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The declining average size of establishments: evidence and explanations
Eleanor J. Choi and James R. Spletzer
Eleanor Choi and James Spletzer are research economists in the Office of Employment and Unemployment Statistics at the Bureau of Labor Statistics. Email: choi.eleanor@bls.gov or spletzer.jim@bls.gov.
Although the average size of establishments rose through the expansionary years of the 1990s, it has fallen during each year of the first decade of the 2000s; a primary explanation is that new establishments are starting and staying smaller.
Keen observers of labor market statistics have noticed that the average size of establishments has been decreasing during the past decade. The average size of establishments rose through each of the expansionary years of the 1990s but then fell slightly during each year of the 2000s regardless of whether the economy was expanding or contracting, as shown in the bottom graph of chart 1.1 The opposing trends of these Bureau of Labor Statistics (BLS) data suggest that the U.S. economy has changed in some fundamental way during the past two decades.
1 The annual establishment age and survival series from the BLS Business Employment Dynamics program began in 1994, which is why the charts presented in this article start with data for 1994.
Business Employment Dynamics
Quarterly Census of Employment and Wages
Employment growth by size class: comparing firm and establishment data.—Dec. 2011.
Births and deaths of business establishments in the United States, The.—Dec. 2008.
How widely do wages vary within jobs in the same establishment?—Feb. 2008.
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