16  Monthly Labor Review • August 2011

Employment Dynamics

Employment dynamics

over the last decade

Business cycle movements in BED and JOLTS data

suggest that the two series complement each other;

during the onset of the 2007–2009 recession,

BED gross job gains and JOLTS hires fell simultaneously

while BED gross job losses and JOLTS separations diverged

Caryn N. Bruyere,

Guy L. Podgornik,

and

James R. Spletzer

Caryn N. Bruyere, Guy L.

Podgornik, and James R. Spletzer

are economists in the Office of

Employment and Unemployment Statistics, Bureau of Labor

Statistics. Email: bruyere.caryn@

bls.gov, podgornik.guy@bls.gov, or spletzer.jim@bls.gov

The 2007–2009 recession was the 

longest and most severe postWorld War II recession. As dated 

by the National Bureau of Economic Research (NBER), the recession was 18 months 

long, lasting from December 2007 through 

June 2009. Prior to that, the longest postWorld War II recessions were the 1973 and 

1981 recessions, both 16 months long.

The employment losses associated with 

the 2007–2009 recession also were the 

largest of any post-World War II recession. Twenty-six months after the recession began, total private employment was 

7.6 percent lower than it was at the start 

of the recession.1

 Prior to this recession, the 

largest employment loss in any post-World 

War II recession was 6.0 percent, posted 11 

months after the start of the 1948 recession. 

Looking at the four most recent recessions 

reveals that the maximum total private employment losses were the aforementioned 

7.6 percent for the 2007–2009 recession, 

3.5 percent for the 1981 recession, 3.0 percent for the 2001 recession, and 1.8 percent 

for the 1990–1991 recession. The time series of total private employment for the 4 

years following the onset of the most recent 

four recessions are presented in chart 1. The 

severity of employment losses in the most 

recent recession relative to other recent recessions is clear.

This article examines the underlying dynamics of the employment losses associated with the 2007–2009 recession. The data 

graphed in chart 1 summarize the net employment losses that originate from the hiring, 

quit, and layoff decisions of more than 8.5 million establishments and more than 100 million 

workers in the private sector. One measure of 

the underlying employment dynamics is to simultaneously count how many jobs are being 

created by establishments that are opening or 

increasing their employment and how many 

jobs are being lost by establishments that are 

closing or decreasing their employment. The 

sum of these two statistics will be the net 

employment change. Another measure of the 

underlying employment dynamics is to simultaneously count how many workers are being 

hired and how many workers are leaving their 

current employer. Again, the sum of these two 

statistics will be the net employment change. 

Both of these measures of the underlying employment dynamics of the labor market can 

be examined with data from two programs 

conducted by the Bureau of Labor Statistics 

(BLS, the Bureau): the Business Employment 

Dynamics (BED) program and the Job Openings and Labor Turnover Survey (JOLTS).

BED data measure the gross job gains registered by expanding and opening establishments and the gross job losses posted by contracting and closing establishments. Gross job 
Monthly Labor Review • August 2011  17

gains and losses, also referred to as job flows, measure 

the establishment-level net changes in employment 

that underlie the single, economywide net-employment-change statistic. JOLTS data measure the number 

of workers hired into jobs and the number of workers 

separating from their employer. These hires and separations data, also referred to as worker flows, measure the 

underlying employment dynamics from the worker’s 

perspective.

Measures of gross job gains and gross job losses 

from the BED statistics and measures of hires and separations from the JOLTS help explain why employment 

is increasing or decreasing. For example, labor market 

analysts often ask what portion of the job losses during 

the most recent recession was due to businesses laying off workers, as opposed to businesses not replacing 

workers who quit or retired. In addition, analysts are 

concerned that employment may not grow quickly as 

the economy emerges from the recent recession: is it 

because businesses are not hiring or because workers 

are still losing their jobs? The measures of employment 

dynamics from the BED statistics and the JOLTS are 

intended to answer this and other types of questions.

In what follows, levels and trends in gross job flows 

from the BED statistics are compared with levels and trends in 

worker flows captured by the JOLTS.

2

 The analysis finds that 

both the BED statistics and the JOLTS measure large amounts 

of employment dynamics that underlie the single net-change 

statistic and that both the BED statistics and the JOLTS have 

business cycle properties. The most important finding, however, 

is that the BED statistics and the JOLTS data are complementary 

and measure different aspects of the labor market. For example, 

the rise in establishment-level employment losses that the BED

statistics show in the early stages of the most recent recession 

reflect an initial decrease in hiring, followed several quarters 

later by a large increase in layoffs, as revealed by the JOLTS data. 

Analogously, the increase seen in the BED establishment-level 

employment gains following the trough of the most recent recession reflects primarily a decrease in the number of layoffs, as 

indicated in the JOLTS data.

Employment dynamics data

This section describes (1) the gross job gains and gross job 

losses exhibited in the BED statistics and (2) the hires and 

separations data collected by the JOLTS. The next section 

compares and contrasts the BED job flows and the JOLTS

worker flows.

