Expanding Business Employment Dynamics Industry and Survival

18th International Roundtable on Business Survey Frames

Beijing, China

10/22/04

Richard L. Clayton David Talan Amy Knaup Akbar Sadeghi

Data Source Only quarterly “universe count” in U.S. statistical system

- quarterly employer reports (employment, wages, predecessors,etc)

- augmented by BLS collections for A) industry detailed codes, addresses, etc. B) worksite breakouts for multi-site businesses

In combination: measure and allocate employment and wages Industry and detailed geography

UI Tax Rate & Actuarial Analysis

UI-Covered Employment

Local Area Unemployment

Personal Income (BEA)

Gross Domestic Product (BEA)

Economic Forecasting

Current Employment Statistics

Occupational Employment Statistics

Job Creation/Destruction•Size Class Dynamics•Business Survival Rates

Geocoded Establishments

Occupational Employment Statistics

Occupational Safety and Health Statistics

Current Employment Statistics

National Compensation Survey

Industrial Price Program

Occupational Safety and Health Statistics

Programmatic Uses

Benchmarking(Employment Base)

General Economic Uses

Quarterly Census of Employment

& Wages Data (QCEW/ES-202)

Analytical Uses Sampling

Mass Layoff Statistics

State Revenue Projections

Jobs Openings & Labor Turnover Survey

Job Openings & Labor Turnover Survey

Quarterly Press Releases, Annual Employment and Wages

Local Economic Development Indicators

• Clusters Analysis• Shift Share• Industry Diversity Indexes• Location Quotients

Federal Funds Allocation$175 Billion

(HUD, USDA, HCFA/CHIP)

Minimum Wage Studies

Uses Of Quarterly Census of Employment and Wages Data (QCEW/ES-202)

Local Economic Impact Response Planning

Local Government Services Planning

Interagency Data Uses• Improve CPS After 2000 Census• LEHD• Industry Code Sharing

Local Transportation Planning

Business Employment Dynamics: Methods

• Starts with cross-sectional QCEW data• Establishments are linked longitudinally

across time• Linkages address mergers, acquisitions, and

spin-offs, etc.• 376 Million quarterly records and growing• No new reporting burden• Excludes self-employed, households, govt

Gross job gains and losses since 1992

• Tremendous job churning not seen in net job data

• Gross job changes at expansions and contractions larger than at openings and closings

• Gross job gains and losses have business cycle properties

• Gross job gains remained low in 2003

Job Reallocation

Job Reallocation Rates by Industry: September 2003

6.0

8.7

8.9

10.5

11.0

11.4

12.1

13.3

13.5

13.7

14.8

15.8

16.6

18.3

23.1

34.1

0.0 5.0 10.0 15.0 20.0 25.0 30.0 35.0 40.0

Utilities

Manufacturing

Education and health services

Information

Financial activities

Wholesale trade

Transportation and w arehousing

Retail trade

Service-providing1

Total private

Goods-producing

Other services

Professional and business services

Leisure and hospitality

Construction

Natural resources and mining

Indu

stry

Job Reallocation Rate (Percent)

Currently available data

• National data for total private and 15 major industry sectors.

• Quarterly data, September 1992 – December 2003• Data available with and without seasonal

adjustment, approximately 8 months after close of the quarter.

• Data available for both employment and counts of establishments as levels and rates

• Establishment-based data

Business Employment Dynamics: Future published data series

• Gross job gains and gross job losses by:– Industry - May 2004

– Size class - late 2004 – early 2005

– States and counties –2005

• Researcher access

Chart 3. Manufacturing Sector Gross Job Gains and Losses, Seasonally Adjusted

Chart 4. Retail Trade Sector Gross Job Gains and Losses, Seasonally Adjusted

Business Survival Statistics

• Establishment level data, not enterprise

• Tracks a single cohort across 4 years

• Includes all sectors in the economy

Data

• Source: Longitudinal Quarterly Census of Employment and Wages

• Unique Identifier to track establishment through ownership changes

• Births: establishments which are new to the longitudinal QCEW in 1998/2

QCEW: Birth Cohort

• New establishments in 1998 2nd quarter– 212,182 new establishments

• 0.16% were specifically involved in mergers, acquisitions, opening of new locations or closing of an existing location

