Monthly Labor Review April 2004 29

Business Employment Dynamics

Business employment dynamics:

new data on gross job gains and losses

The new BLS business employment dynamics data series

captures establishment-level employment changes

that are absent from other BLS series; the detail provided

gives researchers insight into business openings, closings,

expansions, and contractions across the stages

of the business cycle

James R. Spletzer,

R. Jason Faberman,

Akbar Sadeghi,

David M. Talan,

and

Richard L. Clayton

James R. Spletzer is a

senior research

economist, R. Jason

Faberman is a

research economist,

Akbar Sadeghi is an

economist, and

David M. Talan is a

supervisory

economist, all in the

Office of Employment

and Unemployment

Statistics, Bureau of

Labor Statistics,

Washington, DC.

Richard L. Clayton is

Chief, Division of

Administrative

Statistics and Labor

Turnover, Office of

Employment and

Unemployment

Statistics. E-mail:

spletzer.jim@bls.gov

One of the most watched economic

indicators in the United States is the

monthly change in nonfarm payroll

employment released by the Bureau of Labor

Statistics. Changes in this indicator can affect stock

market movements and interest rate decisions

considerably. The monthly change in nonfarm

payroll employment gives the net change in the

number of jobs over a particular month—the overall

change, given that some establishments have

opened, some have expanded, some have contracted, and some have closed. This article presents

new BLS data on quarterly gross job gains and

losses, documents their magnitude, and examines

the historical time series having to do with these

statistics from 1992 to 2003.

The new BLS measures of gross job gains and

gross job losses afford a more thorough understanding of the employment decisions of the

millions of business establishments in the U.S.

economy. Examining establishment-level employment changes aids in analyzing both the large gross

job flows that underlie the substantially smaller net

employment changes and the establishment-level

employment dynamics across various stages of the

business cycle.

The article begins with definitions of gross job

gains and gross job losses. Following this introductory section are a description of the source data

used by the Bureau to generate estimates of quarterly gross job gains and gross job losses and an

explanation of the methodology employed for

longitudinally linking establishment records. The

heart of the article is the presentation of the new

BLS business employment dynamics data series,

together with an analysis of the levels and movements of gross job gains and gross job losses

during the past 10 years. Special attention is given

to technical issues such as the seasonal adjustment

of gross job gains and gross job losses, how the

business employment dynamics data compare with

other BLS establishment-based employment series,

and establishment openings and closings relative

to births and deaths. The article concludes with a

summary of ongoing work and planned future

enhancements to the gross job gains and gross job

loss statistics at the Bureau.

Concepts and definitions

The net result of the millions of business establishments in the U.S. economy changing their

specific employment levels is a change in aggregate

employment from one quarter to the next. While

this aggregate net change identifies the overall

growth or decline of the labor market, it does not

convey the underlying heterogeneity of the many

establishments that open, expand, contract, and

close every quarter. By contrast, statistics on gross

job gains and gross job losses aggregate the establishment-level employment changes in such a way

that one can observe and assess the underlying

dynamics.1

The Bureau uses a number of definitions

pertaining to gross job gains and gross job losses.

Gross job gains are the sum of all employment
30

Business Employment Dynamics

Monthly Labor Review April 2004

increases at either opening or expanding establishments. An

opening establishment is an establishment that has positive

employment in the current quarter and that either had zero

employment or was not in the database the previous quarter. An

expanding establishment is a continuous unit that increases its

employment from a positive level in the previous quarter to a

higher level in the current quarter. Gross job losses are the sum

of all employment losses at either closing or contracting establishments. A closing establishment is an establishment that had

positive employment in the previous quarter and that either has

zero employment or is not in the database in the current quarter.

A contracting establishment is a continuous unit that decreases

its employment from the previous quarter to a lower positive

level in the current quarter. The familiar net change in employment is the difference between the gross job gains and the gross

job losses.

Many establishments do not change their level of

employment from one quarter to the next. For example, between

the first and second quarters of 2003, 3.1 million U.S. establishments with workers did not change their employment

levels. Those establishments which keep their employment

constant do not contribute to the count of either gross job

gains or gross job losses. However, such establishments and

their employment levels are included in the count of the total

number of establishments and the aggregate level of

employment.

By dividing estimates of gross job gains and gross job

losses by the average of the current and previous quarters’

employment, the Bureau expresses those estimates as rates.

This approach provides a symmetric growth rate, so that one

can add and subtract the rates just as one can the levels. For

instance, the net growth rate is the difference of the gross

job gain rate and the gross job loss rate.

An example can help clarify the concepts of gross job gains

and gross job losses. For the rest of this paragraph, the data

discussed are not seasonally adjusted. In March 2003 there

were 105,079,625 jobs, and in June 2003 there were 107,615,979

jobs. Thus, employment increased by 2,536,354 jobs during the

second quarter of 2003. This employment growth can be

decomposed into expanding, opening, contracting, and closing

establishments. Employment in expanding establishments grew

by 7,229,797 jobs, employment in opening establishments by

1,754,671 jobs. The level of gross job gains was 8,984,468 jobs

during the second quarter of 2003, a rate of 8.5 percent. Employment in contracting establishments declined by 5,093,167 jobs,

and closing establishments accounted for the loss of 1,354,947

jobs. The level of gross job losses was 6,448,114 jobs during the

second quarter of 2003, a rate of 6.1 percent. The difference

between the gross job gains and the gross job losses constituted the net employment increase of 2,536,354 jobs, a rate

of 2.4 percent.

Both gross job gains and gross job losses are the sums of

net changes in employment at the establishment level and

are referred to collectively as gross job flows. For example, if

an establishment increases its employment from 100 workers

to 120 workers, the 20 additional jobs are classified as gross

job gains. This count of gross job gains does not measure

the dynamics of workers into and out of jobs in the establishment. For instance, the addition of 20 jobs during the

quarter might have occurred either with the addition of 20

new hires or by the net of 30 new hires and 10 separations.

Counts of hires and separations, referred to as worker flows,

are published monthly by the Job Openings and Labor

Turnover Survey (JOLTS) program at the Bureau.

Longitudinal establishment microdata

Source of data. The source of the data used for constructing

the new BLS business employment dynamics data series is the

Quarterly Census of Employment and Wages (QCEW), also

known as the ES-202 program. A comprehensive and accurate

source of information on employment and wages, the data

gathered in the QCEW program provide a virtual census (98

percent) of employees on nonfarm payrolls. In the second

quarter of 2003, the QCEW statistics show an employment level

of 129.2 million, in 8.2 million establishments in the U.S. economy.