 Chart 1. CES total private employment, previous four recessions, seasonally adjusted

0 6 12 18 24 30 36 42 48

Index Index

1.08

1.06

1.04

1.02

1.00

0.98

0.96

0.94

0.92

0.90

Months since recession began

1981

1.08

1.06

1.04

1.02

1.00

0.98

0.96

0.94

0.92

0.90

2007–2009

2001

1990–1991

SOURCE: U.S. Bureau of Labor Statistic
Employment Dynamics

18  Monthly Labor Review • August 2011

Business employment dynamics. The BED microdata are 

constructed from the Quarterly Census of Employment 

and Wages (QCEW) microdata at the Bureau of Labor 

Statistics. The QCEW is the Bureau’s business list, with 

employment and wage information for all establishments 

covered by State and Federal unemployment insurance 

laws. The 9-million-plus establishments that participate 

in the QCEW cover 98 percent of employees on nonfarm 

payrolls in the United States; thus, the QCEW is a near 

census of U.S. payroll employment. (Self-employed individuals are excluded.)

BED microdata are created by linking the establishments 

in the QCEW longitudinally across quarters. Establishments in the government sector and in the private household services industry are excluded from the BED data. 

Through the process of linking establishments between the 

previous and the current quarter, five categories emerge: 

opening establishments have positive employment in the 

current quarter, but either did not exist or had zero employment in the previous quarter; expanding establishments 

have positive employment in both quarters, with employment in the current quarter higher than employment in the 

previous quarter; contracting establishments have positive 

employment in both quarters, with employment in the current quarter less than employment in the previous quarter; 

and closing establishments had positive employment in the 

previous quarter, but either do not exist or have zero employment in the current quarter. A fifth category comprises 

establishments that have the same level of employment in 

both the current and the previous quarter. Gross job gains

are defined as the number of jobs created by opening and 

expanding establishments, and gross job losses are defined as 

the number of jobs lost from contracting and closing establishments. The difference of gross job gains and gross job 

losses is the familiar net employment change statistic.3

The Bureau releases BED statistics quarterly. The core 

data elements in the release are gross job gains and gross 

job losses, along with the associated establishment counts, 

by industry, State, age, and size of firm. In the fourth 

quarter of 2010, the most recent period for which data are 

available, gross job gains were 6.954 million and gross job 

losses were 6.391 million, resulting in a net employment 

growth of 563,000 for the quarter.4

The time series of quarterly BED statistics starts in the 

third quarter of 1992. Seasonally adjusted gross job gains 

and gross job losses from 1992 to 2010 are presented in 

chart 2, and the resulting net employment change statistics (computed as gross job gains less gross job losses) are 

shown in chart 3.

The BED statistics reflect two major facts about the 

U.S. labor market. First, as seen in chart 2, there is a large 

amount of establishment-level churning that is not evident in the statistics on net employment change. To bring 

out this point more clearly, table 1 presents averages of the 

seasonally adjusted quarterly BED statistics for the years 

2004–2007. In the average quarter of this period, there 

were 1.540 million establishments that were expanding, 

and these expanding establishments created 6.197 million 

jobs. Also during the average quarter of this period, there 

were 365,000 establishments that were opening, and these 

opening establishments started with 1.503 million jobs. 

The sum of these two statistics shows that, in the average 

quarter, there were 1.905 million establishments that created 7.700 million jobs which did not exist in the previous 

quarter. The gross job loss statistics are in the bottom half 

of the table, and they show a similar story: in the average quarter, there were 1.869 million establishments that 

were contracting or closing and 7.282 million jobs that 

existed in the previous quarter no longer existed in the 

next quarter. The net of gross job gains and gross job losses 

was 418,000 net new jobs created in the average quarter 

(during the years 2004–2007). 

Digging somewhat deeper into gross job gains and 

gross job losses, chart 4 shows the decomposition of gross 

job gains into expansions and openings and the decomposition of gross job losses into contractions and closings. 

In the chart, the quarterly gross job gains and losses from 

expanding and contracting establishments are seen to be 

much larger than the quarterly gross job gains and losses 

from opening and closing establishments. Throughout the 

18-year time series of the BED (from the third quarter of 

1992 to the fourth quarter of 2010), 79 percent of quarterly gross job gains are from expanding establishments 

and 80 percent of quarterly gross job losses are from contracting establishments.

The second major conclusion to be drawn from the 

BED statistics is that gross job gains and gross job losses 

have interesting business cycle properties. As seen in chart 

2, simultaneous sharp rises in jobs lost from contracting 

and closing establishments and drops in jobs gained from 

expanding and opening establishments occur during recessions. Examining chart 4 suggests that most of the 

interesting business cycle dynamics associated with gross 

job gains and gross job losses are concentrated in the expanding and contracting establishments, as opposed to 

the opening and closing establishments.

