Better Data on Employment Dynamics is Here

This is an article you should read if you're trying to understand the employment dynamics behind this jobless recovery we're experiencing now.

New quarterly data on business employment dynamics were issued earlier this week by the Bureau of Labor Statistics of the U.S. Department of Labor. These data quantify the sizable number of jobs that appear and disappear in the U.S. economy each quarter. From September 2002 to December 2002, the number of job gains from opening and expanding establishments and the number of job losses from closing and contracting establishments each were nearly 8 million. This is an important point. The data show that the net employment declines associated with the 2001 recession resulted from a large temporary increase in gross job losses accompanied by a sharp decrease in gross job gains. As of December 2002, gross job gains had not returned to pre-recession levels.

The change in the number of jobs over time is the net result of increases and decreases in employment that occur at all establishments in the economy. The new data track these changes in employment at private business establishments from one quarter to the next. In the new data series, gross job gains are defined as increases in employment resulting from expansions of employment at existing establishments or from the opening of establishments. Gross job losses are defined as declines in employment at existing establishments or from closing establishments. The difference between the number of gross jobs gained and the number of gross jobs lost is the net change in employment. These statistics show the dynamic labor market changes that underlie the net employment change statistic.

Opening and expanding private sector business establishments gained 7.7 million jobs in the fourth quarter of 2002, while closing and contracting establishments lost 7.8 million jobs. This led to a net employment loss of 70,000 jobs. Expanding establishments gained 6.1 million jobs in the quarter, while opening establishments accounted for a gain of 1.6 million jobs. Contracting establishments lost 6.2 million jobs, while closing establishments accounted for a loss of 1.6 million jobs. Expanding and contracting establishments accounted for most jobs gained and lost.

Out of 6.4 million active establishments, a total of 1.8 million establishments gained jobs from September to December 2002. Of these, 1.5 million were expanding establishments and 345,000 were opening establishments. During the fourth quarter of 2002, 1.8 million establishments lost jobs. Of these, 1.5 million were contracting establishments and 333,000 were closing establishments.

I'm sure most of you reading this article are asking this question: "What does this picture look like for my state, region or county?" I don't have the answer, but the ES-202 data for your state does have the data to provide an answer. Data reliabiity will be better at the state level and maybe the regional level. Estimation problems grow larger at the county level, especially in small-size counties. Check with your state workforce development or employment agency to learn more about what they can provide you. Go here to find a link to your state employment agency.

Download the report from BLS here.