS

metro/nonmetro figures for 1995 is not possible from

the publicly available CPS data. In February 1998,

when the DWS was administered, the CPS reflected

the 1993 OMB metro/nonmetro classification.
Economic Research Service/USDA Displaced Workers: Differences in Nonmetro and Metro / RDRR-92 ◆ 5

Table 1—Displaced workers, 1995-97

Nonmetro Metro U.S. total

Thousands

Displaced workers1 500 2,915 3,415

Percent

Male 57.5 52.5 53.2

Nonwhite 9.5 15.5 14.6

Hispanic2 5.6 10.8 10.1

Years

Age 42.3 42.2 42.2

Percent

Age distribution:

20-24 years 2.7 3.2 3.2

25-34 years 25.1 22.3 22.7

35-44 years 28.0 34.2 33.3

45-54 years 29.1 26.6 27.0

55-64 years 15.0 13.6 13.8

Education level:

Less than high school diploma 15.8 10.3 11.1

High school diploma 44.2 30.9 32.9

Some college 29.8 31.3 31.1

College degree 7.6 19.5 17.7

Advanced degree 2.7 8.0 7.3

Why displaced?

Plant or company closed or moved 50.6 46.2 46.8

Insufficient work 25.5 20.2 21.0

Position or shift abolished 24.0 33.6 32.2

Year displaced:

1995 26.7 28.5 28.2

1996 33.4 34.7 34.5

1997 39.9 36.9 37.3

Usually worked full time on lost job 90.0 88.8 88.9

Low-skill occupation on lost job 55.0 49.1 49.9

Received written advance notice of job loss 37.9 46.3 45.1

Received unemployment insurance benefits 50.1 48.1 48.4

Exhausted eligibility for unemployment insurance benefits 43.5 47.2 46.7

Moved to a different city or county since lost job 16.3 12.2 12.8

Of those who moved, move was to look for work 

or take a different job 58.1 59.8 59.5

Years

Tenure on lost job 9.2 9.3 9.3

Percent

Tenure distribution:

3-5 years 35.2 31.9 32.4

5-10 years 35.1 32.4 32.8

10-20 years 17.2 24.5 23.4

20+ years 12.5 11.2 11.4

Currently unemployed 10.1 10.0 10.0

Currently employed 73.4 78.7 77.9

Currently not in labor force 16.5 11.5 12.1

Household income less than $15,000 at survey 22.0 12.1 13.6

1 Displaced workers aged 20-64, with 3 or more years of tenure on their lost job.

2 Hispanics may be of any race.

Source: Calculated by ERS using data from the Displaced Worker Survey supplement, February 1998 Current Population Survey,

Bureau of Labor Statistics.
6 ◆ Displaced Workers: Differences in Nonmetro and Metro / RDRR-92 Economic Research Service/USDA

Displaced Workers: 

Who Are They?

Of the 3.4 million workers displaced during 1995-

97, 500,000 were nonmetro workers (14.6 percent)

(table 1). This number is less than proportional to

the nonmetro share of the labor force, which is about

20 percent. For the most part, the nonmetro

displaced experience during 1995-97 is about the

same as the metro experience.6 However, there are

some notable differences. 

Nonmetro displaced workers have lower educational

levels than the metro displaced (fig. 1). Sixty percent

of the nonmetro displaced had at most a high school

diploma, which corresponds to the share of the

nonmetro labor force that has at most a high school

diploma. Only 41 percent of the metro displaced had

at most a high school diploma.

Although the shares of displaced workers who lost

their jobs due to a plant or company closing or

moving, or due to insufficient work were roughly the

same for nonmetro as for metro, nonmetro workers

had a smaller share of displacement due to their position or shift being abolished than metro displaced.

This is perhaps due to continued mass layoffs of

white-collar workers, since white-collar workers were

more likely to report that their position or shift was

abolished than blue-collar workers, and white-collar

jobs are disproportionately located in metro areas.

Most displaced, 89 percent, had worked full-time on

their lost job, and around half had worked in a lowskill occupation.7 About 38 percent of nonmetro

displaced and 46 percent of metro displaced received

advance notice before losing their jobs. A small share

moved after displacement—16 percent of nonmetro

displaced and 12 percent of metro displaced—and

most who moved did so for a new job.

Although many displaced workers found new jobs,

some were still looking for work when they were

surveyed. The nonmetro displaced had the same share

unemployed as the metro displaced at the time of the

survey, both at about 10 percent (fig. 2). In comparison, the overall unemployment rate for 1998 was 4.8

percent for nonmetro areas and 4.4 percent for metro

areas. Although the shares unemployed were the same,

nonmetro displaced were less likely to be employed

and more likely to have dropped out of the labor force

than metro displaced. Over 16 percent of nonmetro

displaced left the labor force after their displacement—they were neither employed nor looking for a

job when surveyed.

About 14 percent of total U.S. displaced workers were in

households with incomes of less than $15,000—under

the 1997 poverty threshold of $16,400 for a family of

Figure 2

Employment status at time of survey

Percent

Source: Calculated by ERS using data from the Displaced Worker 

Survey supplement, February 1998 Current Population Survey,

Bureau of Labor Statistics.

10 percent of displaced workers were unemployed

when surveyed

Unemployed

Employed

0 20 40 60 80 100

Total U.S.

Metro

Nonmetro

Not in labor

force

Less than

high school

diploma

High school

diploma

College

degree

Some 

college

Advanced

degree

0

10

20

30

40

50

Figure 1

Nonmetro displaced workers had lower education 

levels than metro displaced

60 percent of nometro displaced workers had at 

most a high school diploma

Percent

Source: Calculated by ERS using data from the Displaced Worker 

Survey supplement, February 1998 Current Population Survey,

Bureau of Labor Statistics.

Nonmetro Metro Total U.S.
Economic Research Service/USDA Displaced Workers: Differences in Nonmetro and Metro / RDRR-92 ◆ 7

four (fig. 3). This proportion is about the same as that of

all households, 15.5 percent. The nonmetro share of 22

percent of displaced workers in low-income households

is also about the same as the share for all nonmetro

workers. The metro share of low-income displaced

workers, 12 percent, is also about the same as for all

metro households.

Displacement Rates

Nonmetro workers were displaced at a lower rate, 3.5

percent, than metro workers, 4.8 percent, during 1995-

97 (table 2). The displacement rate is the proportion of

displaced workers in a group of employed workers in

the same group, aged 20-64, with 3 or more years of

tenure with their employer.8 Rates of displacement

were lower for nonmetro than for metro for all demographic and education level groups of workers.

Construction was the only industry where the nonmetro

rate, 4.4 percent, was greater than the metro rate, 3.7

percent, although these rates are still fairly close. The

nonmetro and metro rates were about the same for the

transportation, communications, and utilities industry,

with 4.8 percent for nonmetro and 4.5 percent for

metro. Otherwise, the nonmetro rates were lower.

By occupation, the highest rate of displacement for

nonmetro displaced was for operators, fabricators, and

laborers, 5.0 percent, although the metro rate was higher

at 6.2 percent. This occupational group is associated

with the goods-producing industries and manufacturing

in particular. For metro, the highest displacement rate

was for marketing and sales, 7.0 percent. Looking at

low-skill occupations as a group, the displacement rate

was only 3.6 percent for nonmetro, but a relatively high

5.3 percent for metro.

Post-Displacement: Employment,

Unemployment, or Not in the 

Labor Force

Employment

Nonmetro displaced workers who were employed at

the time of the survey had experienced on average 12

weeks of nonemployment compared with an average

14 weeks for metro displaced (table 3). About 70

percent of all employed displaced workers, nonmetro

and metro, had found their jobs within 3 months (fig.

4). About half had changed industries for a new job,

and also about half had changed occupations.

On average, earnings were less on the new job, and

about half of the employed displaced workers,

nonmetro and metro, had found a new job but with

lower real weekly earnings. A relatively large number

of nonmetro displaced workers, 16.6 percent, were

employed at the survey date, but were in households

with income of less than $15,000.

Less than

3 months

3-6

months

6-12

months

12-24

months

24 months

or more

0

20

40

60

80

100

Figure 4

Length of unemployment for displaced workers

Most displaced workers found new jobs within 3 months

Percent

Source: Calculated by ERS using data from the Displaced Worker 

Survey supplement, February 1998 Current Population Survey,

Bureau of Labor Statistics.

Nonmetro Metro Total U.S.

All displaced Employed Unemployed Not in labor

force

0

10

20

30

40

50

Figure 3

Share of households with income less than $15,000

Nometro displaced workers were more likely than metro

workers to be in low-income households

Percent

Source: Calculated by ERS using data from the Displaced Worker 

Survey supplement, February 1998 Current Population Survey,

Bureau of Labor Statistics.

Nonmetro Metro Total U.S.
8 ◆ Displaced Workers: Differences in Nonmetro and Metro / RDRR-92 Economic Research Service/USDA

Table 2—Displacement rates, 1995-97

Nonmetro rate/

Nonmetro rate Metro rate Metro rate U.S. rate

---------- Percent ---------- Ratio Percent

Total1 3.5 4.8 0.72 4.6

20-24 years old 2.5 4.2 .58 3.9

25-34 years old 4.5 5.0 .90 4.9

35-44 years old 3.0 5.0 .61 4.6

45-54 years old 3.6 4.6 .77 4.4

55-64 years old 3.3 4.8 .68 4.5

Men 3.6 4.6 .78 4.4

Women 3.3 5.1 .65 4.7

White 3.5 4.8 .72 4.6

Nonwhite 3.7 4.7 .79 4.5

Hispanic2 4.0 5.0 .80 4.9

Nonhispanic 3.5 4.8 .72 4.5

Education level:

Less than high school 4.7 5.8 .82 5.5

High school diploma 3.7 4.9 .76 4.6

Some college 3.8 5.3 .72 5.0

College degree 2.0 4.5 .45 4.1

Master’s degree or higher .4 3.2 .42 3.2

Industry of lost job:

Agriculture 1.8 2.5 .72 2.2

Mining 2.8 6.6 .42 5.0

Construction 4.4 3.7 1.20 3.8

Manufacturing 5.3 7.3 .72 6.8

Transportation, communications, and utilities 4.8 4.5 1.06 4.6

Wholesale trade 3.0 5.5 .55 5.1

Retail trade 5.6 6.6 .85 6.4

Finance, insurance, and real estate 2.0 6.5 .31 6.0

Services 1.8 3.1 .59 2.9

Public administration 1.1 3.0 .37 2.6

Occupation of lost job:

Executive, administrative, and managerial 4.0 4.4 .92 4.3

Professional specialty 1.8 3.1 .60 2.9

Technicians and related support 3.2 5.4 .59 5.0

Marketing and sales 4.7 7.0 .67 6.6

Administrative support, including clerical 3.0 5.9 .50 5.4

Service 2.3 3.6 .65 3.3

Precision production, craft, and repair 3.3 4.3 .77 4.0

Operators, fabricators, and laborers 5.0 6.2 .81 5.9

Agriculture, forestry, fishing, and related 2.6 3.6 .73 3.2

Low-skill occupations 3.6 5.3 .67 4.9

1 Displaced workers aged 20-64, with 3 or more years of tenure on their lost job.

2 Hispanics may be of any race.

Source: Calculated by ERS using data from the Displaced Worker Survey supplement, February 1998 Current Population Survey,

Bureau of Labor Statistics.
Economic Research Service/USDA Displaced Workers: Differences in Nonmetro and Metro / RDRR-92 ◆ 9