In addition to disseminating statistics on gross job gains 

and losses, the BED program publishes the number of establishments gaining and losing jobs. These establishment 

counts are presented in chart 5, which shows that, during 
Monthly Labor Review • August 2011  19

 Chart 2. Quarterly BED gross job gains and losses, seasonally adjusted, 1992–2010

1992 1994 1996 1998 2000 2002 2004 2006 2008 2010

10,000

8,000

6,000

4,000

10,000

8,000

6,000

4,000

Gross job losses

Gross job gains

Thousands Thousands

SOURCE: U.S. Bureau of Labor Statistic

 Chart 3. Quarterly BED net employment change, seasonally adjusted, 1992–2010

1992 1994 1996 1998 2000 2002 2004 2006 2008 2010

1,500

0

–1,500

–3,000

Thousands Thousands

1,500

0

–1,500

–3,000

NOTE: Shaded areas denote recessions as determined by the National Bureau of Economic Researc

SOURCE: U.S. Bureau of Labor Statistic

NOTE: Shaded areas denote recessions as determined by the National Bureau of Economic Researc
Employment Dynamics

20  Monthly Labor Review • August 2011

the most recent recession, the number of establishments 

gaining jobs declined and the number of establishments 

losing jobs increased. Further calculations (explained in 

the box on page 22) reveal that approximately two-thirds 

of the sharp decrease in gross job gains between the fourth 

quarter of 2007 and the first quarter of 2009 is attributable to a decrease in the number of establishments gaining 

jobs, with the remaining one-third attributable to a decrease in the average number of jobs created by job-creating establishments. These statistics suggest that the falling 

gross job gains are due both to establishments eliminating 

their hiring and to establishments cutting back on their 

hiring, with twice as much explanatory weight given to 

the former. Similar calculations show that approximately 

two-thirds of the sharp increase in gross job losses between the fourth quarter of 2007 and the first quarter 

of 2009 is attributable to an increase in the number of 

establishments losing jobs, with the remaining one-third 

attributable to an increase in the average size of jobs lost 

per declining establishment.

Job Openings and Labor Turnover Survey. The JOLTS is 

composed of a random sample of approximately 16,000 

business establishments, of which approximately 10,500 

provide data on a regular basis. The establishments are 

sampled from the BLS business universe: the QCEW. The 

JOLTS collects information on total employment, job 

openings, hires, and separations. The separations data are 

collected as quits, layoffs and discharges, and other separations. The key component of the JOLTS form is shown 

in exhibit 1.5

The JOLTS total employment estimates are benchmarked monthly to the employment estimates of the Current Employment Statistics (CES) survey, and the ratio of 

CES to JOLTS employment is used to adjust the levels for 

all other JOLTS data elements. After the benchmarking 

of the monthly employment levels, the JOLTS implied net 

employment change (hires minus separations) should be 

comparable to the CES net employment change. However, 

definitional differences, as well as sampling and nonsampling errors between the two surveys, historically have 

caused the JOLTS to diverge from the CES survey over 

time. To limit this divergence, and to improve the quality 

of the JOLTS hires and separations series, the Bureau implemented a monthly alignment method that applies the 

CES employment trends to the seasonally adjusted JOLTS 

implied employment trend, forcing them to be approximately the same. The CES series is considered a highly 

accurate measure of net employment change, owing to its 

very large sample size and annual benchmarking to universe counts of employment from the QCEW program.6

The JOLTS statistics released monthly by the Bureau include hires, separations, and job openings, by industry and 

region. In June 2011, the most recent period for which 

data are available, there were 4.051 million hires and 

4.016 million separations, with a resulting net employment change of 35,000 jobs.7

The time series of monthly JOLTS statistics starts in 

December 2000. In everything that follows in this article, 

quarterly JOLTS data are created from the monthly data 

and the focus is on the private sector for the first quarter 

of 2001 through the fourth quarter of 2010. A time series 

of quarterly JOLTS data for the private sector allows for a 

straightforward comparison of the BED and JOLTS data. 

The measure of quarterly hires is created as the sum of 

three monthly hires, and the measure of quarterly separations is created as the sum of three monthly separations. 

The quarterly JOLTS hires and separations statistics for the 

private sector are presented in chart 6, and the resulting 

net employment change statistics (computed as hires less 

separations) are given in chart 7. The quarterly components of separations—quits, layoffs, and other separations—are shown in chart 8.

The JOLTS hires and separations statistics tell us two 

major facts about the U.S. labor market. First, there is 

a tremendous amount of worker churning in the labor 

market that is not evident in the net employment change 

statistics. To show this phenomenon more clearly, the 

following tabulation presents quarterly averages of the 

BED statistics in the average quarter, 2004–2007

Statistic Number of 

establishments

Number of jobs

gained or lost

Expanding establishments 1,540,000 6,197,000 j

ga

Opening establishments 365,000 1,503,00

ga

Gross job gains 1,905,000 7,700,000 j

ga

Contracting establishments 1,524,000 5,889,000 j

Closing establishments 345,000 1,393,00

Gross job losses 1,869,000 7,282,000 j

Net change in employment ... 418,000 net jobs

gai

Table 1.
Monthly Labor Review • August 2011  21

 Chart 4. Quarterly BED gross job gains and losses, seasonally adjusted, 1992–2010

1992 1994 1996 1998 2000 2002 2004 2006 2008 2010

Openings

8,000

6,000

4,000

2,000

0

Thousands Thousands

Contractions

Expansions

Closings

8,000

6,000

4,000

2,000

0

 Chart 5. Quarterly BED number of establishments, seasonally adjusted, 1992–2010

1992 1994 1

2,400

2,000

1,600

1,200

Thousands Thousands

Establishments gaining jobs

Establishments losing jobs

2,400

2,000

1,600

1,200

SOURCE: U.S. Bureau of Labor Statistic

NOTE: Shaded areas denote recessions as determined by the National Bureau of Economic Researc

