Summary 10-02 / March 2010 • U.S. Department of Labor • U.S. Bureau of Labor Statistics

All firm sizes hit hard during the current recession 

Small and large firms1

 have 

shown different behaviors 

during the past three economic 

downturns (recessions). (See 

box, this page.) In the recession 

of the early 1990s, there were 

more net job losses in small 

firms than in large firms. The 

2001 recession showed the opposite: large firms experienced 

more net job losses during the 

downturn and then continued 

to show net losses into 2003. In 

the early part of this recession, 

however, neither group shows a 

clear majority of job losses. All 

firm sizes have been similarly 

affected by the recession.2 (See 

tables 1 and 2 and chart 1.)

The Business Employment 

Dynamics (BED) data series, 

published by the Bureau of

Labor Statistics (BLS), decomposes the quarterly net employment change into gross job 

gains and gross job losses. This 

breakdown reveals the underlying dynamics of the job market.3

For example, small firms show 

significantly higher levels of both 

gross job gains and gross job 

losses than large firms throughout the data series. (See charts 2 

and 3.) Calculated as a percentage 

of employment, the high rates of 

gross job gains and losses show 

evidence of more turnover and 

volatility in small firms. 

Two quarters before the official beginning of the current 

recession, the two smallest size 

classes—firms with 1 to 4 employees and firms with 5 to 9 

employees—show net losses of 

40,000 and 15,000 jobs, respectively. All size classes then turn 

negative in September 2007, resulting in a net loss of 264,000 

jobs. In the next quarter, however, 

only size classes with 5 to 9, 10 

to 19, and 20 to 49 employees are 

negative. In March 2008, all classes once again show a decline, with

total losses of 312,000 jobs. (See 

table 2.)

When small firms are defined 

as those with fewer than 100 employees, there appears to be little 

difference in net losses between 

small and large firms in the current recession: between December 

2007 and June 2009, firms with 

fewer than 100 employees account 

for an average of 46 percent of net 

losses each quarter. If the grouping is expanded to include firms 

with fewer than 500 employees, 

however, small firms contribute 

an average of 61 percent of net job 

losses. (See chart 1.) 

Charts 2 and 3 contain the

decomposition of net change 

into gross job losses and gross 

job gains for small and large 

firms, where small firms are 

those with fewer than 100

employees (chart 2) and fewer 

than 500 employees (chart 3). 

Time intervals are divided into 

periods of average net gain or 

loss and include quarters of 

lingering net job loss following the official end of the

recessions.4 NBER recession

periods are reprsented by shading. Average quarterly gross

job gains and gross job losses 

are indicated by horizontal

bars.

As displayed in charts 2 and 3, 

gross job gains have not returned 

to prerecession levels after the 

2001 downturn. Both divisions 

of small and large firms show low 

levels of gross job gains. The return to net positive employment 

between September 2003 and 

June 2007 was primarily a result 

of a decline in gross job losses 

rather than increased hiring.

During the current recession, gross job gains reached a 

historic low in the BED series, 

with gross job gains for all firms 

dropping to an all-time low of 

4,517,000 in the first quarter of 

2009. This series minimum is 

reflected in all nine size classes. 

Gross job losses, however, have 

not yet reached the highest levels seen in the 1990 or 2001

recession. It appears that

not only increasing gross job 

losses, but also decreasing gross 

job gains, particularly at small 

firms, are present in the current

recession.

In the current recession, all firms, small and 

large alike, have been similarly affected in terms of

net job losses. Unlike the

previous two recessions, one 

size grouping does not contribute significantly more than 

the other to the economic decline. This current recession 

is being driven by a marked 

drop in gross job gains across 

all size classes, with a larger 

decline at small firms. In addition, the smallest of firm 

size classes—1 to 4 employees and 5 to 9 employees—

showed net losses before

other classes.

For additional information, 

contact Jessica Helfand, an economist in the Division of Administrative Statistics and Labor Turnover, 

Office of Employment and Unemployment Statistics. E-mail: 

helfand.jessica@bls.gov.Telephone: (202) 691–648

The National Bureau of Economic Research 

(NBER) defines the past three recessions as

follows:

1. Beginning in July 1990 (or quarter 3 on a quar-

 terly basis) and extending through March 1991

 (quarter 1 on a quarterly basis)

2. Beginning in March 2001 (quarter 1) and extend-

 ing through November 2001 (quarter 4)

3. Beginning in December 2007 (quarter 4) and

 ongoing
2

Notes

1

An establishment is defined as an economic unit that produces goods or services, usually at a single physical location, and engages in one, or predominantly one, 

activity. A firm is a business and may consist of one or more establishments 2For more information on the BED size class methodology and on the behavior of small and large firms in the previous contractions, see Jessica Helfand, Akbar 

Sadeghi, and David Talan, “Employment dynamics: small and large firms over the business cycle,” Monthly Labor Review, March 2007, pp. 39–50. 3See the BED Web site http://www.bls.gov/bdm/ for further information. 4 These periods are defined as those with average net gains and losses and are longer than the NBER-defined recessions. Periods of average quarterly net gain in 

the BED data series include the following: from quarter 2, 1992, to quarter 4, 2000; and from quarter 3, 2003, to quarter 2, 2007. Periods of average quarterly net 

loss include the following: from quarter 2, 1990, to quarter 2, 1992; from quarter 2, 2001, to quarter 3, 2003, and from quarter 3, 2007, to quarter 2, 2009 (latest data 

available).