Table 3—Displaced workers, 1995-97, employed at time of survey

Nonmetro Metro U.S. total

Thousands

Displaced workers employed at time of survey1 367 2,292 2,658

Percent

Year displaced:

1995 29.0 30.8 30.5

1996 33.8 37.7 37.2

1997 37.2 31.5 32.3

Percent

Male 57.6 54.5 55.0

Nonwhite 9.5 15.2 14.4

Hispanic2 6.5 10.0 9.5

Years

Age 40.9 41.5 41.4

Percent

Education level:

Less than high school diploma 15.1 8.7 9.6

High school diploma 42.0 30.1 31.7

Some college 32.0 31.5 31.6

College degree 8.5 21.3 19.6

Advanced degree 2.4 8.3 7.6

Weeks

After job loss, average time before working again 12.1 14.1 13.8

Percent

Jobless duration:

0-3 months 69.4 69.2 69.2

3-6 months 9.9 11.9 11.6

6-12 months 15.8 9.6 10.4

12-24 months 4.8 7.8 7.4

24+ months .1 1.5 1.3

Percentage whose current job is in a different 

industry than lost job 53.8 51.8 52.1

Percentage whose current job is in a different 

occupation than lost job 53.7 45.4 46.6

Percentage who were full time on lost job but 

are now part time 13.6 10.9 11.3

Low-skill occupation on lost job 51.9 46.4 47.1

1998 dollars

Median weekly earnings on lost job 419.29 582.76 544.28

Median weekly earnings on current job 394.00 481.00 478.00

Percent

Share of workers who found a new job but at 

lower real weekly earnings 52.5 49.3 49.8

Household income less than $15,000 at survey 16.6 9.4 10.4

1 Displaced workers aged 20-64, with 3 or more years of tenure on their lost job.

2 Hispanics may be of any race.

Note: The Personal Consumption Expenditure Price Index, Bureau of Economic Analysis, was used to adjust weekly earnings.

Source: Calculated by ERS using data from the Displaced Worker Survey supplement, February 1998 Current Population Survey,

Bureau of Labor Statistics.
10 ◆ Displaced Workers: Differences in Nonmetro and Metro / RDRR-92 Economic Research Service/USDA

Unemployment

Ten percent of total U.S. displaced workers, 341,000,

were unemployed—jobless, looking for work, and

available to work—when surveyed (table 4). However,

about two-thirds of these unemployed workers had

been displaced in 1997, the year before the survey was

taken. On average, the nonmetro unemployed displaced

looked for work for 17 weeks, and the metro, for 25

weeks. The recentness of this group’s displacement

makes their unemployment less of a policy issue than

had they been displaced 2 or 3 years prior, as many

would have been likely to have found jobs soon after

being surveyed. The unemployed displaced, as a group,

have a lower education level than all displaced. Almost

80 percent of the nonmetro workers and 55 percent of

the metro workers have at most a high school diploma.

A large share of unemployed displaced were in households with incomes of less than $15,000—38 percent

of nonmetro and 28 percent of metro.

Not in the Labor Force

About 12 percent, 415,000, of total displaced had

dropped out of the labor force when surveyed (table

5). That is, they were not employed and were not

looking for work. Almost 50 percent of the nonmetro

displaced workers who were not in the labor force

were men, versus 31 percent of the metro displaced

workers who had dropped out of the labor force. For

both the nonmetro and metro groups, the average age

was late 40’s, and slightly less than two-thirds were in

a low-skill occupation on their lost job. A greater share

of the nonmetro displaced workers who were not in

the labor force stated that they were disabled, 22

percent, than the metro group, 10 percent. The

nonmetro displaced workers were again more likely to

be in a household with income of less than $15,000

than were the metro group.

Table 4—Displaced workers, 1995-97 who were unemployed at time of survey

Nonmetro1 Metro U.S. total

Thousands

Displaced workers unemployed at survey2 50 291 341

Percent

Year displaced:

1995 17.7 12.8 13.5

1996 17.5 18.6 18.5

1997 64.8 68.6 68.1

Male 72.3 60.8 62.5

Nonwhite 14.5 21.2 20.2

Hispanic3 1.3 17.5 15.1

Years

Average age 42.5 43.3 43.2

Percent

Low-skill occupation on lost job 65.0 53.9 55.6

Weeks

Average duration of unemployment 17.2 24.7 23.6

Percent

Unemployment duration:

Less than 3 months 49.7 42.3 43.4

3-6 months 36.7 24.0 25.9

6-12 months 2.3 19.0 16.5

12-24 months 11.3 10.3 10.4

More than 24 months 0 4.4 3.7

Household income less than $15,000 at survey 37.7 27.6 29.1

1 Due to the small number of observations for nonmetro displaced workers unemployed at the survey date-28 observations-caution should be used when

interpreting results.

2 Displaced workers aged 20-64, with 3 or more years of tenure on their lost job.

3 Hispanics may be of any race.

Source: Calculated by ERS using data from the Displaced Worker Survey supplement, February 1998 Current Population Survey, Bureau of Labor Statistics.
Economic Research Service/USDA Displaced Workers: Differences in Nonmetro and Metro / RDRR-92 ◆ 11

Hardship Groups

Overall, fewer workers were displaced during 1995-97

than during 1993-95, rates of displacement for the

labor force were low, and most displaced workers

found new jobs quickly. The tight labor market of this

phase of the expansion meant that many displaced

workers faced relatively little hardship. However, some

displaced worker groups faced disproportionate hardship such as high unemployment and low income

levels. Three hardship groups are examined here: those

age 55-64, those without a high school diploma, and

those with household incomes of less than $15,000.9

Age 55-64

Among all displaced, 472,000 were age 55-64 at the

survey date (table 6). The experience of the nonmetro

displaced age 55-64 was generally the same as for

metro. However, a larger share of the nonmetro group

was male, 74 percent, versus 57 percent for metro.

Additionally, the nonmetro displaced age 55-64 had,

on average, a much longer tenure on their lost job, 18

years, whereas metro displaced age 55-64 had, on

average, 13 years’ tenure. Nonmetro displaced in this

group were more likely to have been in a low-skill

occupation on their lost job than metro displaced.

Most striking about this group is the high share of

unemployment, 30 percent of total, and consequently,

the low employment share, 60 percent. Interestingly,

most displaced age 55-64 stayed in the labor force,

either employed or looking for a job. Surprisingly, a

smaller share of this group were in households with

incomes of less than $15,000 than of all displaced

workers, indicating less hardship than one would have

expected. Perhaps some of these displaced workers age

55-64 were receiving early retirement pensions or lived

with other household members who were employed.

Less than High School Diploma

Those without a high school diploma were markedly

different from all displaced workers. About two-thirds

of those with less than a high school diploma were

male, and about one-third were Hispanic (table 7). A

large share—three-quarters—of the less-than-diploma

displaced were in low-skill occupations. Although a

larger share were unemployed or not in the labor

force than all displaced, two-thirds were employed

when surveyed. 

Looking at the nonmetro displaced who had less than a

diploma, patterns were generally similar to those of

metro. However, the nonmetro displaced were more

Table 5—Displaced workers, 1995-97, not in labor force at time of survey

Nonmetro Metro U.S. total

Thousands

Displaced workers not in labor force at survey1 83 332 415

Percent

Year displaced:

1995 21.6 26.3 25.3

1996 41.1 27.6 30.3

1997 37.3 46.1 44.4

Male 48.2 30.8 34.3

Nonwhite 6.4 12.7 11.5

Hispanic2 4.1 10.7 9.4

Years

Average age 48.2 45.8 46.3

Percent

Low-skill occupation on lost job 62.3 63.3 63.1

Not in labor force reason:

Retired 27.5 30.3 29.8

Disabled 21.8 10.1 12.4

Other 50.7 59.6 57.8

Household income less than $15,000 at survey 37.7 17.8 21.7

1 Displaced workers aged 20-64, with 3 or more years of tenure on their lost job.

2 Hispanics may be of any race.

Source: Calculated by ERS using data from the Displaced Worker Survey supplement, February 1998 Current Population Survey, Bureau of Labor Statistics.
12 ◆ Displaced Workers: Differences in Nonmetro and Metro / RDRR-92 Economic Research Service/USDA

Table 6—Displaced workers, 1995-97, who were age 55-64 at time of survey

Nonmetro Metro U.S. total

Thousands

Displaced workers1 75 396 472

Percent

Male 73.8 56.7 59.4

Nonwhite 2.9 11.2 9.9

Hispanic2 3.1 4.8 4.5

Received written advance notice of job loss 42.4 41.4 41.6

Years

Tenure on lost job 17.8 13.1 13.8

Percent

Low-skill occupation on lost job 62.3 47.9 50.1

Currently unemployed 33.3 29.9 30.4

Currently employed 45.3 62.3 59.6

Currently not in labor force 21.4 7.8 9.9

Household income less than $15,000 at survey 19.3 17.7 17.9

1 Displaced workers aged 20-64, with 3 or more years of tenure on their lost job.

2 Hispanics may be of any race.

Source: Calculated by ERS using data from the Displaced Worker Survey supplement, February 1998 Current Population Survey, Bureau of Labor Statistics.

Table 7—Displaced workers, 1995-97, who had less than a high school diploma

Nonmetro Metro U.S. total

Thousands

Displaced workers1 79 300 379

Percent

Male 77.2 60.6 64.1

Nonwhite 9.7 18.7 16.8

Hispanic2 28.1 35.8 34.2

Years

Average age 43.6 42.4 42.6

Percent

Received written advance notice of job loss 26.8 42.1 39.0

Years

Tenure on lost job 6.5 8.0 7.7

Percent

Low-skill occupation on lost job 59.0 79.6 75.4

Currently unemployed 9.0 18.7 16.7

Currently employed 70.2 66.2 67.0

Currently not in labor force 20.8 15.0 16.3

Household income less than $15,000 at survey 44.8 38.4 39.8

1 Displaced workers aged 20-64, with 3 or more years of tenure on their lost job.

2 Hispanics may be of any race.

Source: Calculated by ERS using data from the Displaced Worker Survey supplement, February 1998 Current Population Survey, Bureau of Labor Statistics.
Economic Research Service/USDA Displaced Workers: Differences in Nonmetro and Metro / RDRR-92 ◆ 13

likely to be male, and, surprisingly, less likely to have

been in a low-skill occupation—59 percent of

nonmetro versus 80 percent of metro. Also surprising

is the relatively low unemployment share for the

nonmetro displaced who had less than a diploma, 9

percent, compared with about 17 percent for all

displaced. Although a large share of those who had

less than a diploma were employed at the survey date,

many were living in households with low incomes.

Forty-five percent of the nonmetro displaced and 38

percent of the metro displaced in this group were in

households with incomes of less than $15,000.

Low Income 10

Among those displaced, 435,000 (13.6 percent) were in

households with incomes of less than $15,000 at the

survey date (table 8). Sixty percent of these workers

were employed at a new job. Although about half were

male averaging age 42 years old, (the same as for all

displaced), larger than proportional shares of low-income

displaced were nonwhite (23 percent) and Hispanic (19

percent). The low-income displaced were more likely to

have at most a high school diploma. Indeed, there is a

large overlap between this hardship group and the

displaced group with less than a diploma. An especially

high share of metro workers in this group had, at most, a

high school diploma—75 percent. The low-income

workers were slightly more likely to have been in a lowskill occupation on their lost job than all displaced.

A large share of this group were not employed: 22

percent of all the low-income displaced were unemployed, and 19 percent had dropped out of the labor

force. Those rates were roughly double the rates for all

displaced. Nonmetro workers in this group had a

slightly lower unemployment rate, 17 percent, but a

higher rate of leaving the labor force, 26 percent.