SOURCE: U.S. Bureau of Labor Statistic

NOTE: Shaded areas denote recessions as determined by the National Bureau of Economic Researc
Employment Dynamics

22  Monthly Labor Review • August 2011

seasonally adjusted quarterly JOLTS statistics for the years 

2004–2007:

Statistic Number of jobs

Hires.......................................................... 14,821,000

Separations ................................................ 14,387,000

 Quits....................................................... 8,158,000

 Layoffs.................................................... 5,301,000

 Other...................................................... 928,000

Net change in employment........................ 434,000

As the tabulation shows, in this period’s average quarter 

14.821 million workers were hired into new jobs and 

14.387 million workers were separated from their current 

jobs. Looking more closely at the separations data shows 

that, in the average quarter from 2004 to 2007, 8.158 million workers quit, 5.301 million workers were laid off, and 

0.928 million workers were separated for other reasons, 

such as retirement. The net employment change resulting from the 14.821 million hires and the 14.387 million 

separations was 434,000 net new jobs created in the average quarter of the period.

The second major conclusion to draw from the JOLTS 

statistics is that hires and separations have business cycle 

properties. As seen in chart 6, both hires and separations 

fall during recessions, although hires fall faster. The growing divergence between the two series leads to the rising 

net employment losses evident in chart 7.8

 The decline 

The number of gross job gains in the fourth quarter of 

2007 (G07) was 7.670 million, calculated as 1.945 million establishments gaining jobs (E07) times an average 

size of 3.94 jobs gained per establishment (S07). The 

number of gross job gains in the first quarter of 2009 

(G09) was 5.783 million, calculated as 1.606 million establishments gaining jobs (E09) times an average size of 

3.60 jobs gained per establishment (S09). During that 

period, both the number of establishments gaining jobs 

decreased (from 1.945 million to 1.606 million) and 

the average size of job gains in gaining establishments 

decreased (from 3.94 to 3.60). How much of the total 

decline in gross job gains (from 7.670 million to 5.783 

million) was due to each of these components?

There are two ways to decompose the difference G07 

– G09. The first is

G07 – G09 = E07S07 – E09S09

 = E07S07 – E09S09 + E07S09 – E07S09

 = E07(S07 – S09) + S09(E07 – E09).

The term E07(S07 – S09) is referred to as the average-size effect and is computed as 1.945(3.94 – 3.60) 

= 0.666. The term S09(E07 – E09) is referred to as the 

number-of-establishments effect and is computed as 

3.60(1.945 – 1.606) = 1.221. These two effects (0.666 + 

1.221 = 1.887) sum to the total number of jobs gained 

(G07 – G09) = (7.670 – 5.783) = 1.887. In this first decomposition, the average-size effect is 35.3 percent of 

the total effect and the number-of-establishments effect is 64.7 percent of the total effect.

The second way to decompose the difference G07 – G09

is

G07 – G09 = E07S07 – E09S09

 = E07S07 – E09S09 + E09S07 – E09S07

 = E09(S07 – S09) + S07(E07 – E09).

The average-size effect E09(S07 – S09) is computed as 

1.606(3.94 – 3.60) = 0.550. The number-of-establishments effect S07( E07 – E09) is computed as 3.94 (1.945 

– 1.606) = 1.337. These two effects (0.550 + 1.337) sum 

to the total number of jobs gained, 1.887. In this second 

decomposition, the average-size effect is 29.2 percent 

of the total effect and the number-of-establishments 

effect is 70.8 percent of the total effect.

Although the two different decompositions fail to 

give the exact same point estimates for the average- size 

effect (35.3 percent and 29.2 percent) and for the number-of-establishments effect (64.7 percent and 70.8 

percent), it is clear that approximately two-thirds of the 

sharp decrease in gross job gains between the fourth 

quarter of 2007 and the first quarter of 2009 is attributable to a decline in the number of establishments 

gaining jobs, with the remaining one-third attributable 

to a decline in the average number of jobs created by 

job-creating establishments.

Gross job gains from the fourth quarter of 2007 to the first quarter of 2009: why the decrease?
Monthly Labor Review • August 2011  23

in separations during recessions is different from the increase in BED gross job losses during recessions, and this 

difference is one of the key results highlighted in the next 

section. 

The decline in JOLTS separations during recessions masks 

different trends in the underlying quits and layoffs. As seen 

in chart 8, quits fell dramatically during the last two recessions and layoffs rose for some time during the latter half of 

the most recent recession. The behavior of these series suggests a general model according to which the levels of hires 

and the levels of job openings both fall during recessions 

as establishments cut back on hiring or implement hiring freezes. Workers see this decline in labor demand and 

stay in their existing jobs; thus, quits fall. As the recession 

deepens, and as establishments want to cut back further on 

employment, the only option left when workers fail to quit 

is for establishments to begin laying them off. 