– Ten supersectorsNatural Resources ConstructionTrade, Transportation, and Utilities ManufacturingInformation Education and Health ServicesProfessional and Business Services Financial ActivitiesLeisure and Hospitality Other Services

active births 1 year later 2 years later 3 years later 4 years later

212,182

81.2%

65.8%

54.3%

44.4%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

Figure 1. Survival rates of new establishments from second quarter of 1998

Figure 2. Survival rates of new establishments from second quarter of 1998 by sector

43.9%

43.8%

55.4%

44.3%

49.2%

37.7%

44.7%

47.4%

42.6%

49.6%

53.3%

53.6%

63.7%

55.1%

58.6%

49.5%

54.7%

57.0%

53.6%

59.4%

64.8%

65.0%

72.8%

66.8%

69.6%

62.9%

66.8%

68.7%

65.7%

69.5%

80.7%

81.2%

85.6%

82.3%

84.1%

80.8%

82.6%

84.2%

80.7%

82.3%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

Other Services

Leisure & Hospitality

Education & Health Services

Professional & BusinessServices

Financial Activities

Information

Trade, Transportation, & Utilities

Manufacturing

Construction

Natural Resources & Mining

Ind

ust

ry

Survival Rate

1 year

2 years

3 years

4 years

Figure 3. Employment patterns of survivors by sector as percentage of original employment

79.8%

91.1%

113.2%

111.8%

105.9%

124.0%

101.0%

112.3%

94.7%

90.7%

71.2%

82.7%

117.4%

123.3%

102.7%

141.0%

98.8%

114.0%

85.6%

91.5%

64.6%

74.8%

114.8%

114.8%

97.2%

124.4%

91.4%

109.6%

76.2%

80.9%

57.3%

69.4%

113.7%

107.0%

92.4%

102.5%

85.0%

100.1%

70.3%

77.0%

0% 100%

Other Services

Leisure & Hospitality

Education & Health Services

Professional & BusinessServices

Financial Activities

Information

Trade, Transportation, & Utilities

Manufacturing

Construction

Natural Resources & Mining

Ind

ust

ry

Percentage of Original Employment

2002/2

2001/2

2000/2

1999/2

Average employment of survivors, by sector and year from birth

NAICS Supersector 1st year(1999)

2nd year (2000)

3rd year (2001)

4th year (2002)

Natural Resources and Mining 7.5 9.0 9.3 10.6

Construction 4.2 4.7 5.1 5.9

Manufacturing 8.3 10.3 12.0 13.2

Trade, Transportation, and Utilities 4.1 4.9 5.6 6.3

Information 7.2 10.5 11.8 12.8

Financial Activities 3.8 4.5 5.0 5.7

Professional and Business Services 4.6 6.2 7.0 8.1

Education and Health Services 6.5 7.9 8.9 10.1

Leisure and Hospitality 1.2 11.5 12.7 14.4

Other Services 1.7 1.9 2.1 2.3

National 4.6 5.6 6.3 7.2

Next Steps: Survival

• Continue to track units through the U.S. recession and recovery

• Compare to Eurostat/OECD data, adjust for scope or other differences

Conclusions

• Survival rates are fairly stable across industries

• Need more detailed industries• Surviving establishments tend to grow over

their lifetime, evident in 1st year• Business Demographics

– Snapshots and longitudinal– Many and growing insights

- Business Demography and BR- Critical output, visible output- Flows from BR strengths

- Comprehensive- Accurate

clayton.rick@bls.govwww.bls.gov/bdm/home.htm