Table 8—Displaced workers, 1995-97, living in households with income less than $15,000 at time of survey

Nonmetro Metro U.S. total

Thousands

Displaced workers1 104 331 435

Percent

Male 65.8 47.3 51.7

Nonwhite 13.0 26.6 23.4

Hispanic2 10.2 21.5 18.8

Years

Age 42.5 41.8 42.0

Percent

Education level:

Less than high school diploma 33.9 32.1 32.5

High school diploma 35.3 43.1 41.2

Some college 28.3 14.8 18.1

College degree 2.1 9.8 7.9

Advanced degree .4 .3 .3

Why displaced?

Plant or company closed or moved 50.5 63.3 60.2

Insufficient work 26.8 23.3 24.2

Position or shift abolished 22.7 13.4 15.6

Received written advance notice of job loss 24.6 39.1 35.8

Years

Tenure on lost job 6.7 8.5 8.1

Percent

Low-skill occupation on lost job 59.0 66.8 64.9

Currently unemployed 17.4 22.8 21.6

Currently employed 56.2 60.9 59.7

Currently not in labor force 26.4 16.4 18.8

1 Displaced workers aged 20-64, with 3 or more years of tenure on their lost job.

2 Hispanics may be of any race.

Source: Calculated by ERS using data from the Displaced Worker Survey supplement, February 1998 Current Population Survey, Bureau of Labor Statistics.
14 ◆ Displaced Workers: Differences in Nonmetro and Metro / RDRR-92 Economic Research Service/USDA

Models and Estimates

The analysis above provides a useful description of

displaced workers. However, to better study the factors

associated with worker displacement in nonmetro and

metro areas, one must control for the influence of

other variables. For example, more men than women

are displaced workers in nonmetro areas. Because

goods-producing industries are disproportionately

male, and because goods-producing industries are

more likely to have layoffs, and also because employment in nonmetro areas is disproportionately in goodsproducing industries, nonmetro men were more likely

to be displaced than nonmetro women during 1995-97.

Sorting out the contribution of various factors, such as

sex, industry, and area of residence, is done by use of

regression models. In looking at displacement, a

worker was displaced or was not displaced over the

time period studied. For this type of binary outcome, a

probit type of regression model is used, where the

coefficient estimates on worker characteristics represent the contribution to the probability that the worker

will be displaced.

Here, three questions will be addressed. First, what is

the probability of displacement for different groups of

workers in nonmetro and metro areas? Second, of those

nonmetro and metro displaced, what is the probability

of employment after displacement? Third, for those who

find a new job after displacement, what are the factors

that contribute to earnings loss in nonmetro areas?

Probability of Displacement

The analysis above on calculated displacement rates is

a start at looking at probability of displacement. I also

conducted a probit analysis to estimate the probability

of job loss. I estimated the following models:

probability(yi

=displacement) = f(age, education

level, sex, race, industry, metro/nonmetro residence)

probability(yi

=displacement, nonmetro only) =

f(age, education level, sex, race, industry)

probability(yi

=displacement, metro only) = 

f(age, education level, sex, race, industry)

These models test the hypotheses that factors—

age, education level, sex, race, industry, and

residence—contribute to the probability of displacement. These models describe the data and estimate

probabilities of displacement controlling for various

factors; they are not designed as models of laborleisure choice theory.11

Usually these models would contain a measure of

regional labor markets such as a regional unemployment

rate. Metro and nonmetro unemployment rates were

similar during 1995-97, and having only one unemployment rate for the aggregate of nonmetro and the aggregate of metro in the model creates a variable equivalent

to the metro/nonmetro dummy. Therefore, these variables were not successful in the models and so were

excluded from analysis.12 Also excluded as an explanatory variable is tenure. Job tenure is problematic

because displaced workers by definition were displaced

in the 3 years’ prior to being surveyed, so their current

job tenure would be short. Tenure then would serve as a

proxy for displacement. If job tenure at displacement is

used, then the difficulty is in how to treat tenure of

workers who were not displaced. Expectations, drawn

from the calculated displacement rates and the literature, were that higher probabilities of displacement

would be experienced by younger and older workers,

those with less education, men, nonwhites, workers in

the goods-producing industries, and metro workers.

Table 9 contains both the probit estimates and the

normalized estimates of the probit models.13, 14, 15

Normalized estimates represent the probability of

displacement given a one-unit increase in an independent variable. The normalized estimates are calculated at the mean of the independent variables. Note

that when the independent variables are binary, the

normalized estimates can be interpreted as rates. The

probit analysis estimates of displacement rates in table

9 have the advantage that each rate is estimated

controlling for the other factors, unlike the calculated

rates presented above. The mean values of each variable are also presented in table 9. In this case, all the

independent variables are 0-1 binary, so the mean

represents the share of workers in each category. For

example, a mean of 0.251 for the variable age 25-34

indicates that 25.1 percent of the workers analyzed are

in that age group. 

The data in this model include all workers who had

reported being displaced during 1995-97 plus all

workers who were employed when surveyed. Unlike

other analysis in this report, displaced workers of all

job tenures are included. Because the model estimates

the probability of being displaced, it is more intuitive

to think of the entire population of displaced and those
Economic Research Service/USDA Displaced Workers: Differences in Nonmetro and Metro / RDRR-92 ◆ 15

Table 9—Probability of displacement, 1995-97

U.S. total Nonmetro Metro

Mean Estimate Mean Estimate Mean Estimate

All tenures-probit estimates:

Intercept -1.447** -1.452** -1.470**

(.021) (.050) (.023)

Age 25-34 0.251 - .025 .224 -.006 .257 -.031

(.021) (.050) (.023)

Age 35-44 .282 -.079** .275 -.189** .283 -.059**

(.020) (.050) (.022)

Age 45-54 .217 -.124** .233 -.189** .214 -.112**

(.022) (.052) (.024)

Age 55-64 .140 -.208** .165 -.375** .134 -.174**

(.026) (.064) (.029)

Education—less than high school diploma .133 .116** .166 .069 .125 .130**

(.020) (.044) (.022)

Education—some college .288 .008 .269 -.042 .292 .022 

(.015) (.035) (.016)

Education—college degree .174 -.090** .108 -.194** .189 -.073**

(.017) (.052) (.019)

Education—advanced degree .078 -.206** .046 -.384** .086 -.189**

(.025) (.087) (.026)

Female .510 -.060** .511 -.141** .509 -.046**

(.012) (.031) (.013)

Nonwhite .169 .009 .112 .083* .183 -.0002

(.016) (.046) (.017)

Goods-producing sector .263 .063** .361 .065* .240 .056**

(.014) (.032) (.015)

Nonmetro .190 -.126**

(.016)

Rescaled generalized R2 .013 .026 .010

Log likelihood -26,500.7 -4,248.1 -22,183.0

Percent

Association of predicted and observed:

Concordant 54.2 59.1 52.9

Discordant 40.7 36.1 41.9

Tied 5.1 4.8 5.2

U.S. total Nonmetro Metro

Normalized probit estimates:

Intercept -0.165 -0.139 -0.174

Age 25-34 -.003 -.001 -.004

Age 35-44 -.009 -.018 -.007

Age 45-54 -.014 -.018 -.013

Age 55-64 -.024 -.036 -.021

Education-less than high school diploma .013 .007 .015

Education-some college .001 -.004 .003

Education-college degree -.010 -.018 -.009

Education-advanced degree -.024 -.037 -.022

Female -.007 -.014 -.006

Nonwhite .001 .008 0

Goods-producing sector .007 .006 .007

Nonmetro -.014

* Indicates significance at the 10-percent level using chi-squared statistic. Standard errors are in parentheses. ** Indicates significance at the 1-percent level

using chi-squared statistic.

Note: The base (omitted) group for U.S. total: age 20-24, high school diploma, male, white, service sector, and metro. The base (omitted) group for nonmetro and metro: age 20-24, high school diploma, male, and white. The number of observations for U.S. total, 50,357; for nonmetro, 11,491; for metro,

38,746. Displaced are 5.7 percent, 4.9 percent, and 5.9 percent of the observations, respectively.
16 ◆ Displaced Workers: Differences in Nonmetro and Metro / RDRR-92 Economic Research Service/USDA

not displaced but working, than to consider only those

with 3 or more years of tenure.16

The estimates show that older workers were less likely

to be displaced. For the U.S. total, those age 55-64 have

a displacement rate 2.4 percentage points lower (-0.024

in table 9) than the base (omitted) category of age 20-

24, high school diploma, male, white, service sector,

and metro. (Because of the nature of modeling with

dummy variables, the estimates are relative to the

omitted groups.) For nonmetro, those age 55-64 had an

even lower displacement rate, 3.6 percentage points less

than the base category. Those with college or advanced

degrees had a lower displacement rate than the base

categories. Those with less than a high school diploma

had a higher rate of displacement with a probability 1.3

percentage points greater than the base group for the

U.S. total. Women also had lower displacement rates

than the base. Nonwhite workers had a probability of

displacement the same as the base case for the U.S. total

and metro, and a slightly higher probability, 0.8

percentage point for nonmetro. Those in the goodsproducing sector—agriculture, mining, manufacturing,

and construction—had a greater probability of displacement as expected. Being in a nonmetro area lowered the

probability of displacement by 1.4 percentage points.

The normalized coefficient estimates of the nonmetro

probit and the metro probit are generally about the same,

consistent with the calculated displacement rates in table

2. The U.S. total model achieves a concordant level of

54 percent, meaning that it is slightly better than a coin

toss, which is as expected given that only about 6

percent of the population analyzed were displaced.17 The

tepidness of the results imply that displacement is less

about workers’ characteristics, which are included in the

model, but about other factors. This is not surprising in

that displacement is a result of economic restructuring

from import competition, technological advances, or

firm downsizing. However, because some industries and

companies are facing more economic restructuring than

other industries and because there are demographic

differences in the distribution of workers across industries and companies, worker characteristics indicate

which groups may be more likely to be displaced.

Probability of Employment 

After Displacement

To answer the second question (for those displaced,

what is the probability of employment after displacement?) I used the following models:

probability(yi

=employment after displacement) =

f(age, sex, tenure on lost job, weekly earnings on lost

job, skill level on lost job, metro/nonmetro residence )

probability(yi

=employment after displacement,

nonmetro only) = f(age, sex, tenure on lost job,

weekly earnings on lost job, skill level on lost job)

probability(yi

=employment after displacement,

metro only) = f(age, sex, tenure on lost job, weekly

earnings on lost job, skill level on lost job)

Expectations were that younger workers, men, those

with less tenure on the lost job, and those with higher

skill levels would have a higher probability of

attaining a new job after displacement and that those

in nonmetro areas would have a lower probability.

Table 10 presents both probit estimates and normalized

probit estimates.18 The data include all workers in the

1998 DWS who reported being displaced during 1995-

97 and who had 3 or more years of tenure on their lost

job. Looking at the U.S. normalized probit estimates,

those in all age categories—25-34, 35-44, 45-54, and

55-64—have higher probabilities of attaining a new

job after displacement than the base category—age 20-

24, male, not low-skill, and metro. However, the age

group 25-34 years old had the highest probability of

all groups, 21.8 percentage points higher than the base

category for total United States, consistent with the

expectation that younger workers are more likely to

find a new job. The coefficients for the category age

55-64 were not significant for any of the three probit

estimates, meaning that the probability of employment

for this group is essentially the same as the base case.

