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February 2006, Vol. 129, No. 2    

Business employment dynamics: tabulations by employer size

Shail J. Butani, Richard L. Clayton, Vinod Kapani, James R. Spletzer, David M. Talan, and George S. Werking Jr.

Business Employment Dynamics (BED) data are becoming a major contributor to our understanding of employment growth and business cycles in the U.S. economy. The Bureau of Labor Statistics BED program generates gross job gains and gross job loss statistics that underlie the quarterly net change in employment. These statistics show, for example, that the net growth of 869,000 jobs in the fourth quarter of 2004 is from the sum of 8.1 million gross job gains from opening and expanding establishments, and 7.2 million gross job losses from contracting and closing establishments.

The new BED data have captured the attention of economists and policymakers across the country, and are high quality, high frequency, relatively timely, and historically consistent. The microdata used to construct the gross job gains and gross job losses statistics are from the Quarterly Census of Employment and Wages (QCEW). It is important to note that the BED data were created with no new data collection efforts and with no new additional respondent burden.

Following the initial release of the BED data in September 2003, the BED data series expanded in May 2004 with the release of industry statistics. BLS then began work on tabulations by size class. The production of size-class statistics is a complex task involving several economic and statistical issues. Although it is trivial to classify a business into a size class in any given quarter, it is difficult to classify a business into a size class for a longitudinal analysis of employment growth. Several different classifications exist, and many of these possible classifications have appealing theoretical and statistical properties. Furthermore, these alternative classification methodologies result in sharply different portraits of employment growth by size class.¹

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Footnotes
1 This point was clearly documented in Cordelia Okolie, "Why size class methodology matters in analyses of net and gross job flows," Monthly Labor Review, July 2004, pp. 3–12.

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Business Employment Dynamics

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Survival and longevity in the Business Employment Dynamics data.—May 2005.
Business employment dynamics: new data on gross job gains and losses—Apr. 2004.