The business cycle properties of the hires and separations series also can be seen by looking at correlations of 

the JOLTS data elements.9

 The correlations of the quarterly 

JOLTS data elements, computed over the period from the 

first quarter of 2001 to the fourth quarter of 2010, are 

given in table 2. The correlation of 0.53 between hires and 

net change in employment indicates that the JOLTS hires 

series is procyclical: hires are growing when employment 

is growing (expansions), and hires are falling when employment is falling (recessions). Separations are mildly 

procyclical: the correlation of 0.14 between separations 

and net employment growth indicates that separations 

move somewhat together with net employment change. 

This mild procyclicality of separations is due to a procyclical quits series and a countercyclical layoffs series. Indeed, the correlation between layoffs and net employment 

growth is very strongly negative (–0.76).

It is worth noting the extremely strong correlation 

(0.97) between hires and quits. When establishments 

are hiring, workers see these opportunities and are more 

likely to quit their current jobs. During recessions, when 

establishments are not hiring, such opportunities are limited and workers are less likely to quit the jobs they have. 

However, it is important to note that, even during the 

trough of the most recent recession, there were still a large 

A key component of the JOLTS survey form

Please provide data for the time period indicated for each item. Enter “0” if none. Enter “NA” if data are not available. See the back of this page for 

explanations of the terms below.

Report for 

month of:

Employment Job openings Hires Separations

Number of full- or 

part-time employees 

who worked or 

received pay for 

the pay period that 

includes the 12th of 

the month

A job is open if 

it meets all three 

conditions:

•	 A specific position 

exists

•	Work could start 

within 30 days

•	You are actively 

seeking workers 

from outside this 

location to fill the 

position

A hire is any addition 

to your payroll, and:

•	May be a new hire 

or a previously 

separated rehire

•	May be permanent, 

short-term, or 

seasonal

•	May be a recall 

from layoff

Quits

(Except 

retirements)

Layoffs and 

Discharges

•	Layoffs

•	 Discharges

•	 Terminations of 

permanent, shortterm, or seasonal 

employees

Other 

•	Retirements

•	 Transfers from this 

location

•	Employee disability

•	 Deaths

A

Total Employment 

for the pay period that 

includes the 12th of 

the month

B

Number of Job 

Openings

on the last business 

day of the month

C

Hires and Recalls

for the entire month

D

Quits

E

Layoffs and 

Discharges

F

Other Separations

..........................for the entire month.........................

3

Exhibit 1.
Employment Dynamics

24  Monthly Labor Review • August 2011

 Chart 6. Quarterly JOLTS total private hires and separations, seasonally adjusted, 2001–2010

18,000

15,000

12,000

9,000

Thousands Thousands

Separations

Hires

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

18,000

15,000

12,000

9,000

 Chart 7. Quarterly JOLTS total private net employment change, seasonally adjusted, 2001–2010

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

1,500

0

–1,500

–3,000

Thousands Thousands

1,500

0

–1,500

–3,000

SOURCE: U.S. Bureau of Labor Statistic

NOTE: Shaded areas denote recessions as determined by the National Bureau of Economic Researc

SOURCE: U.S. Bureau of Labor Statistic

NOTE: Shaded areas denote recessions as determined by the National Bureau of Economic Researc
Monthly Labor Review • August 2011  25

number of hires and quits in the U.S. labor market. In the 

private sector, in the first quarter of 2009, when the number of jobs fell by 2.25 million (as measured by the JOLTS), 

there were still 10.9 million hires and 5.3 million quits. 

These statistics show that hires and quits did not come to 

a complete standstill during the most recent recession, although the respective numbers were certainly much lower 

than their average quarterly levels of 14.8 million hires 

and 8.2 million quits during the mid-2000s expansion. 

(See the tabulation on page 22.) 

Employment dynamics during the last decade

This section compares and contrasts the BED and JOLTS 

statistics. Levels and trends during three periods are examined: the expansionary period of the mid-2000s, the 

onset of the most recent recession, and the quarters following the labor market trough of the recession.

The expansion. Chart 9 graphs BED gross job gains and 

gross job losses from the first quarter of 2004 through the 

fourth quarter of 2010, together with JOLTS hires and separations over the same period. As the chart shows, the BED

and JOLTS series were relatively stable during calendar years 

2004–2007. BED gross job gains have an average quarterly 

level of 7.7 million during this period, and BED gross job 

losses have an average quarterly level of 7.3 million. JOLTS

average quarterly hires are 14.8 million over the same period, and JOLTS average quarterly separations are 14.4 million. The ratio of hires to gross job gains is 1.93:1, and the 

ratio of separations to gross job losses is 1.98:1.

The onset of the recession. The NBER dated the most recent 

recession as having begun in the fourth quarter of 2007. 

From then until the first quarter of 2009, the labor market 

worsened. Following a net employment gain of 210,000 in 

the fourth quarter of 2007 (as measured by the CES total 

private employment series), quarterly employment losses 

began and then increased every quarter, from –211,000 in 

the first quarter of 2008 to –2,349,000 in the first quarter 

of 2009. A vertical line in chart 9 marks the first quarter 

of 2009 as the labor market trough.