Women who were displaced had a lower probability of

employment, as expected. Those with long tenures on

their lost job had a lower probability of employment,

as the probability declined 0.4 percentage point for

each year of tenure. Those with higher weekly earnings had higher probabilities of employment. Those in

low-skill occupations on their lost job were less likely

to find employment, as expected. Workers in nonmetro

areas had a lower probability of employment by 5.0

percentage points than those in metro areas.

I used other explanatory variables in determining the

probability of employment after displacement.

Education levels were used, and results were similar to

using skill level on lost job. Advance notice of job loss

was also used, but without success. Metro-nonmetro

unemployment rates are typically used in explaining

the probability of employment after displacement, but
Economic Research Service/USDA Displaced Workers: Differences in Nonmetro and Metro / RDRR-92 ◆ 17

Table 10—Probability of employment after displacement, 1995-97

U.S. total Nonmetro Metro

Mean Estimate Mean Estimate Mean Estimate

Probit estimates:

Intercept -0.246 0.061 -0.405 

(.298) (.767) (.330)

Age 25-34 .224 .770* .259 1.124* .219 .680*

(.158) (.427) (.172)

Age 35-44 .347 .696* .278 .741* .358 .660*

(.155) (.418) (.169)

Age 45-54 .270 .536* .297 .758* .265 .464*

(.158) (.420) (.173)

Age 55-64 .132 .047 .142 -.083 .130 .033

(.165) (.451) (.179)

Female .473 -.229* .410 -.234 .484 -.232*

(.057) (.152) (.062)

Nonwhite .134 -.084 .090 -.114 .141 -.082 

(.078) (.247) (.082)

Tenure on lost job 9.433 -.013* 9.283 -.0003 9.458 -.014*

(.004) (.010) (.004)

Log(weekly earnings) on 6.248 .136* 6.028 .014 6.285 .171* 

lost job (.004) (.103) (.049)

Low-skill occupations on .489 -.151* .554 -.156 .478 -.113*

lost job (.058) ( .148) (.063)

Nonmetro .143 -.117*

(.075)

Rescaled generalized R2 .146 .167 .142

Log likelihood -1,411.4 -221.3 -1,185.9

Percent

Association of predicted and observed:

Concordant 65.9 60.5 66.3

Discordant 33.6 38.0 33.1

Tied .6 1.5 .6

U.S. total Nonmetro Metro

Normalized probit estimates:

Intercept -0.070 0.020 -0.112

Age 25-34 .218 .361 .187

Age 35-44 .197 .238 .182

Age 45-54 .151 .243 .128

Age 55-64 .013 -.027 .009

Female -.065 -.075 -.064

Nonwhite -.024 -.036 -.023

Tenure on lost job -.004 -.0001 -.004

Log (weekly earnings) on lost job .038 .004 .047

Low-skill occupation on lost job -.043 -.050 -.037

Nonmetro -.050

* Indicates significance at the 10-percent level using chi-squared statistic. Standard errors are in parentheses.

Note: The base (omitted) group for U.S. total: age 20-24, male, white, not low-skill occupation, and metro. The base (omitted) group for nonmetro and

metro: age 20-24, male, white, and not low-skill occupation. The number of observations for U.S. total, 1,217; for nonmetro, 221; for metro, 996. Employed

after displacement are 78.0 percent, 73.8 percent, and 78.9 percent of the observations, respectively.
18 ◆ Displaced Workers: Differences in Nonmetro and Metro / RDRR-92 Economic Research Service/USDA

they were not used as discussed above, because the

metro/nonmetro unemployment rates were so close

during 1995-97.

Earnings Loss

Half the displaced workers who found a new job earned

less in real terms when surveyed than they did on their

lost job. Earnings loss is likely due to several factors.

Workers may have firm-specific skills that would not be

useful at another firm. The lost job earnings may

include a wage premium due to unionization or due to

efficiency wages—higher than market wages paid by

the employer as an incentive for higher productivity and

longer retention. Many employers reward longevity with

a steep wage profile, meaning that long-tenured workers

are paid more than their marginal product, and newer

employees are paid less than their marginal product.

Also, as a consequence of structural change, the

workers’ skills may no longer be valued if the skills are

obsolete or the industry is in decline.

Here earnings loss is measured as the difference

between current earnings (at the survey date) and real

lost job earnings. Half of displaced workers who found

new jobs experienced earnings loss, with about 30

percent suffering a real earnings loss of more than 20

percent. Not all displaced workers are as unfortunate,

as one-third had real earnings on their current job 20

percent or higher than on their lost job (fig. 5).

This analysis is a direct measure of earnings loss and

understates the total loss to displaced workers due to

several factors. First, it does not account for the earnings growth that would have occurred were the worker

still employed and had not been displaced. Second,

this analysis only looks at displaced workers who

found a new job; it does not incorporate nonemployment effects, that is, the earnings losses of those not

employed at the time of the survey and the earnings

losses of those who are now employed but experienced

a period of joblessness. However, because the direct

measure indicates substantial and widespread earnings

loss, it is useful in analyzing the costs of displacement.

The model used here is based on the standard statistical earnings function derived from human capital

theory.19 For worker i:

log(earningsi

) = f(educationi, experiencei, 

demographic factorsi

, job characteristicsi) + ui

where ui = random disturbance, normally distributed with mean zero, and constant variance

The model form is quadratic in experience; that is,

both experience and experience squared appear. The

model used here estimates the impact of the independent variables on the difference between the natural

log of the earnings on the current job and the natural

log of the real earnings on the lost job, or equivalently,

the natural log of the ratio of current earnings to real

lost job earnings. I estimated the following models:

log (current weekly earnings/real lost job weekly

earnings) = 

f (tenure on lost job,

tenure2,

age as proxy for experience,

education level,

low-skill occupation on lost job,

sex,

race,

industry of lost job,

union status on lost job,

advance notice received on lost job,

change in industry,

change in occupation,

full-time status to part-time status,

Less than

80%

80% to

100%

100% to

120%

Greater than

120%

0

10

20

30

40

50

Figure 5

Earnings on current job relative to real earnings

on lost job

About 30 percent of all displaced workers who found a

new job had substantial earnings losses

Percent

Source: Calculated by ERS using data from the Displaced Worker 

Survey supplement, February 1998 Current Population Survey,

Bureau of Labor Statistics.

Nonmetro Metro Total U.S.
Economic Research Service/USDA Displaced Workers: Differences in Nonmetro and Metro / RDRR-92 ◆ 19

weeks looking for work after displacement,

metro/nonmetro residence)

log(current weekly earnings/real lost job weekly

earnings, nonmetro only) = f(tenure, ..., weeks

looking for work after displacement)

log(current weekly earnings/real lost job weekly

earnings, metro only) = f(tenure, ..., weeks looking

for work after displacement)

Expectations were that the displaced workers who

experienced greater earnings loss would be those who

were longer tenured, older, less educated, in low-skilled

occupations, male, nonwhite, in the goods sector industries, in a union, not given advance notice, and had

changed industry or occupation for a new job, were

now working part time but were full time on their lost

job, and had experienced a long period of joblessness

before finding a new job. Again, residential unemployment rates were not included because the metro and

nonmetro rates were so similar over this period.

Ordinary least squares (OLS) estimates are presented

in table 11 for total United States, nonmetro, and

metro.20 Equations (1), (3), and (5) in the table are

estimated for the full model as presented above, and

equations (2), (4), and (6) are estimates for a parsimonious model, that is, a model with a minimal number

of regressors. The R2’s are low, as expected for an

earnings model and for a difference model. 

The reduction in hours worked—full-time to part-time

status—is the largest contributor to earnings loss, and

the estimated coefficient is significant at the 10-

percent level. The coefficient estimate of -1.207,

combined with the intercept, indicates that the reduction of hours by itself, all other things equal, would

yield current earnings that would be 48 percent of lostjob earnings. [Log(current earnings/lost job earnings)

= 0.463 - 1.207. Ratio = e-0.744 = 0.475.] The change

in status from full time to part time was large and

significant in all six models. Indeed, the mean weekly

earnings loss for displaced workers who were

employed full time on their lost job and then were

working part time when surveyed was $380, compared

with a mean earnings loss of $36 for the rest of the

displaced workers who had found a new job. About 11

percent of all the displaced workers who found a new

job were working reduced hours (table 3). 

The estimated coefficient on tenure is negative and

significant in all but one of the models. Longer job

tenures lead to a smaller ratio of current weekly earnings to real lost job earnings, that is, greater earnings

loss. Tenure squared is also significant in the full

model for equations (1) and (5); however, whether one

would expect the ratio of the two earnings to be quadratic in form even if each of the two earnings functions

were quadratic in form is unclear. The tenure squared

coefficient is small enough that its effect combined

with the tenure coefficient is a steady decline in the

ratio of earnings over a 45-year tenure.

All age groups experienced greater earnings loss than

the base group of age 20-24. Interestingly, the coefficients do not show a steady decline over age. The age

45-54 group had the smallest decline of the four groups.

Education was not generally successful as a variable;

however, low-skill occupation on lost job was. The

expectation was that the coefficient on low-skill would

be negative; that is, displaced workers in low-skill

occupations would have greater earnings loss, but the

coefficient is positive in all models, indicating less

earnings loss. This is partly due to the two minimum

wage increases, one October 1, 1996 ($4.25 to $4.75

an hour) and one September 1, 1997 ($4.75 to $5.15

an hour), which would affect earnings of low-skill

workers at or just above the minimum wage. Perhaps

also this is because low-skill jobs are likely to be paid

low wages; thus, a worker displaced from a low-skill

job is likely to find a similar job at similar pay. Also,

the number of low-skill jobs has been growing steadily

during this economic expansion of the 1990s, and with

the tight labor markets starting in 1996, wages for lowskill jobs have seen wage increases above the increases

in the minimum wage. 

Of the displaced workers who found a new job,

women tended to fare better in terms of replacing their

lost job earnings—the coefficients on female were

significant in all models. Race and a new job in a

different industry (as measured by 1-digit SIC code)

did not affect earnings loss. In contrast, changing

occupation (as measured by major occupational group)

did lead to greater earnings loss. Perhaps one can

maintain earnings by getting a job in the same occupation as the lost job, but in a different industry. 

