May 15, 2001 (The Editor’s Desk is updated each business day.)

New information on job creation and destruction

A newly developed BLS database is capable of generating high-quality  information on job creation, job destruction, and the life cycle of establishments.

[Chart data—TXT]

Job creation is defined as the employment growth contributed by establishments that expand or start up, and job destruction is defined as the employment decline resulting from establishments that contract or shut down. The sum of job creation and job destruction is the net change in employment.

First results from the new BLS longitudinal database (referred to as LDB) show a tremendous amount of heterogeneity underlying net employment growth. For example, net growth between September 1999 and December 1999 was 0.9 percent. This reflected a job creation rate of 8.3 percent and a job destruction rate of 7.4 percent. Thus, these figures indicate that slightly more than 1 in 7 jobs were either created or destroyed in three months.

These data are from the BLS Covered Employment and Wages program. Percent changes in this article are computed with a denominator that is an average of levels in the two quarters. Note that unclassifiable establishments are not included on the chart. For more information, see "Measuring job and establishment flows with BLS longitudinal microdata," by Timothy R. Pivetz, Michael A. Searson, and James R. Spletzer, Monthly Labor Review, April 2001.