As documented in the previous section, declining employment levels during the onset of recessions are characterized by falling gross job gains and rising gross job 

losses. BED gross job gains fell from 7.670 million in the 

 Chart 8. Quarterly JOLTS total private separations, seasonally adjusted, 2001–2010

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

10,000

5,000

0

Thousands Thousands

Other separations

Layoffs

Quits

10,000

5,000

0

SOURCE: U.S. Bureau of Labor Statistic

NOTE: Shaded areas denote recessions as determined by the National Bureau of Economic Researc
Employment Dynamics

26  Monthly Labor Review • August 2011

Hires and separations correlations from JOLTS quarterly data, first quarter, 2001, through fourth quarter, 2010

Statistic Hires Separations Quits Layoffs Net change in 

employment

Hires 1.00 0.91 0.97 –0.16 0.53

Separations ... 1.00 .94 .19 .14

Quits ... ... 1.00 –.14 .40

Layoffs ... ... ... 1.00 –.76

Net change in employment ... ... ... ... 1.00

NOTE:   Blank cells indicate that table is symmetric about the diagonal.

Table 2.

fourth quarter of 2007 to 5.783 million in the first quarter of 2009 (a 24.6-percent decline), and BED gross job 

losses rose from 7.384 million to 8.524 million over the 

same period (a 15.4-percent increase). The period also is 

characterized by falling hires and falling separations. The 

JOLTS measure of hires fell by 24.5 percent, from 14.472 

million at the beginning of the period to 10.925 million at 

the end, and the JOLTS measure of separations fell by 7.3 

percent, from 14.215 million to 13.173 million. 

It makes sense that BED gross job gains and JOLTS 

hires fall simultaneously. Gross job gains measure establishment-level increases in employment, and the only 

way that an establishment can grow is to hire personnel. 

When hires decline dramatically, as they did in the NBERdefined recessionary period, it follows that gross job gains 

also decline. What is less intuitive is that BED gross job 

losses are rising while JOLTS separations are falling. Gross 

job losses measure establishment-level decreases in employment, so it may be initially puzzling how establishments can decrease their employment without an increase 

in worker separations.

The explanation for this phenomenon is decreased 

hiring. Establishments can decrease their employment 

in two ways: by increasing separations (such as laying 

off workers or offering incentives for workers to retire) 

and by not hiring replacement workers for those workers 

who quit or retire. As documented earlier, there is a substantial number of separations (quits and layoffs) in both 

expansionary times and recessionary times. If separations 

remain at the same level or decrease mildly while the level 

of hires declines rapidly as establishments decide not to 

replace the workers who quit or retire, establishment employment will decrease and gross job losses will increase. 

This is a likely explanation for what happened during the 

recent recession.

But the story of what actually happened then is more 

complicated. The complexity becomes evident when one 

looks at chart 10, which graphs JOLTS quits and layoffs instead of separations. Quits and layoffs are two of the three 

components of separations; the third component, “other 

separations” (that is, retirements) is not graphed because, 

as seen in chart 8, it does not exhibit much cyclical variation relative to quits and layoffs.

Chart 10 shows some intriguing labor market dynamics during the onset of the 2007–2009 recession. The level 

of hires began falling considerably in the first quarter of 

2008, and quits experienced a similar large decline one 

quarter later. The level of hires hit a trough in the second 

quarter of 2009, and the level of quits did so one quarter 

later. Layoffs were constant during the first several quarters of the recession and then spiked upward in the fourth 

quarter of 2008 and the first quarter of 2009. For the first 

time in the history of the JOLTS (which started in December 2000), the number of layoffs exceeded the number 

of quits (in the fourth quarter of 2008). It is interesting 

to note that the increase in layoffs roughly matches the 

decline in quits in the fourth quarter of 2008 and the first 

quarter of 2009, leaving total separations essentially flat 

during those quarters.

In terms of economics, the following scenario about 

establishments that were downsizing is plausible: During 

the first several quarters of the recession, both hires and 

quits were falling rapidly and large increases in layoffs had 

not yet started. The moderate rise in gross job losses during these quarters appears to be due to hires falling more 

rapidly than quits. Then, in the fourth quarter of 2008 and 

the first quarter of 2009, layoffs increased dramatically 

while hires and quits were still falling rapidly. This increase 

in layoffs signaled the point in the recession at which decreased hiring no longer appeared to serve as a viable tool 

through which establishments could reduce their employment levels. Further contraction in establishment-level 
Monthly Labor Review • August 2011  27

employment—the increase in gross job losses—was then 

driven by increased layoffs.

After the trough. Following the first quarter of 2009, the 

labor market began to improve. Quarterly net employment losses in the private sector, as measured by the CES, 

moderated in every quarter, from –2,349,000 in the first 

quarter of 2009 to –386,000 in the fourth quarter of that 

year. Quarterly net employment growth then turned positive in all four quarters of 2010. 

