As Pentagon Budget Cuts Hit, Firms Hold Off on Layoffs

March 6, 2013

Despite predictions that sequestration-related defense cuts could result in 1 million layoffs, contractors have filed few notices of plant closings or mass layoffs, suggesting that any big impact on the economy from Pentagon downsizing is at least 60 to 90 days away.

The federal Worker Adjustment Retraining and Notification Act (WARN) requires 60 days' notice of layoffs affecting 50 or more workers when the cuts affect a third of the staff at a specific location, and companies must inform state officials where the layoffs will happen. In some cases, smaller cuts are also subject to the law.

In more than a dozen states where USA TODAY examined records of filings, the notices are not showing up yet, suggesting the $46 billion in automatic cuts to military spending slated to occur this fiscal year won't begin to affect employment much until at least May. Instead, the largest notices that have been filed span industries from health care to Hollywood special effects, which Moody's Analytics economist Chris Lafakis said was a normal pattern during a recovery.

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