The number of weeks jobless after displacement was

not significant. Economic theory would say that those

with more weeks jobless had a higher reservation

wage, the lowest wage that that person would accept,

and were engaged in search unemployment.21 The
20 ◆ Displaced Workers: Differences in Nonmetro and Metro / RDRR-92 Economic Research Service/USDA

Table 11—Regression analysis of earnings loss

Dependent variable: Log of the ratio of current weekly earnings to real lost-job earnings

Total U.S. Nonmetro Metro

Mean (1) (2) Mean (3) (4) Mean (5) (6)

Intercept 0.463* 0.437* -0.358 -0.363 0.590* 0.524*

(.183) (.171) (.600) (.554) (.192) (.178)

Tenure 9.149 -.031* -.012* 8.690 .006 -.026* 9.221 -.044* -.010*

(.012) (.004) (.037) (.010) (.013) (.004)

Tenure 132.7 .001* 142.2 -.001 131.2 .001*

(.0004) ( .001) (.0004)

Age 25-34 .244 -.420* -.387* .300 .235 .499 .235 -.544* -.511*

(.174) (.170) (.593) (.553) (.181) (.178)

Age 35-44 .366 -.448* -.433* .288 -.007 .260 .378 -.522* -.526*

(.173) (.169) (.600) (.558) (.180) (.176)

Age 45-54 .269 -.416* -.383* .307 -.007 .314 .263 -.495* -.475*

(.176) (.172) (.606) (.558) (.183) (.180)

Age 55-64 .102 -.489* .428* .090 -.037 .251 .103 -.546* -.505* 

(.186) (.183) (.691) (.621) (.193) (.190)

Education:

Less than high school diploma .100 .097 .164 .120 .090 .164

(.085) (.217) (.094)

Some college .311 .071 .304 .128 .312 .064

(.061) (.182) (.065)

College degree .208 .146* .094 .175 .226 .148*

(.071) (.280) (.073)

Advanced degree .071 .199* .014 .789 .080 .175*

(.103) (.685) (.103)

Low-skill occupation .469 .152* .127* .535 .123 .076 .459 .164* .138*

on lost job (.051) (.047) (.168) (.149) (.054) (.050)

Female .450 .150* .135* .400 .278* .282* .458 .140* .116*

(.050) (.048) (.171) (.159) (.052) (.051)

Nonwhite .130 .034 .032 .093 .083 .054 .136 .022 .031

(.070) (.069) (.258) (.244) (.072) (.072)

Goods-producing sector .334 -.065 -.101* .446 .036 .011 .316 -.085 -.117*

(.053) (.052) (.169) (.157) (.056) (.055)

Union .136 -.050 .126 -.199 .137 -.015

(.072) (.256) (.075)

Advance notice .444 -.015 .358 -.021 .457 .008

(.048) (.165) (.051)

Change in industry, .518 .047 .537 -.036 .515 .080

lost job to current job (.049) (.155) (.052)

Change in occupation, .461 -.110* -.106* .533 .011 -.050 .450 -.134* -.120*

lost job to current job (.049) (.047) (.165) (.143) (.052) (.050)

Change in status, .109 -1.207* -1.233* .113 -1.011* -.982* .108 -1.204* -1.25*

full time to part time (.079) (.076) (.248) (.227) (.083) (.081)

Weeks jobless after 13.6 -.001 12.4 -.225 13.8 -.132*

lost job (.001) (.212) (.072)

Moved to a different city .147 -.137* .177 .004 .142 -.002 

or county since lost job (.067) (.005) (.001)

Nonmetro .134 -.036 -.031

(.071) (.069)

Number of observations 925 937 159 161 765 775

R2 (adjusted) .257 .262 .138 .175 .280 .281

* Indicates significance at the 10-percent level. Standard errors are in parentheses.

Note: The dependent variable is the difference between log weekly earnings current job and log real weekly earnings lost job. This is equivalent to the log

of the ratio of current earnings to lost job earnings. The base group for U.S.: age 20-24, high school diploma, not low-skill on lost job, male, white, service

sector, not in union in lost job, no advance notice, did not change industry, did not change occupation, was full time to full time or part time to full time, did

not move, and metro. The base groups for nonmetro and metro are the same but without metro/nonmetro residence.
Economic Research Service/USDA Displaced Workers: Differences in Nonmetro and Metro / RDRR-92 ◆ 21

reservation wage concept implies that a higher reservation wage would result in a longer spell of joblessness,

but ultimately a higher wage on a new job than had the

first available job been accepted. However, longer

periods of joblessness are in fact associated with

greater earnings loss among displaced workers.22 In

addition, more weeks jobless would indicate softer

local labor market conditions, so then, weeks jobless

might serve as a proxy for local labor market conditions. Those who moved after displacement, however,

experienced an earnings loss. The coefficient for

moved to a different city or county is significant and

negative in model (1). Perhaps this measure may be

serving as a proxy for local labor market conditions;

for example, those who see no opportunities for

employment where they are, so they move and find a

new job, albeit at lower earnings. 

Nonmetro residence was not significant in either the

full model (1) or the parsimonious model (2), and the

two nonmetro models (3) and (4) were not particularly

successful. Perhaps this is so because there is not

much difference in the distribution of the ratio of

current earnings to lost job earnings, in metro versus

nonmetro areas (fig. 5). Modeling the level of earnings

on the current job or the lost job results in the

nonmetro residence coefficient being significant and

negative (not shown here), because nonmetro earnings

are on average lower than metro earnings.

Because this model is a direct measure of earnings loss

which does not include the earnings losses of those not

employed at the time of the survey, estimated earnings

loss is underestimated with an upward bias. If

displaced workers not employed were included, the

nonmetro coefficients in models (1) and (2) would be

smaller since nonmetro areas had a larger share of

displaced workers who were not employed at the

survey. Because these coefficients are small and are

not significant at the 10-percent level, the bias does

not appear to affect the conclusions.23
22 ◆ Displaced Workers: Differences in Nonmetro and Metro / RDRR-92 Economic Research Service/USDA

Policies To Assist 

Displaced Workers

How do we deal with unemployment that results from

structural change? If the economy is undergoing structural change, some would argue that the change should

not be impeded, that those who are dislocated should

receive assistance, and that the costs of the economic

change should be shared by all. Kletzer (1998) stated,

“[a]ttempting to help dislocated workers seems to

many a matter of fairness or social insurance. Since

dislocation is specifically not due to the actions of the

workers, there is no economic incentive to be served

by the reduction in their income, and a society made

up of risk-averse people will be interested in insuring

against the risk that it happens to them.”24

Several Federal programs are designed to assist

displaced workers—dislocated workers in the language

of the programs—and their employers. These programs

are described below.25 Legislation to protect displaced

workers is also discussed below. The question here 

is, do these Federal programs and legislation serve

workers in nonmetro areas well or poorly? Although

data are not available to definitively answer that question, indicators of the programs’ operation in rural areas

can provide insights into program effectiveness.

Unemployment Insurance

The Unemployment Insurance (UI) Program is the

main income assistance program for displaced

workers. The Federal-State UI system was established

in 1935 as part of the Social Security Act. The intent

of unemployment compensation is “to provide an

unemployed worker time to find a new job equivalent

to the one lost without major financial distress.” In

fiscal year 1997, 8 million workers received $20.6

billion in benefits.

Although UI programs vary State by State, an unemployed worker is generally eligible for benefits if the

worker (1) meets the State requirements for wages

earned or time worked in the previous year; (2) is

unemployed due to no fault of his/her own; (3) is able

to work and is available for work; and (4) is actively

seeking work. The weekly unemployment benefits 

are generally about 50 percent of earnings when

employed. Benefits can be paid up to 26 weeks in

most States. In periods of high unemployment, benefits may be extended for an additional 13 weeks.

About 1.7 million displaced workers (half of all workers

displaced in 1995 to 1997) received unemployment

insurance (table 1). Most of these displaced workers

would likely be eligible for UI benefits due to their 3-

year tenure on their lost job. Those who did not receive

benefits may have found a new job right away and

experienced no joblessness, may have dropped out of

the labor force and were not looking for a new job, or

may have declined applying for UI benefits for other

reasons. About half of those who received benefits,

800,000, exhausted their UI benefits before finding

another job. UI usage between nonmetro and metro

displaced workers was at essentially the same rate, 50

percent of nonmetro displaced versus 48 percent metro.

In addition, about the same share of displaced workers

exhausted their benefits: 43.5 percent of nonmetro

versus 47 percent of metro. The Unemployment

Insurance Program appears to be serving nonmetro

displaced workers as well as metro displaced workers.

Trade Adjustment 

Assistance Programs

The Trade Expansion Act of 1962 created the Trade

Adjustment Assistance (TAA) program, and the Trade

Act of 1974 expanded the program benefits and liberalized eligibility criteria establishing the program as it

now exists. The purpose of TAA is to assist workers

who become unemployed as a result of competition

from foreign imports. The North American Free Trade

Agreement-Transitional Adjustment Assistance

(NAFTA-TAA) program was established under the

North American Free Trade Agreement Implementation

Act of 1993, and assists workers who become unemployed as a result of imports from Mexico or Canada.

Assistance includes training, reemployment services,

job search allowance, relocation allowance, and income

support if the individual has exhausted unemployment

insurance benefits. The goal is to assist individuals to

return to suitable employment, “work of a substantially

equal or higher skill level than the person’s past

adversely affected employment, and which pays not less

than 80 percent of his/her previous employment.” The

FY2001 appropriation for the TAA program was $342.4

million and for the NAFTA-TAA program $64 million.

A worker group at a plant or a portion of a plant must

be certified by the U.S. Department of Labor to be

individually eligible to receive benefits. A petition

seeking certification may be filed by three or more

workers, their union, or by a company official on the

workers’ behalf. TAA and NAFTA-TAA benefits are
Economic Research Service/USDA Displaced Workers: Differences in Nonmetro and Metro / RDRR-92 ◆ 23

then provided by the States. TAA also provides technical assistance to companies. The assistance is in

diagnosing a company’s problems, assessing its opportunities, and developing a recovery strategy. The U.S.

Department of Commerce administers the technical

assistance part of the TAA program.

Several studies have examined the relationship

between imports and displacement. “There is strong

evidence that as imports become more competitive,

domestic industry displacement rises,” according to

Kletzer (1998).26 Additionally, Addison, Fox, and

Ruhm (1995) found that industry trade sensitivity and

displacement are associated. Shelburne and Bednarzik

(1993) responded that “[m]anufacturing industries that

are intensively involved in international trade, either as

importers or as exporters, are significantly more

geographically concentrated than manufacturing industries with less involvement in trade.” They also found

that trade-related job loss was geographically concentrated during 1987-92. This geographical concentration

means that a plant closing may weaken the local

economy and adversely affect displaced workers’

prospects for finding a new job. All of these results

support the need for assistance programs for workers

who lose their jobs due to trade impacts. 

The TAA and NAFTA-TAA programs appear to be

serving nonmetro areas well. Of the 5,701 companies

with worker groups that received certification under

TAA between 1994 and early 1999 that could be identified as either metro or nonmetro, 2,254 certifications,

or 39.5 percent, were in nonmetro counties (table

12).27 This percentage is double the nonmetro proportion of the U.S. labor force and double the nonmetro

share of all U.S. establishments.28 Of the total estimated number of workers affected, 40.9 percent were

employed in nonmetro areas.29 Certifications are

disproportionately nonmetro, largely because

nonmetro employment is more trade sensitive than

metro employment.30

The largest group of certifications was for worker

groups in the apparel and other textile products industries. In nonmetro areas, 42.8 percent of nonmetro

certifications were for apparel companies. Apparel was

also the industry with the most certifications in metro

areas as well. Mining was the industry with the next

largest number of certifications in both nonmetro and

metro. In addition to mining’s 376 certifications in

nonmetro areas, 446 certifications for mining companies had the location as “All Locations,” so they could

not be identified as metro or nonmetro. A large

number of workers in these companies are probably

located in nonmetro areas as mining employment is

disproportionately located in nonmetro areas.

Putting the number of certifications in the context of

total number of establishments, certification rates are

also presented in table 12. The certification rate is 0.17

percent for nonmetro areas; that is, 0.17 percent of all

nonmetro establishments received TAA certification.

This nonmetro rate is small, but larger than the metro

rate of 0.06 percent. The apparel industry in nonmetro

areas had by far the largest certification rate, 27.2

percent, versus a rate of 4.9 percent in metro areas.

Related industries in nonmetro areas also had high rates:

textile mill products, 6.4 percent, and leather and leather

products, 19.9 percent. Interestingly, although the

number of certifications of worker groups in nonmetro

areas of electronic and other electrical equipment establishments and in measuring, analyzing, and controlling

instruments were relatively small, they made up a

noticeable share of all nonmetro establishments in those

industries, 7.0 percent and 3.3 percent, respectively. At

the total U.S. level, certifications in mining were almost

6 percent of all mining establishments.