The QCEW data are derived from quarterly Unemployment

Insurance (UI) administrative microdata. All employers subject

to State UI laws are required to submit quarterly reports detailing

their monthly employment and quarterly wages to the State

Employment Security Agencies. After the microdata are edited

and, if necessary, corrected by the State Labor Market Information staff, the States submit the data and other business

identification information to the Bureau as part of the FederalState cooperative QCEW program.

Because the gross job gain and gross job loss statistics are

defined from the establishment-level employment changes, it is

important to mention the definitions of establishment and

employment in the QCEW program. An establishment is an

economic unit that produces goods or services, usually a

physical location engaged in one or predominantly one type of

economic activity. Thus, an establishment is different from a firm

or a company, which may consist of one or more establishments

at several locations. The Bureau, in cooperation with the States,

takes many steps to ensure that employers with multiple

establishments in a given State report employment and wage

data for specific establishments. Employment is defined as the

number of workers covered by the UI program (and whose wages

are therefore subject to employer UI taxes) who earned wages

during the pay period that includes the 12th of the month. The

quarterly UI microdata contain information on monthly employment; the gross job gain and gross job loss statistics use

employment in the third month of the quarter as the measure of

an establishment’s quarterly employment.
 Monthly Labor Review April 2004 31

The gross job gain and gross job loss statistics published

by the Bureau are derived from a subset of the establishments

covered in the QCEWdatabase. Government establishments

are excluded, as are both private households (NAICS 814110)

and establishments with zero employment in two consecutive

quarters. Establishments in Puerto Rico and the Virgin Islands

also are excluded.

The linkage methodology. Following establishments across

time with administrative UI microdata is a complex and challenging exercise. Creating the business employment dynamics

data series requires a thorough understanding of how businesses

operate and how they file their UI tax forms. The manner in which

businesses report administrative changes and changes in

ownership can result in establishments obtaining new UI

identifiers even though no economic changes occurred. Failing

to capture and link such noneconomic changes would result in

an overstatement of establishment openings and closings and

thus an overstatement of job turnover in the economy. Accordingly, the Bureau has developed a multistep process for

linking business establishment data over time.2 The process

consists of four steps: two distinct administrative matches, a

probability-based weighted match, and an analyst intervention

match.

The BLS linkage process is based on the unique establishment

identifier maintained by the States. The first step is to link

establishments that maintain the same identifier across quarters.

This step is followed by a match using predecessor and successor information that identifies distinct establishments as

continuous across quarters in situations where the UI establishment identifier changes as a result of a change in ownership

or a change in the reporting configuration of a multiestablishment

company. In most cases, businesses that buy another business

must report their assumption of liability for paying the boughtout business’ UI taxes to the State. These reported linkages make

up the vast majority of predecessor and successor linkages;

others are identified by the State Labor Market Information staff.

The third step in the BLS linkage process is a probability-based

weighted match, using information such as the name, street

address, and telephone number of the establishment to link a

closing establishment in the previous quarter with an opening

establishment in the current quarter when continuity appears to

warrant such a linkage. The final step in the matching process is

an analyst’s review and possible manual linkage of selected large

unmatched records.

Gross job gains and gross job losses

Cross-sectional results. The seasonally adjusted time

series of gross job gains and gross job losses are presented

in table 1. During the second quarter of 2003, the economy

lost a (seasonally adjusted) total of 180,000 jobs. This

employment decline is the net result of two factors: the jobs

gained by opening and expanding establishments and the

jobs lost by closing and contracting establishments. Opening

and expanding establishments gained 7.5 million jobs in the

second quarter of 2003, while closing and contracting establishments lost 7.7 million jobs. Each of these figures is substantially larger than the net employment change statistic,

which illustrates the sizable amount of job “churning” that

occurs in the U.S. economy every quarter.

Gross job gains result from expanding and opening establishments. How large are these two components relative to

each other? Table 1 shows that, in the second quarter of 2003,

employment in expanding establishments grew by 6.0 million

jobs and employment in opening establishments grew by 1.5

million. These statistics indicate that expanding establishments

account for 80 percent, and opening establishments for 20

percent, of quarterly gross job gains. With regard to gross job

losses, employment in contracting establishments declined by

6.1 million jobs, employment in closing establishments by 1.6

million jobs. Thus, contracting establishments accounted for 80

percent, and closing establishments for 20 percent, of quarterly

gross job losses. Expanding and contracting establishments

accounted for most jobs gained and lost when measured

quarterly.

Measured in percentages rather than levels, the gross

job gain rate in the U.S. private-sector economy was 7.0

percent between March 2003 and June 2003, and the gross

job loss rate for the quarter was 7.3 percent. (See table 2.)

The interpretation of these statistics is that the jobs gained

in opening and expanding establishments during the

quarter made up 7.0 percent of the total number of jobs and

the jobs lost from closing and contracting establishments

during the quarter constituted 7.3 percent of the total number

of jobs. The difference of –0.3 percent between the gross job

gain rate and the gross job loss rate is the net employment

growth rate, seasonally adjusted, between March 2003 and

June 2003.

An important component of the business employment

dynamics data series is the establishment counts underlying the

gross job gains and gross job losses. These counts are reported

in table 3 on a seasonally adjusted basis, with rates given in table

4. Looking at the second quarter of 2003 in each table reveals that

there were about 1.5 million expanding establishments (22.6

percent of all active establishments) and 1.5 million contracting

establishments (22.9 percent) during the quarter. Approximately

332,000 establishments (5.2 percent) opened during the quarter,

and 337,000 establishments (5.3 percent) closed during the

quarter. The difference of the number of opening establishments

and the number of closing establishments (–5,000) is the net

change in the number of active establishments during the quarter.3

The statistics from tables 1 and 3 indicate that the average

expanding establishment added 4.1 jobs during the quarter
32

Business Employment Dynamics

Monthly Labor Review April 2004

Private-sector gross job gains and job losses, seasonally adjusted quarterly data, September 1992

to June 2003

1992:

 September ............................. 276 7,233 5,528 1,705 6,957 5,362 1,595

 December .............................. 344 7,162 5,504 1,658 6,818 5,428 1,390

1993:

 March..................................... 534 7,511 5,532 1,979 6,977 5,318 1,659

 June ...................................... 636 7,290 5,757 1,533 6,654 5,260 1,394

 September ............................. 709 7,383 5,770 1,613 6,674 5,322 1,352

 December .............................. 754 7,481 5,876 1,605 6,727 5,357 1,370

1994:

 March..................................... 643 7,502 5,880 1,622 6,859 5,401 1,458

 June ...................................... 880 7,761 6,033 1,728 6,881 5,400 1,481

 September ............................. 1,025 7,838 6,121 1,717 6,813 5,493 1,320

 December .............................. 614 7,682 6,044 1,638 7,068 5,602 1,466

1995:

 March..................................... 830 7,858 6,180 1,678 7,028 5,647 1,381

 June ...................................... 307 7,705 6,020 1,685 7,398 5,934 1,464

 September ............................. 673 7,873 6,211 1,662 7,200 5,667 1,533

 December .............................. 570 8,023 6,287 1,736 7,453 5,916 1,537

1996:

 March..................................... 432 7,980 6,262 1,718 7,548 6,030 1,518

 June ...................................... 594 8,111 6,329 1,782 7,517 5,961 1,556

 September ............................. 590 8,146 6,285 1,861 7,556 5,988 1,568

 December .............................. 827 8,267 6,390 1,877 7,440 5,906 1,534

1997:

 March..................................... 823 8,305 6,463 1,842 7,482 5,886 1,596

 June ...................................... 627 8,139 6,386 1,753 7,512 5,924 1,588

 September ............................. 876 8,608 6,674 1,934 7,732 5,972 1,760

 December .............................. 642 8,673 6,674 1,999 8,031 6,098 1,933

1998:

 March..................................... 777 8,829 6,668 2,161 8,052 6,120 1,932

 June ...................................... 677 8,739 6,601 2,138 8,062 6,191 1,871

 September ............................. 759 8,587 6,600 1,987 7,828 6,123 1,705

 December .............................. 619 8,482 6,704 1,778 7,863 6,115 1,748

1999:

 March..................................... 401 8,804 6,720 2,084 8,403 6,454 1,949

 June ...................................... 587 8,806 6,803 2,003 8,219 6,383 1,836

 September ............................. 752 8,938 6,931 2,007 8,186 6,335 1,851

 December .............................. 950 9,066 7,046 2,020 8,116 6,303 1,813

2000:

 March..................................... 719 8,847 6,938 1,909 8,128 6,414 1,714

 June ...................................... 534 8,723 6,938 1,785 8,189 6,463 1,726

 September ............................. 407 8,854 6,930 1,924 8,447 6,620 1,827

 December .............................. 301 8,680 6,867 1,813 8,379 6,594 1,785

2001:

 March..................................... –281 8,474 6,700 1,774 8,755 6,883 1,872

 June ...................................... –782 8,217 6,413 1,804 8,999 7,115 1,884

 September ............................. –1,080 7,898 6,104 1,794 8,978 7,060 1,918

 December .............................. -808 7,902 6,083 1,819 8,710 6,930 1,780

2002:

 March..................................... –276 8,013 6,200 1,813 8,289 6,545 1,744

 June ...................................... –81 8,010 6,223 1,787 8,091 6,372 1,719

 September ............................. 71 7,922 6,208 1,714 7,851 6,257 1,594

 December .............................. –70 7,746 6,114 1,632 7,816 6,189 1,627

2003:

 March..................................... –478 7,441 5,904 1,537 7,919 6,361 1,558

 June ...................................... –180 7,510 5,988 1,522 7,690 6,140 1,550

Gross job gains Gross job losses

3 months ended— Net change1

 Expanding

establishments

 Opening

establishments Total Contractingestablishments Total Closing

establishments

Table 1.

 1 Net change is the difference between total gross job gains and total gross job losses.

[In thousands]
 Monthly Labor Review April 2004 33

Private-sector gross job gains and job losses, as a percentage of employment,1 seasonally adjusted

quarterly data, September 1992 to June 2003

[In percent]

1992:

 September ............................. .3 8.1 6.2 1.9 7.8 6.0 1.8

 December .............................. .2 7.9 6.1 1.8 7.7 6.1 1.6

1993: .........................................

 March ..................................... .6 8.3 6.1 2.2 7.7 5.9 1.8

 June ...................................... .8 8.1 6.4 1.7 7.3 5.8 1.5

 September ............................. .8 8.1 6.3 1.8 7.3 5.8 1.5

 December .............................. .8 8.1 6.4 1.7 7.3 5.8 1.5

1994:

 March ..................................... .7 8.1 6.3 1.8 7.4 5.8 1.6

 June ...................................... .9 8.3 6.5 1.8 7.4 5.8 1.6

 September ............................. 1.1 8.3 6.5 1.8 7.2 5.8 1.4

 December .............................. .6 8.0 6.3 1.7 7.4 5.9 1.5

1995:

 March ..................................... .8 8.1 6.4 1.7 7.3 5.9 1.4

 June ...................................... .3 7.9 6.2 1.7 7.6 6.1 1.5

 September ............................. .7 8.1 6.4 1.7 7.4 5.8 1.6

 December .............................. .5 8.2 6.4 1.8 7.7 6.1 1.6

1996:

 March ..................................... .6 8.2 6.4 1.8 7.6 6.1 1.5

 June ...................................... .6 8.2 6.4 1.8 7.6 6.0 1.6

 September ............................. .6 8.2 6.3 1.9 7.6 6.0 1.6

 December .............................. .9 8.3 6.4 1.9 7.4 5.9 1.5

1997:

 March ..................................... .8 8.2 6.4 1.8 7.4 5.8 1.6

 June ...................................... .6 8.0 6.3 1.7 7.4 5.8 1.6

 September ............................. .9 8.4 6.5 1.9 7.5 5.8 1.7

 December .............................. .6 8.4 6.5 1.9 7.8 5.9 1.9

1998:

 March ..................................... .7 8.5 6.4 2.1 7.8 5.9 1.9

 June ...................................... .6 8.3 6.3 2.0 7.7 5.9 1.8

 September ............................. .8 8.2 6.3 1.9 7.4 5.8 1.6

 December .............................. .5 8.0 6.3 1.7 7.5 5.8 1.7

1999:

 March ..................................... .4 8.3 6.3 2.0 7.9 6.1 1.8

 June ...................................... .6 8.3 6.4 1.9 7.7 6.0 1.7

 September ............................. .7 8.3 6.4 1.9 7.6 5.9 1.7

 December .............................. .9 8.4 6.5 1.9 7.5 5.8 1.7

2000:

 March ..................................... .6 8.1 6.4 1.7 7.5 5.9 1.6

 June ...................................... .4 7.9 6.3 1.6 7.5 5.9 1.6

 September ............................. .3 8.0 6.3 1.7 7.7 6.0 1.7

 December .............................. .2 7.8 6.2 1.6 7.6 6.0 1.6

2001:

 March ..................................... –.2 7.7 6.1 1.6 7.9 6.2 1.7

 June ...................................... –.8 7.4 5.8 1.6 8.2 6.5 1.7

 September ............................. –1.1 7.2 5.6 1.6 8.3 6.5 1.8

 December .............................. –.7 7.3 5.6 1.7 8.0 6.4 1.6

2002:

 March ..................................... –.2 7.5 5.8 1.7 7.7 6.1 1.6

 June ...................................... .0 7.5 5.8 1.7 7.5 5.9 1.6

 September ............................. .1 7.4 5.8 1.6 7.3 5.8 1.5

 December .............................. –.1 7.2 5.7 1.5 7.3 5.8 1.5

2003:

 March ..................................... –.5 6.9 5.5 1.4 7.4 5.9 1.5

 June ...................................... –.3 7.0 5.6 1.4 7.3 5.8 1.5

Gross job gains Gross job losses

3 months ended— Net change2

 Expanding

establishments

 Opening

establishments Total Contractingestablishments Total Closing

establishments

Table 2.

1

The rates measure gross job jains and gross job losses as a percentage

of the average of the previous and current employment figures.

 2 Net change is the difference between total gross job gains and total

gross job losses.
34

Business Employment Dynamics

Monthly Labor Review April 2004

Private-sector establishments, by direction of employment change, seasonally adjusted quarterly data,

September 1992 to June 2003

1992:

September .............................. 11 1,576 1,287 289 1,541 1,263 278

 December .............................. 24 1,591 1,294 297 1,534 1,261 273

1993:

 March ..................................... 32 1,614 1,310 304 1,537 1,265 272

 June ...................................... 26 1,631 1,337 294 1,521 1,253 268

 September ............................. 37 1,647 1,348 299 1,530 1,268 262

 December .............................. 23 1,655 1,365 290 1,544 1,277 267

1994:

 March ..................................... 13 1,644 1,356 288 1,576 1,301 275

 June ...................................... 29 1,700 1,390 310 1,570 1,289 281

 September ............................. 38 1,715 1,404 311 1,579 1,306 273

 December .............................. 13 1,693 1,394 299 1,613 1,327 286

1995:

 March ..................................... 31 1,717 1,411 306 1,616 1,341 275

 June ...................................... 26 1,697 1,390 307 1,640 1,359 281

 September ............................. 7 1,715 1,412 303 1,649 1,353 296

 December .............................. 23 1,726 1,409 317 1,656 1,362 294

1996:

 March ..................................... 15 1,736 1,424 312 1,663 1,366 297

 June ...................................... 22 1,745 1,426 319 1,674 1,377 297

 September ............................. 36 1,762 1,432 330 1,675 1,381 294

 December .............................. 35 1,787 1,455 332 1,673 1,376 297

1997:

 March ..................................... 31 1,801 1,471 330 1,683 1,384 299

 June ...................................... 18 1,783 1,463 320 1,702 1,400 302

 September ............................. 17 1,810 1,482 328 1,706 1,395 311

 December .............................. 9 1,818 1,482 336 1,736 1,409 327

1998:

 March ..................................... 19 1,814 1,469 345 1,738 1,412 326

 June ...................................... 56 1,841 1,487 354 1,706 1,408 298

 September ............................. 22 1,824 1,488 336 1,744 1,430 314

 December .............................. 2 1,831 1,512 319 1,730 1,413 317

1999:

 March ..................................... 11 1,827 1,493 334 1,766 1,443 323

 June ...................................... –1 1,847 1,506 341 1,785 1,443 342

 September ............................. 16 1,860 1,510 350 1,783 1,449 334

 December .............................. 36 1,903 1,539 364 1,758 1,430 328

2000::

 March ..................................... 24 1,882 1,525 357 1,810 1,477 333

 June ...................................... 20 1,876 1,526 350 1,819 1,489 330

 September ............................. 23 1,879 1,520 359 1,821 1,485 336

 December .............................. 12 1,863 1,512 351 1,831 1,492 339

2001:

 March ..................................... 5 1,849 1,502 347 1,841 1,499 342

 June ...................................... –3 1,811 1,473 338 1,861 1,520 341

 September ............................. –8 1,774 1,435 339 1,878 1,531 347

 December .............................. 6 1,775 1,429 346 1,856 1,516 340

2002:

 March ..................................... 4 1,786 1,444 342 1,834 1,496 338

 June ...................................... 6 1,794 1,447 347 1,825 1,484 341

 September ............................. 38 1,805 1,460 345 1,781 1,474 307

 December .............................. 12 1,798 1,453 345 1,809 1,476 333

2003:

 March ..................................... –4 1,756 1,420 336 1,859 1,519 340

 June ...................................... –5 1,783 1,451 332 1,802 1,465 337

 1 Net change is the difference between the number of opening establishments and the number of closing establishments.

Establishments gaining jobs Establishments losing jobs

3 months ended— Net change1

 Expanding

establishments

 Opening

establishments Total Contractingestablishments Total Closing

establishments

Table 3.

[In thousands]
 Monthly Labor Review April 2004 35

Private-sector establishments, by direction of employment change, as a percentage of total establishments,1

seasonally adjusted quarterly data, September 1992 to June 2003

1992:

 September ............................. 0.2 29.5 24.1 5.4 28.8 23.6 5.2

 December .............................. .4 29.6 24.1 5.5 28.6 23.5 5.1

1993:

 March ..................................... .6 29.8 24.2 5.6 28.4 23.4 5.0

 June ...................................... .5 29.9 24.5 5.4 27.9 23.0 4.9

 September ............................. .6 30.0 24.6 5.4 27.9 23.1 4.8

 December .............................. .4 29.9 24.7 5.2 27.9 23.1 4.8

1994:

 March ..................................... .2 29.6 24.4 5.2 28.4 23.4 5.0

 June ...................................... .6 30.5 24.9 5.6 28.1 23.1 5.0

 September ............................. .6 30.5 25.0 5.5 28.2 23.3 4.9

 December .............................. .2 30.0 24.7 5.3 28.6 23.5 5.1

1995:

 March ..................................... .6 30.3 24.9 5.4 28.4 23.6 4.8

 June ...................................... .5 29.7 24.3 5.4 28.7 23.8 4.9

 September ............................. .1 29.9 24.6 5.3 28.8 23.6 5.2

 December .............................. .4 30.0 24.5 5.5 28.8 23.7 5.1

1996:

 March ..................................... .3 30.0 24.6 5.4 28.7 23.6 5.1

 June ...................................... .4 30.1 24.6 5.5 28.8 23.7 5.1

 September ............................. .7 30.2 24.5 5.7 28.6 23.6 5.0

 December .............................. .5 30.4 24.8 5.6 28.5 23.4 5.1

1997:

 March ..................................... .5 30.5 24.9 5.6 28.5 23.4 5.1

 June ...................................... .3 30.0 24.6 5.4 28.7 23.6 5.1

 September ............................. .3 30.3 24.8 5.5 28.6 23.4 5.2

 December .............................. .1 30.4 24.8 5.6 29.0 23.5 5.5

1998:

 March ..................................... .3 30.2 24.5 5.7 28.9 23.5 5.4

 June ...................................... 1.0 30.5 24.6 5.9 28.2 23.3 4.9

 September ............................. .3 30.0 24.5 5.5 28.7 23.5 5.2

 December .............................. .0 30.0 24.8 5.2 28.4 23.2 5.2

1999:

 March ..................................... .2 29.9 24.4 5.5 28.9 23.6 5.3

 June ...................................... .0 30.2 24.6 5.6 29.2 23.6 5.6

 September ............................. .3 30.3 24.6 5.7 29.0 23.6 5.4

 December .............................. .6 30.9 25.0 5.9 28.5 23.2 5.3

2000:

 March ..................................... .4 30.4 24.6 5.8 29.2 23.8 5.4

 June ...................................... .3 30.1 24.5 5.6 29.2 23.9 5.3

 September ............................. .3 30.0 24.3 5.7 29.1 23.7 5.4

 December .............................. .2 29.7 24.1 5.6 29.2 23.8 5.4

2001:

 March ..................................... .1 29.4 23.9 5.5 29.2 23.8 5.4

 June ...................................... .0 28.8 23.4 5.4 29.5 24.1 5.4

 September ............................. –.1 28.2 22.8 5.4 29.8 24.3 5.5

 December .............................. .1 28.2 22.7 5.5 29.5 24.1 5.4

2002:

 March ..................................... .0 28.3 22.9 5.4 29.1 23.7 5.4

 June ...................................... .1 28.4 22.9 5.5 28.8 23.4 5.4

 September ............................. .6 28.4 23.0 5.4 28.0 23.2 4.8

 December .............................. .2 28.2 22.8 5.4 28.3 23.1 5.2

2003:

 March ..................................... .0 27.5 22.2 5.3 29.0 23.7 5.3

 June ...................................... –.1 27.8 22.6 5.2 28.2 22.9 5.3

Establishments gaining jobs Establishments losing jobs

3 months ended— Net change2

 Expanding

establishments

 Opening

establishments Total Contractingestablishments Total Closing

establishments

Table 4.

[In percent]

 1 The rates measure establishments gaining or losing jobs as a percentage

of the average of the number of establishments in the previous and current

quarters.

 2 Net change is the difference between total gross job gains and total

gross job losses.
36

Business Employment Dynamics

Monthly Labor Review April 2004

(5.988 million jobs divided by 1.451 million establishments)

and the average contracting establishment lost 4.2 jobs during

the quarter (6.140 million jobs divided by 1.465 million

establishments). A similar calculation shows that the average

opening establishment starts with 4.6 employees in its first

quarter of positive employment and the average closing

establishment is responsible for the loss of 4.6 employees in

the final quarter in which it still has employees.

These business employment dynamics data add to the

labor market statistics currently available from the Bureau.

The traditional measure of net employment change produced

by the Bureau indicates that employment fell by 180,000 jobs

(seasonally adjusted) during the second quarter of 2003. The

gross job gains and gross job loss statistics signal that this

net employment loss is the result of 6.0 million jobs added at

1.5 million expanding establishments, 1.5 million jobs added

at 332,000 opening establishments, 6.1 million jobs lost at 1.5

million contracting establishments, and 1.6 million jobs lost at

337,000 closing establishments. These large gross job flows

underlie the substantially smaller net employment change

statistic and were calculated from the same administrative UI

microdata, without any additional data collection efforts or

any additional burden on respondents.

The business employment dynamics statistics also expand

our understanding of the U.S. economy. Primarily, the gross

job flow and establishment flow statistics reveal the tremendous amount of churning underlying the net growth rates.

Each quarter in the U.S. economy, millions of establishments

remaining in operation are adding or subtracting from their

workforces, creating a turnover of millions of jobs. At the

same time, hundreds of thousands of establishments open

and close, causing the simultaneous gain and loss of millions

of jobs. These business employment dynamics statistics

demonstrate that a sizable number of jobs and establishments

appear and disappear in the short time frame of 3 months.

Time-series results. The business employment dynamics data

for any given quarter highlight the large amount of churning that

underlies net employment growth. One of the principal uses of

these data is to gain an understanding of this continuous

churning over the course of the business cycle, which, to a large

degree, is defined by the growth (or shrinkage) of employment.

The new BLS gross job gain and gross job loss statistics will

enable researchers to analyze the extent to which economic

recessions and expansions are characterized by changes in

business expansions and openings, by changes in business

contractions and closings, or by a combination of the two.

Chart 1 shows the quarterly net employment growth rate from

the new BLS business employment dynamics data series. The

recent recession, which was dated by the National Bureau of

Economic Research (NBER) as occurring between March 2001

and November 2001, is clearly evident. Prior to the recession,

between the third quarter of 1992 and the first quarter of 2000, net

employment growth had been positive every quarter, averaging

0.7 percent per quarter. But then, during the recession, net

employment growth was negative in all quarters of 2001, with

a low of –1.1 percent in the third quarter.

The seasonally adjusted gross job gain and gross job loss

rates are plotted in chart 2. As explained earlier, the difference

between the gross job gain rate and the gross job loss rate is

the familiar net employment growth rate depicted in chart 1.

When gross job gains are above gross job losses, there are

net employment gains; when gross job losses exceed gross

job gains, there are net employment losses.

The most recent business cycle is evident in chart 2. Between the third quarter of 1992 and the first quarter of 2000,

the gross job gain rate was relatively constant, averaging 8.2

percent per quarter, and the gross job loss rate also was

relatively constant, averaging 7.5 percent per quarter. The

gross job gain rate started to decline in 2000 and dropped

substantially in 2001 (to 7.2 percent in the third quarter of the

latter year). The gross job loss rate increased considerably in

2001, rising to a high of 8.3 percent in the third quarter. Thus,

the declining net employment growth rate during the first three

quarters of 2001 is characterized by both a falling gross job

gain rate and a rising gross job loss rate.

