Annual measures of gross job gains and gross job losses

Monthly Labor Review

Volumn 127, Issue 11, 2004, Pages 3-13

  Pinkston, Joshua C ^a   Spletzer, James R ^a  

^a BUREAU OF LABOR STATISTICS   (United States)

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EID: 20444450157     PISSN: 00981818     EISSN: None     Source Type: Journal    
DOI: None     Document Type: Review

References (17)

1. For a complete description and analysis of the new data series, see James R. Spletzer, R. Jason Faberman, Akbar Sadeghi, David M. Talan, and Richard L. Clayton, "Business employment dynamics: new data on gross job gains and losses," Monthly Labor Review, April 2004, pp. 29-42. The Business Employment Dynamics Web site is www.bls.gov/bdm.
2. Further details about definitions and the quarterly linkage algorithm can be found in Spletzer and others, "Business employment dynamics," April 2004.
3. Establishments involved in ownership changes also need to be treated with care when constructing gross job gains and gross job loss statistics. When an establishment changes ownership, it is allowed to change its State specific unemployment insurance number. But this change will likely be identified by a State supplied predecessor or successor number or by the probabilistic weighted match in the BLS record linkage system, and as such, the unique establishment identifier in the BLS longitudinal establishment database remains constant through this period of ownership change.
4. A detailed description of the algorithm can be found in Joshua C. Pinkston and James R. Spletzer, "Annual Measures of Job Creation and Job Destruction Created from Quarterly Microdata," American Statistical Association 2002 Proceedings of the Section on Business and Economic Statistics, pp. 3311-3316. This ASA paper reports that the annual gross job gains rate for California increases from 18.7 percent to 20.0 percent, and the annual gross job loss rate for California increases from 15.4 percent to 16.8 percent, when not using information on breakouts and consolidations within the year.
5. See Spletzer and others, "Business employment dynamics," April 2004, table 5, page 40.
6. Percentages are calculated using the average of the current and previous levels as the denominator. This ensures that increases and decreases are treated symmetrically. For example, conventional calculations would describe an increase from 4 employees to 8 as a 100-percent increase, whereas a decrease from 8 to 4 would be a 50-percent decrease. Instead, when using average employment in the denominator, both the increase from 4 to 8 and the decrease from 8 to 4 are changes of 66.67 percent.
7. See James R. Spletzer, "The Contribution of Establishment Births and Deaths to Employment Growth," Journal of Business and Economic Statistics, January 2000, pp. 113-26.
8. For instance, "in 1999 alone, 33 million jobs were destroyed and 36 million created."
9. See "All Jobs Count," The Washington Post, Editorial, March 4, 2004, p. A22. These statistics are the sum of the four quarterly statistics in table 1.
10. We do not interpret these statistics as survival probabilities, primarily because the statistics in table 5 refer to the opening and closing of establishments, whereas the literature on establishment survival refers to the birth and death of establishments. The statistics in table 5 (84.5 percent, 73.9 percent, and 61.6 percent), are lower than survival statistics in the literature. For example, the quarterly survival statistics in Spletzer, "The Contribution of Establishment Births and Deaths to Employment Growth," January 2000, are 90.5 percent, 84.9 percent, and 80.1 percent.
11. See Timothy Dunne, Mark J. Roberts, and Larry Samuelson, "Plant Turnover and Gross Employment Flows in the U.S. Manufacturing Sector," Journal of Labor Economics, vol. 7, no. 1, 1989, pp 48-71;
12. and Steven J. Davis, John C. Haltiwanger, and Scott Schuh, Job Creation and Destruction (Cambridge, MA, MIT Press, 1996).
13. See Patricia M. Anderson and Bruce D. Meyer, "The Extent and Consequences of Job Turnover," Brookings Papers on Economic Activity, 1994, pp. 177-236;
14. Christopher L. Foote, "Trend Employment Growth and the Bunching of Job Creation and Destruction," Quarterly Journal of Economics, vol. 113, No. 3, August 1998, pp. 809-34;
15. and Spletzer, "The Contribution of Establishment Births and Deaths to Employment Growth," January 2000.
16. Another possible explanation for the difference between the statistics in this article and those of Davis and others. Job Creation and Destruction, 1996, is different time periods.
17. It is possible that the late 1990s and early 2000s have higher gross job flow rates than the 1970s and 1980s. However, figure 8 of R. Jason Faberman, "Gross Job Flows over the Past Two Business Cycles: Not all 'Recoveries' are Created Equal," BLS Working Paper no. 372, June 2004, shows that the gross job gains and gross job loss rates for the manufacturing sector are arguably lower in the 1990s than in previous decades.