In the NAFTA-TAA program, 692 of the certifications

during January 1994-January 1999 were in nonmetro

areas, 39.5 percent of the certifications that could be

classified as metro or nonmetro (table 13).31 Again,

this is twice the proportion of the nonmetro labor

force. Of the estimated total number of workers

affected, 42 percent were of worker groups in

nonmetro companies.32 The main reason for certification for both the nonmetro companies and the metro

companies was that production shifted to Mexico–36

percent of nonmetro certifications and 48 percent of

metro certifications.

Again, the industry with the largest number of

NAFTA-TAA certifications was apparel and other

textile products. For nonmetro, 39 percent of certifications were for worker groups at apparel companies, for

metro, 24.5 percent. The lumber and wood products

industry also had a large number of certifications in

nonmetro areas, 100, or 14 percent, although there

were only 30 certifications, 3 percent, for worker

groups at metro companies. 
24 ◆ Displaced Workers: Differences in Nonmetro and Metro / RDRR-92 Economic Research Service/USDA

Table 12—Trade Adjustment Assistance program certifications, January 1994 - September 1999

Industry Nonmetro Nonmetro Metro Metro U.S. U.S.

rate1 rate1 total2 rate1

Number Percent Number Percent Number Percent

Agriculture, forestry, and fishing 7 0.03 5 0.01 12 0.01

Mining 376 3.30 613 4.56 1,435 5.78

Construction 1 0 0 0 1 0

Manufacturing—total 1,855 2.23 3,091 1.04 4,758 1.25

Food and kindred products 13 .22 57 .37 70 .33

Tobacco products 0 0 1 .92 1 .74

Textile mill products 126 6.44 175 3.94 301 4.70

Apparel and other textile products 965 27.20 1,007 4.86 1,986 8.18

Lumber and wood products, except furniture 141 .68 46 .27 191 .51

Furniture and fixtures 24 1.00 32 .34 56 .47

Paper and allied products 24 2.24 49 .89 73 1.11

Printing, publishing, and allied industries 8 .08 19 .04 27 .04

Chemicals and allied products 15 .80 82 .78 97 .78

Petroleum refining and related products 10 2.24 15 .9 25 1.18

Rubber and miscellaneous plastics products 25 .81 69 .51 93 .56

Leather and leather products 98 19.92 127 8.78 227 11.71

Stone, clay, glass, and concrete products 16 .32 77 .66 118 .71

Primary metal industries 34 2.58 91 1.68 125 1.86

Fabricated metal products 38 .67 106 .34 144 .39

Industrial and commerical machinery,

computer equipment 42 .39 213 .46 290 .51

Electronic and other electrical equipment 151 7.02 302 2.01 479 2.79

Transportation equipment 51 1.81 104 1.14 158 1.33

Measuring, analyzing, controlling instruments 35 3.34 107 1.03 143 1.25

Miscellaneous manufacturing industries 39 1.43 115 .73 154 .84

Transportation, communications, utilities 10 .01 14 .01 25 .01

Wholesale trade 0 0 4 0 4 0

Retail trade 0 0 3 0 28 0

Finance, insurance, and real estate 0 0 0 0 0 0

Services 5 0 14 0 19 0

Public administration 0 0 0 0 0 0

Total 2,254 .17 3,447 .06 6,282 .09

1 TAA certifications as a percentage of all establishments.

2 U.S. total includes certifications in nonmetro and metro, and also certifications for companies with the location, "All Locations," companies certified in

Puerto Rico, and companies in cities that could not be identified as metro or nonmetro. Consequently, U.S. totals may be larger than the sum of nonmetro 

and metro.

Source: Calculated by ERS using data from Employment and Training Administration, U.S. Department of Labor, and from Enhanced County 

Business Patterns data, 1996.
Economic Research Service/USDA Displaced Workers: Differences in Nonmetro and Metro / RDRR-92 ◆ 25

Table 13—NAFTA-Transitional Adjustment Assistance program certifications, January 1994 - January 1999

Industry Nonmetro Nonmetro Metro Metro U.S. U.S.

rate1 rate1 total2 rate1

Number Percent Number Percent Number Percent

Agriculture, forestry, and fishing 9 0.04 10 0.01 19 0.02

Mining 16 .14 17 .13 58 .23

Construction 0 0 4 0 4 0

Manufacturing-total 658 .79 995 .33 1663 .44

Food and kindred products 4 .07 25 .16 29 .14

Tobacco products 0 0 0 0 0 0

Textile mill products 26 1.33 44 .99 69 1.08

Apparel and other textile products 270 7.61 259 1.25 531 2.19

Lumber and wood products, except furniture 100 .48 30 .18 134 .36

Furniture and fixtures 6 .25 16 .17 22 .18

Paper and allied products 17 1.59 24 .44 41 .62

Printing, publishing, and allied industries 4 .04 12 .02 16 .03

Chemicals and allied products 7 .37 28 .27 35 .28

Petroleum refining and related products 1 .22 1 .06 2 .09

Rubber and miscellaneous plastics products 15 .48 38 .28 53 .32

Leather and leather products 26 5.28 28 1.94 55 2.84

Stone, clay, glass, and concrete products 8 .16 27 .23 35 .21

Primary metal industries 8 .61 28 .52 36 .54

Fabricated metal products 22 .39 68 .22 91 .25

Industrial and commercial machinery,

computer equipment 19 .18 60 .13 79 .14

Electronic and other electrical equipment 78 3.63 164 1.09 244 1.42

Transportation equipment 27 .96 52 .57 79 .66

Measuring, analyzing, controlling instruments 14 1.33 57 .55 72 .63

Miscellaneous manufacturing industries 6 .22 34 .22 40 .22

Transportation, communications, utilities 7 .01 10 0 24 .01

Wholesale trade 0 0 4 0 4 0

Retail trade 0 0 0 0 0 0

Finance, insurance, and real estate 0 0 0 0 0 0

Services 2 0 18 0 20 0

Public administration 0 0 0 0 0 0

Total 692 .05 1,058 .02 1,792 .03

1 NAFTA-TAA certifications as a percentage of all establishments.

2 U.S. total includes certifications in nonmetro and metro, and also certifications for companies with the location, "all locations," "various locations," or

"throughout the State," and companies in cities that could not be identified as metro or nonmetro. Consequently, U.S. totals may be larger than the sum of nonmetro and metro.

Note: Many worker groups petition for and are certified under both the TAA and NAFTA-TAA programs. Thus, the number of worker groups certified

under these programs cannot be added together.

Source: Calculated by ERS using data from Employment and Training Administration, U.S. Department of Labor, and from Enhanced County 

Business Patterns data, 1996.
26 ◆ Displaced Workers: Differences in Nonmetro and Metro / RDRR-92 Economic Research Service/USDA

NAFTA-TAA certification rates show patterns similar

to the TAA certification rates. The apparel industry in

nonmetro areas has the largest certification rate, 7.61

percent. Other industries with high rates are textile

mill products, leather and leather products, electronic

and other electrical equipment, and measuring,

analyzing, and controlling instruments, as with the

TAA certification rates. 

These results suggest two concerns. First, even a small

plant closing can have a large effect on a rural community, and many of the nonmetro companies certified

had more than 100 employees. Second, the apparel

industry is clearly undergoing a deep restructuring.

Thus, many if not most of displaced apparel workers

who find a new job will do so in another industry or

occupation. The burden of this adjustment due to trade

is falling disproportionately on nonmetro workers.

The Worker Adjustment and 

Retraining Notification Act

The Worker Adjustment and Retraining Notification

Act (WARN) of 1988 requires 60-days advance notice

of covered plant closings and covered mass layoffs.

WARN is not a program, but legislation mandating

advance notice. The intent of WARN is to provide

workers and their communities time to prepare for the

economic dislocation of job loss. With advance notice,

workers would have more time to look for a new job,

reducing unemployment. Nord and Ting (1991) found

that a 60-day advance notice appeared to result in

lower earnings losses and less unemployment. To the

extent that advance notice reduced joblessness, WARN

benefits not only workers, but also employers, since

“[e]mployer contributions to unemployment insurance

will be reduced as dislocated workers quickly obtain

new jobs and their dependence on unemployment

benefits is lessened.”33

An employer with 100 or more full-time employees is

usually covered by WARN. For a plant closing, a

covered employer must give notice if an employment

site of 50 or more employees will be shut down. For a

mass layoff, a covered employer must give advance

notice for a layoff of 500 or more employees or for 50-

499 employees if they make up at least a third of the

employer’s workforce. There are exemptions to

providing advance notice and exemptions to providing

the full 60-days notice such as if the layoff is the direct

result of a natural disaster, and employers have the

option of “buying out” the employees’ advance notice.

Because nonmetro establishments are, on average,

smaller than metro establishments, nonmetro workers

are less likely to be covered by WARN than metro

workers. However, the difference is small, as most

establishments in the United States are small. In 1996,

the average size of nonmetro establishments was 12

employees, compared with 16 employees for metro

establishments.34 Only 1.7 percent of nonmetro establishments and 2.4 percent of metro establishments had

100 or more employees, with 100 employees being the

threshold for a company being covered by WARN. Fifty

employees is the threshold for a site being covered by

WARN, if the company has 100 or more employees,

and 3.8 percent of nonmetro establishments and 5.4

percent of metro establishments had 50 or more

employees. So, nonmetro workers are less likely than

metro workers to be covered by WARN. However,

employees at most U.S. establishments are not going to

be covered by WARN, because only a small percentage

of establishments had 100 or more employees.35

For the covered firms, Addison and Blackburn (1994)

found that the incidence of advance notice does not

appear to have increased since WARN was implemented in 1989. Before WARN, only three States had

advance notice requirements, although firms could, of

course, voluntarily give advance notice.

Enforcement authority for WARN is with the U.S.

District Courts. Thus, the workers, their representatives, or a local government unit must file an individual or class action lawsuit to bring compliance if

advance notice is not given. The penalties that the

employer is liable for are the amount of back pay and

benefits for the period of violation (up to 60 days) for

each employee and a civil penalty up to $500 for each

day of violation.

Rapid Response

When notice is given to employees, the employer is

also required to contact the State Dislocated Worker

Unit. The State then sends out a rapid response team

to assist workers about to be laid off. The purpose of

rapid response is “to mobilize resources and coordinate a unified and responsible State effort to assure

affected unemployed individuals and dislocated

workers receive appropriate governmental assistance

and benefits and an opportunity to adjust their lives in

an orderly manner.”36 The team determines what type

of assistance workers are eligible for and facilitates

applications for assistance. The team also assists the
Economic Research Service/USDA Displaced Workers: Differences in Nonmetro and Metro / RDRR-92 ◆ 27

local community in obtaining State economic development assistance. Rapid response is authorized by title

III of the Job Training Partnership Act (JTPA).

Although nonmetro areas would be less likely to have a

layoff covered by WARN, governors are able to invoke

the rapid response visit for smaller layoffs that are not

covered. This authority would be especially useful for

nonmetro areas because a small layoff, say 30 workers,

could seriously affect the local community.

Economic Dislocation and Worker 

Adjustment Assistance Act and 

Workforce Investment Act

The Economic Dislocation and Worker Adjustment

Assistance Act (EDWAA) provides retraining and

readjustment services to displaced workers and needrelated payments to those who have exhausted their

unemployment insurance benefits. EDWAA amended

title III of the Job Training Partnership Act (JTPA) in

1988. In addition to assisting workers who lost their

job from plant closures or mass layoffs, EDWAA

benefits are also available to long-term unemployed

persons; farmers, ranchers, and other self-employed

persons; and under some certain circumstances,

displaced homemakers. Special programs also exist for

workers affected by military base closures and realignments. EDWAA is a federally funded program administered by the States. Each State has a Dislocated

Worker Unit that is responsible for the program. In

fiscal year 1999, $1.4 billion was allocated for dislocated worker employment and training activities.