With the official ending of the NBER-dated recession in late

2001, the gross job loss rate decreased considerably and, by

early to mid-2002, returned to a rate comparable to its prerecession rates. The same cannot be said for the gross job

gain rate following the recession: in calendar year 2002, the

gross job gain rates remained in the range from 7.2 percent to

7.5 percent, substantially lower than the measure’s prerecession rates.

The time series of gross job gain rates at expanding and

opening establishments, and gross job loss rates at contracting

and closing establishments, are presented in chart 3. Immediately

obvious is the previously stated observation that, for any given

quarter, expanding and contracting establishments account for

most jobs gained and most jobs lost, respectively, measured on

a quarterly frequency. This is seen in the fact that the job gain

rate for expanding establishments and the job loss rate for

contracting establishments are in the neighborhood of roughly 6

percent, whereas the job gain rate for opening establishments

and the job loss rate for closing establishments are almost always

below 2 percent.

The business cycle is most evident in the expanding and

contracting establishments. (See chart 3.) The difference

between the gross job gain rate due to expansions and the gross

job loss rate due to contractions mirrors the overall difference

between the gross job gain rate and the gross job loss rate. The

difference between the gross job gain rate due to openings and

the gross job loss rate due to closings does exhibit some business

cycle properties, but this difference is quite small relative to the
 Monthly Labor Review April 2004 37

Chart 2. Gross job gain and loss rates, seasonally adjusted quarterly data, September 1992

 to June 2003

6.5

7.0

7.5

8.0

8.5

9.0

6.5

7.0

7.5

8.0

8.5

9.0

Percent Percent

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002

Gross job gain rate

Gross job loss rate

Chart 1. Net employment growth rate, seasonally adjusted quarterly data, September 1992

to June 2003

-1.5

-1

-0.5

0

0.5

1

1.5

-1.5

-1

-0.5

0

0.5

1

1.5

Percent Percent

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002
38

Business Employment Dynamics

Monthly Labor Review April 2004

difference between the corresponding rates for expansions and

contractions. The time series of net employment growth rates

from the net of expanding and contracting establishments, as

well as that from the net of opening and closing establishments,

is presented in chart 4.

Discussion of technical issues

Seasonal adjustment. Non-seasonally adjusted gross job gain

and gross job loss statistics are presented in table 5. These data

show large seasonal patterns. The net employment change in

the first quarter of the year is consistently negative, with declines

of more than 2 million jobs in each of the first quarters of recent

years. This first-quarter decline is then consistently followed by

a large increase in employment in the second quarter of the year.

The first-quarter decline is driven by gross job losses, the second

quarter increase by gross job gains. This seasonal pattern is not

surprising, given factors such as the weather, temporary hiring

for major holidays, and the opening and closing of schools.

The seasonal patterns in quarterly net employment growth

and in the underlying gross job gain and gross job loss statistics

follow a more or less regular pattern each year; thus, their

influence can be eliminated with standard seasonal adjustment

techniques. However, although seasonal adjustment makes

long-term trends and cyclical developments much easier to

recognize, seasonally adjusting the business employment

dynamics data series introduces complications into the basic

definition of the net change in employment as the difference

between gross job gains and gross job losses.

In approaching the issue of seasonally adjusting the business

employment dynamics data, the Bureau follows the accepted

statistical methodology of seasonally adjusting the component

series and building up from the underlying publication levels.

The time series of jobs gained or lost from opening, expanding,

closing, and contracting establishments are independently

seasonally adjusted, and the seasonally adjusted net employment

change is then computed as the difference between gross jobs

gained (seasonally adjusted) and gross jobs lost (seasonally

adjusted). The resulting seasonally adjusted time series of net

employment change, which is derived by summing the four

component series, will differ from the net employment change

estimated from seasonally adjusting the employment levels and

taking first differences. As a result, in presenting the business

employment dynamics data series, the Bureau has chosen not to

present employment levels in the seasonally adjusted tables.

Comparisons with other BLS data series. The net employment

change from the business employment dynamics data series will

Chart 3. Gross job gain and loss rates, seasonally adjusted quarterly data, September 1992 

to June 2003

1

2

3

4

5

6

7

1

2

3

4

5

6

7

Percent Percent

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002

Job gain rate at expanding establishments

Job loss rate at contracting establishments

Job gain rate at closing establishments

Job loss rate at closing establishments
 Monthly Labor Review April 2004 39

not match the net employment change from the BLS monthly

Current Employment Statistics (CES) survey. With a sample

size of more than 400,000 business establishments per month

covering about one-third of total nonfarm employment, the

CES survey provides detailed and timely industry data on

employment, hours, and earnings of workers on nonfarm

payrolls. The employment estimates from the CES survey are

usually the first major economic indicators to be released each

month and are widely used by policymakers and the business

community.

There are three key reasons that the business employment

dynamics data series will not match the CES estimates. First, the

CES estimates are based on monthly surveys from a sample of

establishments and are available within 2 to 3 weeks of the

reference period, whereas the gross job gain and gross job loss

statistics are based on a quarterly census of administrative

records and are published 8 months after the end of the reference

period. Second, the CES survey has a coverage different from

that of the business employment dynamics series—excluding

the agriculture sector, but including establishments not covered

by the UI program, such as railroads and religious organizations.

Third, as described in the previous section, computing a

seasonally adjusted net employment change from seasonally

adjusted component series (openings, expansions, contractions,

and closings) is different from estimating the net employment

change from a seasonally adjusted total employment series.

It is wise to be cautious in attempting to compare net

employment change statistics from the CES survey with those

from the business employment dynamics data series. The

intended use of the latter is to show the large gross job flows

that underlie the net change in aggregate employment levels.

Data users who want timely information or who want to track

net changes in aggregate employment levels over time without

regard to the underlying gross job gains and gross job loss

statistics should refer to the CES data.