The improving labor market during the period from 

the first quarter of 2009 to the second quarter of 2010 is 

characterized by a steep decline in gross job losses and a 

rise in gross job gains. (See chart 9.) During this period, 

BED gross job losses fell by 2.317 million (from 8.524 million to 6.207 million, a 27.2-percent decrease) and BED 

gross job gains rose by 1.152 million (from 5.783 million 

to 6.935 million, a 19.9-percent increase). The posttrough 

period from the first quarter of 2009 to the second quarter 

of 2010 is also characterized by falling separations and relatively stable hires. The JOLTS measure of separations fell 

by 19.8 percent (from 13.173 million to 10.566 million), 

and the JOLTS measure of hires fell by 0.4 percent (from 

10.925 million to 10.886 million). The two BED measures 

and the quarterly JOLTS separations series appear to have 

been at turning points in the first quarter of 2009, whereas 

the quarterly JOLTS hires series reached its turning point 

one quarter later. Looking at the period from the second 

quarter of 2009 to the same quarter a year later, rather 

than at the period from the first quarter of 2009 to the 

second quarter of 2010 indicates that JOLTS hires grew by 

5.5 percent (from 10.316 million to 10.886 million).

In terms of employment dynamics, the period from the 

first quarter of 2009 to the second quarter of 2010 has similarities to that from the fourth quarter of 2007 to the first 

quarter of 2009, but with key components of growth and 

decline reversed. During the onset of the recession, BED

gross job gains and JOLTS hires—the two growth components of net employment change—fell simultaneously, 

whereas BED gross job losses and JOLTS separations—the 

two measures of decline in net employment change—diverged, with gross job losses increasing while separations 

fell. Following the trough of the recession, BED gross job 

losses and JOLTS separations fell simultaneously, whereas 

BED gross job gains and JOLTS hires diverged somewhat. 

After the trough, gross job gains increased by 1.152 mil18,000

15,000

12,000

9,000

 Chart 9. Quarterly BED gross job gains and gross job losses, and JOLTS total private hires and separations,

seasonally adjusted, 2004–2010

2004 2005 2006 2007 2008 2009 2010

10,000

8,000

6,000

4,000

BED

(thousands)

JOLTS

(thousands)

BED (losses)

BED (gains)

JOLTS (hires)

JOLTS (separations)

SOURCE: U.S. Bureau of Labor Statistic

NOTE: Shaded area denotes recession as determined by the National Bureau of Economic Researc
Employment Dynamics

28  Monthly Labor Review • August 2011

lion over the period from the first quarter of 2009 to the 

second quarter of 2010 while hires grew by 0.570 million 

over the period from the second quarter of 2009 to the 

second quarter of 2010. 

It makes sense that BED gross job losses and JOLTS 

separations decline simultaneously. Gross job losses measure establishment-level decreases in employment, and 

separations are one of two ways that an establishment can 

contract (the other being attrition—not hiring to replace 

workers who quit or retire). When separations decline as 

dramatically as they did from the first quarter of 2009 to 

the first quarter of 2010, it follows that gross job losses 

also will decline. What is more difficult to understand is 

how BED gross job gains can rise significantly despite a 

much smaller increase in JOLTS hires.

The large absolute numbers of hires and separations at 

any point in time—even in deep recessions—are the key 

to understanding the somewhat divergent trends of BED 

gross job gains and JOLTS hires in the period from the first 

quarter of 2009 to the second quarter of 2010. As a simple 

example, consider an establishment with 100 employees, 

and assume that, historically, this establishment has averaged 10 quits or retirements every quarter and always 

has hired 10 new workers to replace these separations. If 

separations decline from 10 to 5, and the establishment 

still hires 10 workers, then the establishment has grown 

from 100 to 105, even though it did not increase its level 

of hires. With a steady positive level of hires, a decrease 

in separations leads to an increase in establishment-level 

employment and thus an increase in gross job gains. The 

BED and JOLTS data shown in chart 9 suggest that, following the labor market trough, establishments were expanding by keeping their hiring at a relatively steady level 

while simultaneously decreasing separations.

The large decrease in separations from the first quarter 

of 2009 to the first quarter of 2010 reflects primarily a 

decrease in layoffs. During that period, separations fell by 

2.852 million and layoffs dropped by 2.138 million. As 

chart 10 shows, in calendar year 2010 layoffs fell to just 

under 5 million per quarter, a level below their prerecessionary average. Quits fell during the first three quarters 

of 2009, from 5.341 million in the first quarter of that year 

to 4.582 million in the third quarter; then they began to 

increase, rising to a level of 5.061 million in the second 

quarter of 2010. (See chart 10.) 

The increase in quits during the first half of 2010 war10,000

8,000

6,000

4,000

 Chart 10. Quarterly BED gross job gains and gross job losses, and JOLTS total private hires and separations, 

seasonally adjusted, 2004–2010 

2004 2005 2006 2007 2008 2009 2010

BED gains and losses;

JOLTS layoffs and quits

(thousands)

JOLTS hires

(thousands)

18,000

15,000

12,000

9,000

SOURCE: U.S. Bureau of Labor Statistic

BED (losses)

BED (gains)

JOLTS (hires)

JOLTS (quits) JOLTS (layoffs)
Monthly Labor Review • August 2011  29

rants further mention. Following the series low in the 

third quarter of 2009, quits rose by 424,000 during the 

first two quarters of 2010. This increase was undoubtedly 

spurred by an increase in job openings, which hit a series 

low of 5.828 million in the fourth quarter of 2009 and 

then grew by 1.361 million during the first two quarters 

of 2010. Furthermore, hires rose by 499,000 during the 

first two quarters of 2010. When establishments want 

to start hiring following a recessionary trough, they post 

job openings and begin hiring. Meanwhile, workers start 

quitting their current jobs when they are hired into the 

newly created jobs. The fact that the increase in job openings is much higher than the increase in both hires and 

quits suggests that establishments are posting job openings yet not hiring to fill them. Nevertheless, this simultaneous rise in job openings, hires, and quits suggests 

that the underlying components of employment growth 

dynamics were beginning to increase in 2010 after having 

recorded their recessionary lows in the last two quarters 

of 2009.