EDWAA benefits include Rapid Response assistance,

described above; retraining services may include classroom, occupations skills, on-the-job training, remedial

education, and English-as-a-second-language instruction; readjustment services, including testing and

counseling, job search and placement, and supportive

services such as child care and transportation

allowances; and needs-related payments to workers

who have exhausted their unemployment insurance

benefits. Applications for benefits are submitted to the

Substate Area (SSA) Coordinators, local agencies that

provide services to laid-off workers.

As an indicator of the accessibility of SSA’s to

nonmetro workers, I classified the 551 SSA’s

according to metro/nonmetro location.37 About onequarter were located in nonmetro areas, greater than

the nonmetro share of 20 percent of the labor force.

Some States—Delaware, North Dakota, Utah, and

Wyoming—have only a single SSA located in a metro

area. Other States—Alabama, Colorado, Connecticut,

Massachusetts, Nebraska, New Jersey, New Mexico,

Nevada, Rhode Island, and West Virginia—have more

than one SSA, but all the State SSA’s are located in

metro areas. Overall, it appears that nonmetro areas

are well served by the SSA’s, at least in terms of proximity. However, in several States, nonmetro displaced

workers would have to travel a long distance to reach

the SSA. 

In 1998, the Workforce Investment Act (WIA) became

law. WIA consolidates several training and employment programs under the Job Training Partnership Act,

including EDWAA, into a single, unified program.

Legislated benefits are essentially the same, but

program effectiveness is expected to improve under

WIA as the focus is on how benefits are delivered.

Goals of the new WIA program are to (1) streamline

services; (2) empower individuals by making use of

Individual Training Accounts and by greater levels of

information and guidance; (3) provide greater access

to services; (4) increase program accountability; (5)

involve local businesses; (6) increase State and local

flexibility; and (7) improve youth programs.

Implementation of WIA began in 1999 and will

continue over the next several years as each State

develops a strategy to implement the program.

Congress repealed the Job Training Partnership Act as

of July 1, 2000. For fiscal year 2001, the estimated

expenditure for all dislocated worker employment and

training activities programs (excepting TAA and

NAFTA-TAA) is $1.74 billion.

Two important concepts in the WIA program are the

Individual Training Accounts and the One-Stop Career

Center system. The Individual Training Accounts

allow the individual to choose from a list of eligible

training providers. Individuals can choose both the

type of training and the provider of the training. The

One-Stop Career Center consolidates service delivery

for employment and training programs. Many States

separate the Substate Area agencies, providing services

for displaced workers, from the Service Delivery Area

agencies, which provide services to welfare recipients.

Information about Unemployment Insurance may be in

yet another location. The One-Stops are designed to

assist both job-seekers and employers. The One-Stop

concept predates WIA, and in 1994 the U.S.

Department of Labor (DOL) began giving grants to

States to implement One-Stop systems. Currently there
28 ◆ Displaced Workers: Differences in Nonmetro and Metro / RDRR-92 Economic Research Service/USDA

are 1,100 One-Stops, with many SSA and Service

Delivery Areas being converted to One-Stops. DOL

also has a “virtual” Rapid Response and One-Stop

system using a toll-free number and information on the

Employment and Training Administration website.

Public service announcements sent to television

stations advertise the toll-free number. Full implementation of these services is expected to be achieved 

in 2001.

For displaced workers, benefits will be essentially the

same under WIA as under EDWAA. The WIA

Individual Training Accounts will allow greater flexibility to displaced workers and perhaps a greater likelihood that training will provide marketable skills. The

large number of One-Stops and the virtual One-Stop

means that these programs will be more accessible to

nonmetro displaced workers.

Some rural communities, however, may find the local

governance requirements of WIA another burden of

devolution. Local elected officials are required to

appoint members of local workforce investment

boards. These appointments must be done within State

criteria and are subject to State certification. Local

officials, in conjunction with the local board, develop

the local workforce investment plan and oversee the

local One-Stop system. The local board, in turn, has its

own responsibilities. In rural communities where official positions are part time, local leaders may be overwhelmed with Federal requirements that they must

now meet and with the Federal programs they must

now implement.

Benefit Protections

Retirement benefits of displaced workers who are in a

defined benefit plan are protected by the Employee

Retirement Income Security Act of 1974 (ERISA).

Two amendments to ERISA provide health insurance

benefits to displaced workers: the Consolidated

Omnibus Budget and Reconciliation Act of 1985

(COBRA) and the Health Insurance Portability and

Accountability Act of 1996 (HIPAA). Under COBRA,

some displaced workers have the right to continue

health insurance coverage after they lose their jobs.

Employers with 20 or more employees are usually

covered under COBRA. Workers must have been

enrolled in the employer’s health plan, must elect to

receive COBRA coverage when laid off, and must pay

the entire premium amount plus a 2-percent administrative fee. COBRA coverage extends for a maximum

of 18 months after job loss. HIPAA protects displaced

workers who find a new job by limiting health insurance exclusions for preexisting conditions, prohibiting

discrimination against employees based on their health

status, and allowing workers to apply for individual

health insurance policies. However, workers must have

been in an employer-sponsored health plan on the lost

job for the HIPAA protections to apply.

Fewer nonmetro workers participate in a pension plan

or other retirement plan on their job than metro

workers, 38 percent of nonmetro workers versus 41

percent of metro workers in 1993.38 Consequently,

nonmetro displaced workers are less likely to be

covered by the retirement protections provided by

ERISA. Nonmetro workers displaced during 1995-97

were slightly less likely to have been covered by

health insurance on their lost job—64 percent of

nonmetro displaced had health insurance versus 71

percent of metro displaced.39 Because nonmetro

displaced workers are less likely to have had health

insurance on their lost job and because nonmetro

establishment size is on average smaller than metro

establishment size, nonmetro workers are less likely to

benefit from the protections of COBRA and HIPAA. 

Evaluation of Programs

Leigh (1990, 1991, 1995) has written extensively on

evaluation of displaced worker programs. He

concluded that job search assistance is effective in

speeding up reemployment of displaced workers and is

also a fairly low-cost program. He also concluded that

results are mixed for classroom training in vocational

skills. However, one TAA classroom training program

that was evaluated was considered a success in that

displaced workers who found a new job but had to

change occupation or industry were able to mitigate

their earnings losses. On-the-job training program

evaluations have also been favorable, but Leigh

wondered if enough employers would be convinced 

to participate.

The ERS study, International Agriculture and Trade

Reports: NAFTA (1999), looked at NAFTA-TAA certifications by metro/nonmetro status. Counties that had

received agriculture-related certifications had higher

rates of unemployment and lower employment growth

during NAFTA’s early years, for both metro and

nonmetro counties, suggesting that program funds

targeted counties that truly needed assistance.
Economic Research Service/USDA Displaced Workers: Differences in Nonmetro and Metro / RDRR-92 ◆ 29

Conclusions: 

Displacement Rates Low, but

Rural Displacement Still a Concern

The analysis presented here suggests that nonmetro

workers are not at greater risk of displacement than

metro workers. Indeed, they faced a slightly lower risk

of displacement during 1995-97. This is a reversal of

the experience of the 1980s, when nonmetro workers

had greater displacement rates than metro workers. For

measures of hardship after displacement such as unemployment rates, weeks jobless, or lost earnings,

nonmetro displaced workers fared about the same as

metro displaced. Consequently, assessing whether

nonmetro displaced faced more or less hardship than

metro displaced is not straightforward.

Despite this favorable news, analysis reveals several

concerns about displaced workers in nonmetro areas:

(1) Once displaced, nonmetro workers were less

likely to find a new job than metro displaced.

A larger share of nonmetro displaced workers

dropped out of the labor force than metro displaced workers.

(2) Although nonmetro displaced workers who

found a new job did about as well as metro displaced workers in replacing their lost-job earnings, nonmetro median weekly earnings were

considerably less than the metro median weekly

earnings. And related to this, nonmetro displaced

workers were more likely to be in low-income

households than metro displaced workers.

(3) Nonmetro workers were less likely to be covered by the legislation designed to protect displaced workers, WARN, ERISA, COBRA, and

HIPAA. Because the intent is to protect displaced workers and their benefits, perhaps the

differences in employment characteristics

between metro and nonmetro jobs should be

taken into account.

(4) The large number and share of trade adjustment assistance certifications in nonmetro

areas suggest that layoffs are continuing at a

relatively high rate given the low unemployment rate. Even though layoffs from these

plant closings and downsizings constituted a

small share of the total nonmetro labor force,

they likely had a large impact on rural communities. The effect of restructuring of the

apparel industry in particular is falling disproportionately on nonmetro areas. Assistance is

clearly warranted not only to help the displaced workers, but also to help the affected

communities adjust and develop new sources

of employment. Restructuring and relocations

continue as the United States becomes increasingly involved in the global economy. For

example, recent announcements directly

affecting nonmetro areas include sheet and

towel maker WestPoint Stevens Inc.’s plans to

close its plant in Halifax County, NC, due to

streamlining and technological advances;

Baldwin Piano’s closing of its plant in Leflore

County, MS, to outsource the manufacturing

of components; International Paper Co.’s closing of its plywood mill in Ware County, GA,

due to competition from imports; Ohio Art

Co.’s plan to close its Etch A Sketch plant in

Williams County, OH, and move production to

China; Converse’s reorganization and bankruptcy protection filing that will close the

Robeson County, NC, sneaker plant and then

license production to Asian manufacturers; and

the closing of the Sunshine Mine, the nation’s

largest silver mine in Shoshone County, ID,

due to low silver prices.

(5) Were the United States to again face the financial market conditions of the 1980s debt crisis–the high value of the dollar and high interest rates–nonmetro areas would probably

experience extensive displacement. In the

recent global financial crisis, the U.S. trade

deficit increased sharply in 1998 and 1999,

hurting the goods-producing sector, in particular, agriculture and manufacturing, resulting in

a decline in nonmetro employment growth.

Fortunately, nonmetro areas did not experience

lasting damage from the global financial crisis,

unlike the experience of the 1980s debt crisis.

The labor market story of the mid-1990s is very much a

favorable one. The tight labor markets of this phase of

the expansion have reduced displacement levels and

rates and allowed most displaced workers to find new

jobs. However, layoffs continue at a relatively high rate

given low unemployment, and some groups face disproportionate hardship. Worker displacement in nonmetro

areas is of particular concern as goods-producing industries continue to lay off workers. Economic change is

inevitable; the challenge is to adequately provide for

workers and communities dealing with change.
30 ◆ Displaced Workers: Differences in Nonmetro and Metro / RDRR-92 Economic Research Service/USDA

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Economic Research Service/USDA Displaced Workers: Differences in Nonmetro and Metro / RDRR-92 ◆ 33

Endnotes

1. In the text, “nonmetropolitan” and “metropolitan”

are used interchangeably with “nonmetro” and

“metro.” “Rural” and “urban” for “nonmetro” and

“metro” are also used.

2. Hipple (1999), p. 27-28.

3. Beneria (1998), no page number.

4. Leistritz and Root (1999), p. 40.

5. From Hipple (1999), p. 29: “The count of displaced workers includes, in addition to those who

lost jobs, workers who left jobs in anticipation of

losing them. Debriefing data collected as part of

quality assessment research conducted on the February 1998 Displaced Worker Survey indicate that

79 percent of the displaced were job losers and 19

percent were job leavers. (One percent said they

had retired.) Thus, the group referred to as job losers includes some workers who left or retired from

their jobs prior to losing them.”