Still, although the net employment change statistic from the

CES survey and that from the business employment dynamics

data series may differ in any specific quarter, the time-series

behavior of the seasonally adjusted net employment change from

the two series is quite similar. (See chart 5.4) This similarity should

not be surprising, because the CES survey benchmarks to the

QCEW. During the 1990s, the net employment change from the

two data series show the same pattern, albeit with differences in

any given quarter. Both data series exhibit a substantial decline

in net employment growth during 2001, with continued negative

net employment growth through calendar year 2002. The two

most prominent deviations of the two data series from each other,

as seen in chart 5, are the timing of the trough for net employment

Chart 4. Net employment growth rate, net from expansions and contractions, and net

 from openings and closings, seasonally adjusted quarterly data, September 1992

 to June 2003

-1.5

-1.0

-0.5

0.0

0.5

1.0

1.5

-1.5

-1.0

-0.5

0.0

0.5

1.0

1.5

Percent Percent

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002

Net employment growth rate

Net from expansions and contractions Net from openings and closings
40

Business Employment Dynamics

Monthly Labor Review April 2004

1992:

III ........... 90,030,906 90,062,201 31,295 6,694,437 5,185,801 1,508,636 6,663,142 5,253,172 1,409,970

IV ........... 90,062,201 90,202,907 140,706 7,016,541 5,546,759 1,469,782 6,875,835 5,572,915 1,302,920

1993:

I ........... 90,202,907 88,530,171 –1,672,736 6,817,100 4,706,266 2,110,834 8,489,836 6,319,158 2,170,678

II ........... 88,530,171 91,795,987 3,265,816 8,712,639 6,929,245 1,783,394 5,446,823 4,234,364 1,212,459

III ........... 91,795,987 92,207,606 411,619 6,831,071 5,407,537 1,423,534 6,419,452 5,222,709 1,196,743

IV ........... 92,207,606 92,787,273 579,667 7,345,315 5,920,848 1,424,467 6,765,648 5,483,227 1,282,421

1994:

I ........... 92,787,273 91,214,492 –1,572,781 6,762,591 5,027,475 1,735,116 8,335,372 6,423,172 1,912,200

II ........... 91,214,492 94,820,452 3,605,960 9,243,823 7,237,053 2,006,770 5,637,863 4,354,033 1,283,830

III ........... 94,820,452 95,484,367 663,915 7,236,252 5,726,384 1,509,868 6,572,337 5,401,123 1,171,214

IV ........... 95,484,367 95,961,088 476,721 7,551,187 6,096,852 1,454,335 7,074,466 5,705,136 1,369,330

1995:

I ........... 95,961,088 94,560,606 –1,400,482 7,132,762 5,326,685 1,806,077 8,533,244 6,718,309 1,814,935

II ........... 94,560,606 97,623,447 3,062,841 9,135,720 7,182,433 1,953,287 6,072,879 4,806,987 1,265,892

III ........... 97,623,447 97,918,679 295,232 7,238,062 5,786,393 1,451,669 6,942,830 5,581,227 1,361,603

IV ........... 97,918,679 98,409,573 490,894 7,912,085 6,370,566 1,541,519 7,421,191 5,990,164 1,431,027

1996:

I ........... 98,409,573 96,530,970 –1,878,603 7,296,438 5,429,595 1,866,843 9,175,041 7,172,656 2,002,385

II ........... 96,530,970 99,905,399 3,374,429 9,574,969 7,519,880 2,055,089 6,200,540 4,861,123 1,339,417

III ........... 99,905,399 100,039,834 134,435 7,433,502 5,822,305 1,611,197 7,299,067 5,900,582 1,398,485

IV ........... 100,039,834 100,848,104 808,270 8,180,473 6,507,956 1,672,517 7,372,203 5,951,339 1,420,864

1997:

I ........... 100,848,104 99,400,380 –1,447,724 7,650,275 5,630,317 2,019,958 9,097,999 6,985,729 2,112,270

II ........... 99,400,380 102,741,932 3,341,552 9,576,754 7,564,511 2,012,243 6,235,202 4,875,449 1,359,753

III ........... 102,741,932 103,087,995 346,063 7,808,898 6,148,921 1,659,977 7,462,835 5,885,241 1,577,594

IV ........... 103,087,995 103,814,819 726,824 8,620,430 6,829,860 1,790,570 7,893,606 6,117,694 1,775,912

1998:

I ........... 103,814,819 102,201,556 –1,613,263 8,203,574 5,819,061 2,384,513 9,816,837 7,247,199 2,569,638

II ........... 102,201,556 105,745,572 3,544,016 10,266,444 7,823,083 2,443,361 6,722,428 5,128,625 1,593,803

III ........... 105,745,572 105,895,205 149,633 7,741,331 6,045,188 1,696,143 7,591,698 6,049,428 1,542,270

IV ........... 105,895,205 106,669,216 774,011 8,473,855 6,872,921 1,600,934 7,699,844 6,108,728 1,591,116

1999:

I ........... 106,669,216 104,637,156 –2,032,060 8,186,652 5,881,407 2,305,245 10,218,712 7,621,358 2,597,354

II ........... 104,637,156 108,121,039 3,483,883 10,361,230 8,075,511 2,285,719 6,877,347 5,311,276 1,566,071

III ........... 108,121,039 108,182,154 61,115 8,022,495 6,316,593 1,705,902 7,961,380 6,277,917 1,683,463

IV ........... 108,182,154 109,278,661 1,096,507 9,031,448 7,207,652 1,823,796 7,934,941 6,298,406 1,636,535

2000:

I ........... 109,278,661 107,672,227 –1,606,434 8,208,752 6,097,257 2,111,495 9,815,186 7,531,814 2,283,372

II ........... 107,672,227 111,115,514 3,443,287 10,306,902 8,269,019 2,037,883 6,863,615 5,384,637 1,478,978

III ........... 111,115,514 110,783,450 –332,064 7,916,328 6,284,783 1,631,545 8,248,392 6,582,852 1,665,540

IV ........... 110,783,450 111,182,910 399,460 8,627,728 6,985,872 1,641,856 8,228,268 6,622,454 1,605,814

2001:

I ........... 111,182,910 108,561,077 –2,621,833 7,880,090 5,924,318 1,955,772 10,501,923 8,018,068 2,483,855

II ........... 108,561,077 110,734,261 2,173,184 9,735,188 7,671,463 2,063,725 7,562,004 5,936,261 1,625,743

III ........... 110,734,261 109,000,401 –1,733,860 7,040,777 5,519,373 1,521,404 8,774,637 7,023,453 1,751,184

IV ........... 109,000,401 108,173,134 –827,267 7,795,254 6,147,166 1,648,088 8,622,521 7,025,677 1,596,844

2002:

I ........... 108,173,134 105,810,039 –2,363,095 7,506,355 5,512,394 1,993,961 9,869,450 7,560,400 2,309,050

II ........... 105,810,039 108,514,155 2,704,116 9,511,664 7,462,523 2,049,141 6,807,548 5,316,536 1,491,012

III ........... 108,514,155 107,896,027 –618,128 7,058,609 5,604,565 1,454,044 7,676,737 6,222,723 1,454,014

IV ........... 107,896,027 107,747,941 –148,086 7,628,881 6,151,289 1,477,592 7,776,967 6,318,024 1,458,943

2003:

I ........... 107,747,941 105,079,625 –2,668,316 6,868,671 5,187,329 1,681,342 9,536,987 7,483,095 2,053,892

II ........... 105,079,625 107,615,979 2,536,354 8,984,468 7,229,797 1,754,671 6,448,114 5,093,167 1,354,947

Employment Gross job gains

 Previous

 quarter

Gross job losses

 Year

 and

 quarter

 Current

 quarter Total

 Net

 change

 Expanding

establishments Total Opening

establishments

 Contracting

establishments

 Closing

establishments

Table 5. Private-sector gross job gains and job losses, non-seasonally adjusted quarterly data, September 1992

to June 2003
 Monthly Labor Review April 2004 41

growth during the 2001 recession (the third quarter of 2001 for

the business employment dynamics data, compared with the

fourth quarter of 2001 for the CES survey) and the pattern of net

employment growth following the trough of the recession. With

regard to this second observation, it is interesting to note

that, despite the different quarterly patterns evident in the

chart, the cumulative net employment growth is similar in the

two data series: the cumulative net employment growth from

the first quarter of 2002 through the second quarter of 2003 in

the business employment dynamics data was –1,014,000,

whereas the cumulative net employment growth in the CES

survey during the same period was –1,020,000.

Openings and closings compared with births and deaths. The

new business employment dynamics data series produced by

the Bureau classifies establishments as expanding, contracting,

opening, or closing (or not changing their employment level).

The definitions of establishment openings and closings differ

from definitions of establishment births and deaths. It is not

possible to define business deaths on a contemporaneous basis.

Businesses in the UI system are allowed to, and often do, report

zero employment for several quarters after they have effectively

closed. This undoubtedly occurs when a business owner

temporarily shuts down, but anticipates starting up the business

again when economic conditions improve. By reporting zero

employment and wages on the quarterly contributions form, the

business owner can keep his or her UI account active. Reporting

zero employment results in many observed business closings,

but which of these closings will start up again and which will die

is not observed for several more quarters.

Although business deaths cannot be defined contemporaneously, we can define both births and deaths in the historical

data. (This research is ongoing at the Bureau.) A business birth

is defined as an opening establishment that did not have any

positive employment during the previous four quarters (thus

differentiating seasonal openings from business births). Hence,

births are a subset of openings. Likewise, a business death is

defined as a closing establishment that does not have positive

employment during the subsequent four quarters. Deaths, then,

are a subset of closings.

THIS ARTICLE HAS DISCUSSED THE CREATION of a new quarterly

data set on business employment dynamics by the Bureau of

Labor Statistics. The new data quantify the sizable number of

jobs that appear and disappear in the U.S. economy each quarter.

The data also show that the 2001 recession is characterized by a

decline in gross job gains accompanied by an increase in gross

job losses, and the several quarters following the end of the

Chart 5. Net employment growth, business employment dynamics series and current 

employment statistics survey, seasonally adjusted data, September 1992

 to June 2003

-1,200

-800

-400

0

400

800

1,200

-1,200

-800

-400

0

400

800

1,200

Thousands Thousands

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002

Current employment statistics survey

Business employment dynamics series
42

Business Employment Dynamics

Monthly Labor Review April 2004

recession are characterized by a gross job loss rate that returned

to prerecession levels and a gross job gain rate that did not

return to prerecession levels.

These new gross job gain and gross job loss statistics will

help economists, policymakers, and business leaders better

understand the labor market and the U.S. economy. The data

described represent just the start of a number of new data

series flowing from the Business Employment Dynamics

program.5 In addition to publishing the national-level data

described herein, the Bureau is preparing further data series

at more detailed levels. Plans are in the works to release gross

job gain and gross job loss statistics for industries and geographical regions, although confidentiality restrictions will

determine just how much detail will be published. The Bureau

also is working on gross job gain and gross job loss data by

size class, which will allow the commonly asked question “Who

creates the most jobs?” to be answered. The statistics presented

in this article are all at the establishment level; the Bureau is

working on gross job gain and gross job loss statistics at the firm

level as well. Finally, BLS researchers are working on annual gross

job gain and gross job loss statistics, and related issues such as

business survival rates.

Notes

1

 For more details regarding the BLS gross job gain and gross job loss

data and the underlying motivation for creating such data, see Timothy

Pivetz, Michael Searson, and James Spletzer, “Measuring job and

establishment flows with BLS longitudinal microdata,” Monthly Labor

Review, April 2001, pp. 13–20.

2

 For more details of the BLS linkage methodology, see Kenneth

Robertson, Larry Huff, Gordon Mikkelson, Timothy Pivetz, and Alice

Winkler, “Improvements in Record Linkage Processes for the Bureau

of Labor Statistics’ Business Establishment List,” in Proceedings for

the 1997 Record Linkage Workshop and Exposition (Washington, DC,

National Academies Press, 1999), pp. 212–21.

3

 Two technical notes warrant mention. First, as stated earlier, the

3.1 million establishments with positive employment that do not

change their employment across quarters are not counted as expanding,

opening, contracting, or closing establishments in table 3. However,

they are included in the count of all establishments used as the

denominator to calculate the rates in table 4. Second, the definition of

“active establishment” excludes the roughly 1 million establishments

with zero employment in both quarters. Businesses in the UI system

are allowed to report zero employment on their quarterly tax forms. A

common example of a business that would report two consecutive quarters

of zero employment is a seasonal business that is open only during

several months of the year. Such a business would be counted as an

opening establishment in the quarter that it moves from zero to positive

employment and a closing establishment in the quarter that it moves

from positive to zero employment. An establishment that reports zero

employment in both the current and previous quarters is not counted as

an active establishment. The preceding definitions, along with several

exclusions for scope (such as government and private households), explain

why the business employment dynamics data series reports roughly 6.4

million active establishments per quarter, whereas the QCEW program

reports more than 8 million establishments per quarter.

4

 The CES data used in chart 5 are the seasonally adjusted total private series.

5

 For more information, visit the Business Employment Dynamics

website at www.bls.gov/bdm.