Saad Ullah
The latest comparison between WARN notices and U.S. jobless claims shows a striking mismatch. While WARN notices - legally mandated layoff warnings - have spiked multiple times in recent years, initial claims often remained flat or moved sideways. This challenges the long-held assumption that WARN notices are a dependable early signal of rising unemployment.
What the Chart Shows
The chart compares year-over-year changes in initial unemployment claims with WARN notices, adjusted to lead by two months. As trader Seth Golden has pointed out, claims often stay flat even when WARN shows dramatic swings.
Historically, there were a few moments - notably during the 2008 financial crisis and the COVID-19 shock - when WARN spikes seemed to foreshadow a surge in claims. But outside these crisis periods, the relationship looks far less convincing. Between 2009 and 2019, WARN notices fluctuated considerably, yet claims largely moved sideways, showing little correlation. During 2020 and 2021, both measures spiked, but WARN notices rose much more sharply than claims. From 2022 through 2024, WARN notices again posted strong increases, yet claims remained relatively stable.
Why the Disconnect?
Several factors help explain the divergence. A resilient labor market allows laid-off workers to quickly find new jobs, which reduces the number of people filing claims. WARN coverage is limited, applying mainly to large employers and excluding smaller businesses that make up a significant portion of the workforce. Policy interventions such as stimulus packages and enhanced unemployment benefits have distorted the traditional link between layoffs and claims. Structural shifts in the post-pandemic labor market - including high job openings and increased worker mobility - have further weakened WARN's predictive power.
Saad Ullah