Table 1. Average quarterly net employment change and gross job gains and losses over NBER recession periods, by firm size, seasonally adjusted

Quarter 3, 1990–Quarter 1, 1991 Quarter 1, 2001–Quarter 4, 2001 Quarter 4, 2007–Quarter 2, 20091

Firm size class Net 

change

Gross job 

gains

Gross job 

losses

Net 

change

Gross job 

gains

Gross job 

losses

Net 

change

Gross job 

gains

Gross job 

losses

Total private –552 6,183 6,735 –774 6,428 7,202 –1,117 5,490 6,606

1 to 99 –293 3,898 4,191 –197 3,968 4,164 –511 3,529 4,040

100 or more –260 2,284 2,544 –577 2,460 3,037 –606 1,961 2,566

1 to 499 –428 4,913 5,341 –390 4,951 5,341 –684 4,349 5,033

500 or more –124 1,270 1,394 –384 1,477 1,861 –433 1,141 1,573

1

Recession is ongoing; quarter 2, 2009, represents the latest data available.
3

Table 2. Quarterly net change by firm size class, in thousands, seasonally adjusted, March 2000–June 2009

Year 3 months 

ended— Total Private

1

to

4

5

to

9

10

to

19

20

to

49

50

to

99

100

to

249

250

to

499

500

to

999

1,000

or

more

2000 March 857 80 62 65 93 78 103 85 72 219

June 447 9 1 8 28 34 57 38 43 229

September 316 9 10 17 36 38 48 21 24 113

December 287 9 –2 7 25 20 37 19 10 162

2001 March 0 8 7 9 –7 –33 –63 –53 –23 155

June –856 1 –13 –34 –73 –72 –97 –89 –91 –388

September –1,218 –55 –48 –61 –108 –110 –146 –118 –119 –453

December –1,021 21 –18 –34 –82 –85 –116 –91 –87 –529

2002 March 24 23 20 8 –6 –26 –35 –10 –18 68

June –72 47 16 5 3 8 –3 –16 –23 –109

September –173 37 9 –5 –23 –21 –30 –17 –11 –112

December –227 35 3 –9 –27 –33 –41 –26 –18 –111

2003 March –345 –13 –26 –40 –64 –33 –29 –22 –20 –98

June –138 41 30 23 25 –4 –16 –19 –36 –182

September 208 44 28 27 24 7 16 8 3 51

December 306 59 20 31 32 17 13 20 7 107

2004 March 425 40 25 28 57 58 75 40 29 73

June 605 36 21 40 77 69 73 35 44 210

September 201 23 17 16 28 31 57 38 10 –19

December 775 100 48 55 74 40 64 40 45 309

2005 March 369 8 3 13 36 38 56 45 21 149

June 554 67 35 56 91 72 74 49 43 67

September 707 68 45 45 57 36 50 51 59 296

December 519 91 22 29 31 21 26 22 4 273

2006 March 731 55 52 73 132 99 116 71 64 69

June 408 24 16 31 70 51 71 52 41 52

September 17 –10 –4 –4 –3 14 7 16 11 –10

December 464 60 10 16 29 27 44 4 20 254

2007 March 430 18 38 50 70 46 58 31 43 76

June 201 –40 –15 9 43 46 73 51 30 4

September –264 –18 –25 –41 –51 –23 –36 –13 –6 –51

December 266 14 –19 –10 –2 10 42 29 12 190

2008 March –312 –79 –34 –22 –18 –7 0 –1 –4 –147

June –523 –106 –58 –50 –46 –20 –7 –15 –24 –197

September –1,027 –93 –66 –79 –122 –73 –95 –49 –59 –391

December –1,868 –136 –147 –174 –250 –183 –199 –126 –113 –540

2009 March –2,648 –245 –178 –220 –341 –274 –320 –211 –178 –681

June –1,704 –114 –83 –95 –141 –114 –146 –115 –133 –763

NOTE: Shading indicates NBER-defined recessions. The net quarterly employment change shown is somewhat different from the official employment changes 

as measured by the Current Employment Statistics (CES) program. Differences in coverage, estimation methods, and seasonal adjustment can result in measurement differences. (See the technical note in the BED press release for more details, on the Internet at http://www.bls.gov/news.release/pdf/cewbd.pdf.)
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