6. Standard errors and confidence intervals were calculated for many of the statistics in table 1. The

confidence intervals for the number of displaced

workers (in thousands) are nonmetro, 500 ± 76;

metro, 2,915 ± 152; and U.S. total, 3,415 ± 164.

The confidence intervals for the percentage statistics were in the range of ± 4.0 to ± 7.6 for nonmetro; ± 0.9 to ± 2.6 for metro; and ± 0.8 to ± 2.4

for U.S. total.

7. I applied the 11 education and training categories

from the Office of Employment Projections, BLS,

to the CPS data. The categories are first professional degree, doctoral degree, master’s degree,

work experience plus bachelor’s or higher degree,

bachelor’s degree, associate’s degree, postsecondary vocational training, work experience in a

related occupation, long-term on-the-job training,

moderate-term on-the-job training, and short-term

on-the-job training. The last three categories:

long-term, moderate-term, and short-term on-thejob-training were combined to define low-skill

occupations. For more information on the education and training categories, see U.S. Department

of Labor, Bureau of Labor Statistics, Monthly

Labor Review, Vol. 120, No. 11, Nov. 1997; and

U.S. Department of Labor, Bureau of Labor Statistics, “Occupational Projections and Training

Data,” Bulletin 2501, Jan. 1998.

8. Displacement rates are usually calculated by dividing the number of displaced workers in a specified

worker group by a tenure-adjusted (that is, 3 or

more years of tenure with their employer) average

over the displacement period (1995-97) of the number of employed workers in the specified worker

group. Because of the reclassification of metro/nonmetro in 1993 and the phase-in of the new classification during 1994-95 into the CPS, a meaningful

denominator cannot be estimated for 1995. Consequently, I used a tenure-adjusted estimate of each

worker group from the February 1998 basic CPS.

The February 1998 CPS includes supplemental

information on job tenure. Because 1995-98 was a

period of employment growth, using 1998 data may

make the denominators larger and the displacement

rates smaller than if a 1995-97 average could be

calculated. Because only 1 month, February, is

used, the denominators may be smaller than if the

annual averages were used due to seasonal factors,

making the displacement rates larger than if a 1995-

97 average could be calculated. 

9. There is some overlap of the three hardship

groups:

—30 percent of the age 55-64 group had less than

a high school diploma;

—12 percent of the age 55-64 group had household incomes less than $15,000;

—16 percent of those with less than a high school

diploma were age 55-64;

—37 percent of those with less than a high school

diploma had household incomes less than

$15,000;

—18 percent of those with household incomes

less than $15,000 were age 55-64;

—32 percent of those with household incomes

less than $15,000 had less than a high school

diploma; 

—roughly 5 percent of each group were in all

three groups.

10. Each respondent was asked which income range

their household income fell in and was not asked

individual income level. Consequently, a median

income cannot be calculated, and whether or not a

household is below the poverty line cannot be

determined. In addition, household income range

is missing for some observations.

11. Labor-leisure choice theory describes the individual’s decision to work and how much time to

spend working. It is the decision between labor

(work) and leisure (nonmarket activities). The pro-
34 ◆ Displaced Workers: Differences in Nonmetro and Metro / RDRR-92 Economic Research Service/USDA

bit models presented describe the factors that contribute to loss of a job, not the decision not to

work. For an overview of labor-leisure choice theory, see Ehrenberg and Smith (1994), chapter 6.

12. Unemployment rates as percentages for 1995-97

were for nonmetro: 5.7, 5.5, 5.2 (average 5.5) and

for metro: 5.6, 5.4, 4.9 (average 5.3). Source: ERS

calculations using Current Population Survey data.

The aggregate nonmetro and metro unemployment

rates were unsuccessful in the probit models as

they create a singular matrix, and consequently, an

unsolvable equation. Future research may include

more disaggregated unemployment rates or

employment growth rates.

13. Estimates for probability of displacement and

probability of employment after displacement

were done in SAS, Vers. 6, using PROC MEANS

and PROC PROBIT. With much help from Charlie

Hallahan, I programmed the normalization transformation of the estimated probit coefficients.

Diagnostic statistics were done in SAS, Vers. 6,

using PROC LOGISTIC.

14. There are slight differences in the mean values

reported in tables 9 and 10, and in table 1.

Because the probit procedure does not use observations when any of the variable values are missing, the mean is calculated from a smaller sample

than the means in table 1, resulting in slightly different means.

15. The values represent the effect of a change in an

independent variable on F-1 (probability of displacement) where F-1(·) is the inverse function of

the normal cumulative density function. Consequently, the interpretation of probit estimates is

not intuitive. To get the increase in the probability

of displacement given a one-unit increase in an

independent variable, one must instead look at the

normalized estimates, which are given by the partial derivative of prob(yi

=displacement) with

respect to bÿand then calculated at the mean values

of the independent variables. That is,

where is the vector of estimated coefficients of

the probit model, fÿis the standard normal probability density function, and X is the vector of the

means of the independent variables. The normalized estimates are then the marginal effects of the

independent variables at the mean on the probability of displacement.

16. I also did analysis on the population of those displaced with 3 or more years of tenure on their lost

job and those not displaced but working with 3 or

more years of tenure on their current job, which

yielded similar results (not shown).

17. The observations are paired up without pairing the

observation with itself. Pairs that are both 1’s or

0’s for the dependent variable are ignored. For the

remaining pairs, the predicted value of the observation with a 1 is compared with the predicted

value of the observation with a 0. If the predicted

value of the 1 observation is greater than the predicted value of the 0 observation, then the pair is

concordant. If not, the pair is discordant, and if

the predicted values in the pair are the same, then

the pair is a tie. For more information, see Paul D.

Allison, Logistic Regression Using the SAS System: Theory and Application, Cary, NC: SAS

Institute Inc., 1999. 

18. Some of the unemployed workers would have

“incomplete spells” of unemployment at the time

of the survey; that is, they were unemployed when

surveyed but found a job after the survey. These

incomplete unemployment spells create a downward bias in the results in that probabilities of

employment would be larger if all unemployment

spells were completed at the survey. Future

research will try to adjust for this bias. However,

because jobless duration for those who were

employed at the survey was about the same for

nonmetro and metro (table 2), there is no reason to

think that the bias is different for nonmetro displaced workers than for metro displaced workers.

19. Human capital theory describes the labor market

investment decisions individuals make in education and training, migration, and job search. The

theory includes explanation of how different characteristics, such as education level, contribute to

earnings. For an overview of human capital theory,

see Ehrenberg and Smith (1994), chapter 9.

20. Estimates were done using PROC REG in SAS,

Vers. 6.

21. For a discussion of the reservation wage and

search unemployment, see Ehrenberg and Smith

(1994), pp. 590-591.

22. See Podgursky and Swaim (Fall 1987).

23. Future research may use a tobit truncated regression model of earnings loss to include those who

were not employed at the survey.

24. Kletzer (1998), p. 133.

bf ( )b ˆ ˆ X

3⁄4

b

ˆ
Economic Research Service/USDA Displaced Workers: Differences in Nonmetro and Metro / RDRR-92 ◆ 35

25. Information on the Federal programs assisting displaced (dislocated) workers and their employers is

available on the Internet. For more information see

U.S. Department of Labor, Employment and

Training Administration, http://www.doleta.gov.

For more information on the Trade Adjustment

Assistance Program technical assistance to

employers, see U.S. Department of Commerce,

http://www.doc.gov, and look under Economic

Development Administration. For more information on ERISA, COBRA, and HIPAA, see U.S.

Department of Labor, Pension and Welfare Benefits Administration, http://www.dol.gov/dol/pwba.

26. Kletzer (1998, p. 131) provides a short survey of

the literature on trade and displacement in this

article. 

27. Data on the Trade Adjustment Assistance Program

certifications are from Employment and Training

Administration (ETA), U.S. Department of Labor.

Data are for certifications dated January 1994-

September 1999, and the data were prepared by

ETA on September 21, 1999. Because the certification process takes time, and also because there

are amendments and reconsiderations to applications, the number of certifications is dynamic. For

example, ETA reported that as of April 14, 2000,

the Department of Labor issued certification for

6,593 worker groups under TAA and 1,433 worker

groups under NAFTA-TAA.

28. 19.2 percent of the 6.7 million establishments in

the United States are in nonmetro areas. Source:

ERS calculations from the Enhanced County Business Patterns Data, 1996. Excluded from the data

are self-employed persons, domestic service workers, railroad employees, agricultural production

workers, most government employees, and

employees on ocean-borne vessels or in foreign

countries. An establishment is defined as a single

physical location at which business is conducted

or services or industrial operations are performed.

For more information on the County Business Patterns data, see the U.S. Census Bureau website,

http://www.census.gov/. 

29. The estimated number of workers affected is

based on total employment at the plants where the

petitioning workers worked and is not necessarily

the number of workers laid off. In addition, the

data were sometimes missing, and about 50 of the

certifications did not have an estimated number of

workers. For these reasons, the focus is on the

number of certifications and not the estimated

number of workers affected.

30. See Karen S. Hamrick, “Rural Labor Markets

Often Lead Urban Markets in Recessions and

Expansions,” Rural Development Perspectives,

Vol. 12, No. 3, June 1997, pp. 11-17; Karen S.

Hamrick, “Rural Unemployment Sensitive to

Exchange Rates,” Rural Conditions and Trends,

Vol. 3, No. 2, Summer 1992, pp. 10-11.

31. Data on the NAFTA-Transitional Adjustment

Assistance Program certifications are from

Employment and Training Administration, U.S.

Department of Labor. Data are for certifications

dated January 1994-January 1999; the data were

prepared by ETA on January 29, 1999. 

32. The estimated number of workers affected is

based on total employment at the plants where the

petitioning workers worked. It is not necessarily

the number of workers laid off. In addition, a large

number of the data are missing, as ETA did not

record the estimated number of workers for multiple certifications of one company. For these reasons, the focus is on the number of certifications

and not the estimated number of workers affected.

33. State of Hawaii Department of Labor and Industrial Relations website,

http://dlir.state.hi.us/index.html, on the Business

Closing Down or Laying Off page,

http://dlir.state.hi.us/closing.html.

34. Statistics on establishment size are ERS calculations from the Enhanced County Business Patterns

Data, 1996. Excluded from the data are selfemployed persons, domestic service workers, railroad employees, agricultural production workers,

most government employees, and employees on

ocean-borne vessels or in foreign countries. An

establishment is defined as a single physical location at which business is conducted or services or

industrial operations are performed. For more

information on the County Business Patterns data,

see the U.S. Census Bureau website,

http://www.census.gov/.

35. The majority of workers are at firms with fewer

than 100 employees. (Note that a firm may contain

more than one establishment.) Nationwide in 1996,

57 percent of all employed were at firms with fewer

than 100 employees. Source: U.S. Small Business

Administration, Office of Advocacy, based on U.S.

Department of Commerce, Census Bureau data.

See http://www.sba.gov/advo/.
36 ◆ Displaced Workers: Differences in Nonmetro and Metro / RDRR-92 Economic Research Service/USDA

36. State of Hawaii Department of Labor and Industrial Relations website,

http://dlir.state.hi.us/index.html, on the Rapid

Response page,

http://dlir.state.hi.us/wdd/kaneohe/rapid_resp.html. 

37. The list of Substate Area Coordinators is from The

National Association of Counties 1999-2000 Job

Training Partnership Act and Workforce Investment Act Directory. SSA’s in the Federated States

of Micronesia, Puerto Rico, and the Virgin Islands

were not included in this analysis. 

38. Frenzen (1995), p. 24.

39. 1998 CPS Displaced Worker Survey data.