Mass Layoffs 3.7% Higher Than Last Year

September 26, 2001 (PLANSPONSOR.com) - The US economy was battered by another 1,500 mass layoffs in August, according to the Bureau of Labor Statistics.

The 1,474 mass layoff actions during the month affected 163,263 workers, according to the report.

That was down from July’s count of 2,108 mass layoffs, resulting in 272,308 new initial unemployment insurance claims.

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Year-to-date figures are more telling. They show a substantial increase this year, with 13,089 layoff actions, and 1,564,317 initial claims, from 2000?s numbers. Last year saw layoff events totaling 9,554, and initial claims reaching 1,081,738 between January and August.

The monthly data series, which is measured by claims filed for unemployment insurance benefits during the month, covers mass layoffs of 50 or more workers beginning in a given month, regardless of the duration of the layoffs.

By Industry


In August 2001, manufacturing industries accounted for 41% of all mass layoff events and 49% of all initial claims filed, compared to last year, when layoffs in manufacturing accounted for 34% of events and 36% of initial claims.


Services accounted for 24% of events and initial claims filed in August. Layoffs in services were concentrated in business services, particularly help supply services, and in motion pictures.


One in every 10 layoff events and 9% of initial claims during the month were in retail trade industries, largely in general merchandise, or department stores.

Big Figures


Compared with August 2000, the largest increases in initial claims were reported in electronic and other electrical equipment, where the number increased by 13,536, transportation equipment, where initial claims increased by 9,319, and business services, which saw a 7,718 increase.

The largest over-the-year decrease in initial claims was reported in engineering and management services, where the number of initial claims fell by 4,774.

Regional Differences

The highest number of initial claims due to mass layoffs occurred in the West in August, which say 62,826 claims, largely in business services and motion pictures, the two industries accounting for more than a third of all claimants in the region.

In contrast, the Northeast region registered the lowest number of mass layoff-related initial claims at 24,891.

On a year to date basis, all regions reported increases in mass layoff events and initial claims, with the largest increase occurring in the Midwest, where claims are up by 26,430 for the year.

CSC Calls For Move to T+0 Trade Settlement

September 25, 2001 (PLANSPONSOR.com) - In the wake of terrorist attacks that, at least temporarily, threatened the nation's financial markets, a new report is calling for shortening the trade settlement cycle to same day (T+0).

In a recent article information technology consultant Computer Sciences Corporation (CSC) suggests that the challenges of moving to same day from next day settlement are largely identical.  US equity markets currently work with a three-day settlement cycle (T+3) between the day a trade is initiated and the day on which money/securities actually change hands.

Attack Aftermath

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CSC notes that in the current three-day settlement cycle, transactions from September 6, September 7 and September 10 were scheduled to have settled within three business days – including September 11.  The subsequent disruption in US markets following the terrorist attack subjected investors – including pension funds – to settlement risk.

Settlement risk is the financial exposure when securities and cash are not exchanged between buyers and sellers.

Incomplete or unsettled transactions negatively impact the cash flow of financial institutions and damage the efficiency of the marketplace.  Additionally, some US firms, notably the Bank of New York, were reported to have experienced difficulty settling the large volume of transactions once trading resumed.

T+1 And Counting

According to the Securities Industry Association (SIA) estimates, moving to T+1 could conservatively generate approximately $2.7 billion in pre-tax, annual net benefits for the industry, compared with an $8 billion price tag to ready for the switch.  More than half the benefits would be realized in the back-end of the clearing and settlement cycle as a result of improvements in settlement activities, according to the SIA.

Following the move to T+3 in 1995, the US securities industry has been actively planning for the move to next day settlement, or T+1.  Citing a T+1 Business Case published by the Securities Industry Association ( http://www.sia.com/t_plus_one_issue/pdf/BusinessCaseFinal.pdf , pg. 4-5), CSC notes the following foundation steps required to move to T+1:

– Modify internal processes to ensure compliance with compressed settlement guidelines.
– Identify and comply with accelerated deadlines for submission of trades to the clearing and trading systems.
– Amend DTCC’s trade guarantee process to provide guarantee on trade date.
– Report trades to Clearing Corporation in locked-in format and revise clearing corporation’s output.
– Rewrite Continuous Net Settlement (CNS) to enhance speed and efficiency.
– Reduce reliance on checks, and use alternative means of payment.
– Immobilize shares prior to conducting transactions.
– Revise the prospectus delivery rules and procedures for IPOs.
– Develop industry matching utilities and linkages for all asset classes.
– Standardize reference data and move to standardized industry protocols.

CSC says that, with much of the preparations underway for a move to T+1, it would be just as easy to go all the way to T+0.

SIA T+1 Industry Reports at http://www.sia.com/t_plus_one_issue/html/t1_industry_reports.html .

T+1 Issues and Key Milestones at http://www.sia.com/t_plus_one_issue/pdf/Key_Milestones___Building_Blocks_as_of_081601.PDF

The T+1 Business Case at http://www.sia.com/t_plus_one_issue/pdf/BusinessCaseFinal.pdf


 

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