Downsizing and Worker Separations: Modelling the Regional Economic Impacts of Alternative Department of Energy Workforce Adjustment Policies

Lewis D., Frisch M. and Greenberg M. (2004) Downsizing and worker separations: modelling the regional economic impacts of alternative Department of Energy workforce adjustment policies, Reg. Studies 38, 67-83. Fifty years of huge investments by the US Department of Energy (DOE) in some regions has resulted in the DOE being the de facto steward of their regional economic health. With the end of the cold war, job reductions of DOE contractor workforce have severely impacted these regions. DOE worker separation policies may cushion or intensify these impacts. Using an economic simulation model, we examined the impacts of three different worker separation policies: the 'painful response' (no severance packages), the 'current response' (the current average of DOE separation packages), and the 'supportive response' (more lucrative severance and continued medical coverage). The analysis is split on two regional axes: (1) more rural DOE regions, as in the area surrounding the Savannah River Site (SRS) near Augusta, GA; versus (2) more metropolitan locations, such as the area surrounding the Rocky Flats Site which is in the Denver MSA. The results indicate that recent legislation which enhances worker separation packages for nuclear defence workers will substantially help the workers and their DOE-dependent communities cope with the negative impacts of DOE restructuring. Our research also corroborates earlier work which asserts that the state can play an effective, positive role in helping workers and communities adjust to economic restructuring.