BED AND JOLTS DATA WERE FIRST PUBLISHED in 2003 

and 2004, respectively. Both have informed analysts about 

the large amount of labor market churning that underlies 

the conventional net change in employment. BED and 

JOLTS data also exhibit business cycle properties, although 

the components of the BED and JOLTS series don’t always 

move together during recessions. The business cycle movements in BED and JOLTS data suggest that the two series 

complement, rather than replicate, each other. Analyzed together, BED and JOLTS statistics increase our understanding 

of employment dynamics in recessions.

Notes

1 The total private employment statistics in this paragraph are from 

the Current Employment Statistics (CES) data published by the Bureau of Labor Statistics. (See “Current Employment Statistics – CES 

(National),” http://www.bls.gov/ces (visited Aug. 10, 2011).) 

2 The analysis in this article builds on and expands the earlier comparison of the BED statistics and the JOLTS in Zhi Boon, Charles M. Carson, R. Jason Faberman, and Randy E. Ilg, “Studying the labor market 

using BLS labor dynamics data,” Monthly Labor Review, February 2008, 

pp. 3–16, http://www.bls.gov/opub/mlr/2008/02/art1full.pdf (visited 

July 21, 2011). Another comparison of job flows and worker flows can 

be found in Steven J. Davis, R. Jason Faberman, and John Haltiwanger, 

“Labor Market Flows in the Cross Section and Over Time,” unpublished 

manuscript, March 20, 2011, http://www.carnegie-rochester.rochester.

edu/April11-pdfs/Davis_Faberman_Haltiwanger_April_2011_CR_

Paper.pdf (visited Apr. 4, 2011).

3 For a more complete description of the BED data, including details 

on the source data and the longitudinal linking algorithm, see Timothy R. Pivetz, Michael A. Searson, and James R. Spletzer, “Measuring 

job and establishment flows with BLS longitudinal microdata,” Monthly 

Labor Review, April 2001, pp. 13–20, http://www.bls.gov/opub/

mlr/2001/04/art2full.pdf (visited July 21, 2011); and James R. Spletzer, 

R. Jason Faberman, Akbar Sadeghi, David M. Talan, and Richard L. 

Clayton, “Business employment dynamics: new data on gross job gains 

and losses,” Monthly Labor Review, April 2004, pp. 29–42, http://www.

bls.gov/opub/mlr/2004/04/art3full.pdf (visited July 21, 2011).

4 The fourth-quarter, 2010, BED statistics were released on August 

2, 2011. The most recent BED news release is titled “Business Employment Dynamics—Fourth Quarter 2010” (U.S. Bureau of Labor Statistics, Aug. 2, 2011), http://www.bls.gov/news.release/pdf/cewbd.pdf 

(visited Aug. 10, 2011).

5 To learn more about the JOLTS sample, definitions of variables, 

and survey forms, see “Job Openings and Labor Turnover Survey” (U.S. 

Bureau of Labor Statistics, updated monthly), http://www.bls.gov/jlt 

(visited July 25, 2011). The portion of the survey form presented in 

exhibit 1 is copied from “Job Openings and Labor Turnover Report” 

(U.S. Bureau of Labor Statistics, no date), http://stats.bls.gov/jlt/

jltc1.pdf.

6 The Bureau implemented the monthly alignment method with 

the release of January 2009 data, and all JOLTS historical series were 

revised to incorporate the new method. For further details regarding the improvements in methodology, see “Job Openings and Labor Turnover Survey: Improving JOLTS Methodology” (U.S Bureau 

of Labor Statistics, updated periodically), http://www.bls.gov/jlt/

methodologyimprovement.htm (visited July 25, 2011).

7 The June 2011 JOLTS statistics were released August 10, 2010. The 

most recent JOLTS news release is “Job Openings and Labor Turnover—

June 2011” (U.S. Bureau of Labor Statistics, Aug. 10, 2011), http://

www.bls.gov/news.release/pdf/jolts.pdf (visited Aug. 10, 2011).

8 The hires, separations, and net employment changes shown in 

charts 6 and 7 represent quarterly data and are much smoother than 

the trend lines based on monthly data. The small sample size of the 

JOLTS data causes some volatility in the monthly data, sometimes making it difficult to discern underlying economic trends.

9 The correlation coefficient quantifies how two data series move 

together through time. The correlation is +1 in the case of a perfect 

positive relationship, –1 in the case of a perfect negative relationship, 

and some value between –1 and +1 in all other cases, with 0 denoting no relationship between the two series. The closer the coefficient 

is to either –1 or +1, the stronger is the correlation between the 

variables.