Bureau of Labor Statistics Timely Statistics on SMEs and Entrepreneurs in the U.S. Labor Market...

Bureau of Labor Statistics

Timely Statisticson SMEs and Entrepreneurs

in the U.S. Labor Market

James R. Spletzer

U.S. Bureau of Labor StatisticsOctober 2009


Today’s Presentation

Employment losses in the current recession are much greater than in recent recessions

We would like timely data on employment gains and losses by firm size, and we would like timely data on entrepreneurs

We can get both from the Business Employment Dynamics (BED) data produced by the Bureau of Labor Statistics (BLS)


Net Employment Losses During Recessions, by Firm Size

0%

20%

40%

60%

1990:Q3 - 1991:Q1(1.7M jobs lost)

2001:Q1 - 2001:Q4(3.1M jobs lost)

2007:Q4 - 2008:Q4(3.3M jobs lost)

1-19 20-99 100-499 500+


Gross Job Gains and Gross Job Losses,Firms Sized 1-19 and 500+

800

1800

2800

1990

1991

1992

1993

1995

1996

1997

1998

2000

2001

2002

2003

2005

2006

2007

2008

Gross Job Gains 1-19 Gross Job Gains 500+

Gross Job Losses 1-19 Gross Job Losses 500+


Gross Job Gains and Gross Job Losses,Firms Sized 1-19

500

1000

1500

2000

1990

1991

1992

1993

1995

1996

1997

1998

2000

2001

2002

2003

2005

2006

2007

2008

Expansions 1-19 Openings 1-19

Contractions 1-19 Closings 1-19


Gross Job Gains and Gross Job Losses,Firms Sized 1-19

700

800

900

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

1.65

1.85

2.05

Number of Expanding Firms 1-19

Average Number of Jobs Added at Expanding Firms 1-19


Summary: Firms Sized 1-19

Large employment losses in the current recession (through 2008:Q4) by small firms sized 1-19:

-- Losses appear to be characterized by declining job creation, not increasing job destruction

- Declining job creation is most evident in expanding firms and not in opening firms

- There is a steep fall in the number of expanding firms in the current recession

Preliminary benchmark announcement (10/2/09) states that job losses in 2009:Q1 due to an increase in the number of business closings


Entrepreneurs in the BED

There are many empirical definitions of entrepreneurs:

- Nascent entrepreneurs (Paul Reynolds, PSED)

- Newly self-employed (Kauffman index of entrepreneurship, using the CPS)

- New firms (using business data)

We define entrepreneurs in the BED as new establishments with positive employment

- We’re working on a measure of “entrepreneurial births” that are unaffiliated with existing firms; research indicates lower levels but same trends


Entrepreneurs in the BED

700

1050

1400

19

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

120

180

240

Birth Employment (Thousands)

Number of Establishment Births (Thousands)


Summary: Entrepreneurs in the BED

The number of entrepreneurs in the BED:- Increased steadily 1993-2000 and 2003-2005- Declined during 2008

There has been a long-term decline (1998-2008) in the jobs created by entrepreneurs in the BED:

- Each entrepreneur created 6.3 jobs (on average) in the 1993-1998 period

- Fell to 4.4 (on average) in the 2005-2007 period- Why?- Is this important?


Timely Statistics on SMEs and Entrepreneurs in the U.S. Labor Market

The BED from BLS provides the most timely data in the U.S. (~8 month lag) on job gains and job losses by firm size, as well as data on business births

The BED through 2008:Q4 shows large job losses by small firms (1-19) in the current recession

-- Sharp decline in the number of small firms expanding

The BED also shows substantial long-term declines in the number of jobs created by entrepreneurs


Description of the BED

The BLS Quarterly Census of Employment and Wages (QCEW) program-- Collects employment and wages

-- By ownership, county, and industry

-- Administrative data from the State UI systems, enhanced with quarterly survey data

-- A virtual census (98%) of employees on nonfarm payrolls

First quarter 2009 (released Oct 16, 2009):-- Employment of 129.0 million

-- 9.1 million establishments



Business Employment Dynamics (BED)

QCEW microdata linked longitudinally

Why link the microdata longitudinally?Net changes in employment are one of the most

important economic statisticsUnderlying these net changes is substantial churning:

businesses are continually opening, closing, expanding, and contracting

These large gross job flows have fascinating business cycle properties



Quarterly Press Release-- http://www.bls.gov/news.release/pdf/cewbd.pdf-- Gross job gains (expansions, openings, & births)

and gross job losses (contractions, closings, & deaths) by industry, state, size class

-- 2009:Q1 data to be released November 19, 2009-- 2008:Q4 data released August 19, 2009:

“From September 2008 to December 2008 the number of job gains from opening and expanding private sector establishments was 6.7 million, and the number of job losses from closing and contracting establishments was 8.5 million”



-2,000

-1,000

0

1,000

2,000

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

Quarterly Net Employment Change

6,000

7,000

8,000

9,000

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

Quarterly Gross Job Gains Quarterly Gross Job Losses


Supplemental Table:Net Employment Growth by Firm Size


Supplemental Table:Employment by Firm Size


Supplemental Table:Net Employment Growth by Firm Size


Supplemental Table:Employment by Firm Size

Bureau of Labor Statistics Timely Statistics on SMEs and Entrepreneurs in the U.S. Labor Market...

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