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Research Data on Business Employment Dynamics by Age and Size

Overview

The Bureau of Labor Statistics has developed research data on employment dynamics by age and size. The Business Employment Dynamics program currently publishes data on gross job gains and gross job losses by size of firm and age of establishment. The new data provide insights into job flows by age and size at both the establishment and firm levels. These data enable users to compare gross job flows and net employment changes across a wide range of business organizations, from startups to small and young firms to large and older firms.

The new annual research data by age and size track employment changes at private business units from March of each year. Gross job gains are the sum of increases in employment at existing units and new jobs at opening units. Gross job losses are the result of contractions in employment at existing units and the loss of jobs at closing units. The difference between the number of gross jobs gained and gross jobs lost is the net change in employment.

Concepts and Methods

The definitions and methodology in measuring annual gross job gains and gross job losses are similar to the quarterly measures. The linkage method considers all predecessor and successor relations that may come about due to changes in ownership and corporate restructuring over the entire year. At the establishment level, some of the quarterly job gains and job losses are offset during the estimation over the year. Therefore, the sum of four quarters of gross job gains and gross job losses are not equal to annual gross job gains and gross job losses. The net change in employment over the year, however, is equal to the sum of four quarterly net changes on a not seasonally adjusted basis.

The formal definitions of the annual Business Employment Dynamics data elements are as follows:

Openings. These are units with positive employment in March of the current year following zero employment in March of the previous year.

Expansions. These are units with positive employment in March in both the previous and current years, with a net increase in employment over this period.

Closings. These are units with positive employment in March in the previous year, with no employment or zero employment reported in March of the current year.

Contractions. These are units with positive employment in March in both the previous and current years, with a net decrease in employment over this period.

Gross job gains. Gross job gains include the sum of all jobs added at either opening or expanding units.

Gross job losses. Gross job losses include the sum of all jobs lost in either closing or contracting units.

The net change in employment. The net change in employment is the difference between gross job gains and gross job losses.

The net change in the number of establishments. The net change in the number of establishments is the difference between the number of openings and the number of closings.

Rates calculation. Rates for age group less than one year old will either be 200% or 0%. This is due to the calculation of rates for Business Employment Dynamics data. The numerator in the calculation is the component (openings, expansions, closings or contractions). Any firm or establishment that is less than one year old is by definition an opening, and therefore cannot be in any of the other three categories making the numerator for those equal to zero. The denominator is the average of the prior and current quarter employment levels. In the age group less than one year old the current quarter employment level is equal to the openings component and the prior quarter level is zero.

Data Source

BLS derives Business Employment Dynamics data from the Quarterly Census of Employment and Wages (QCEW) database. The QCEW data are the product of a federal-state cooperative program. The data come from summaries of employment and total wages of workers covered by state and federal unemployment insurance. State Workforce Agencies provide this information to BLS. The state agencies compile these summaries from the records of their unemployment insurance programs. State laws require most employers to pay quarterly taxes based on the employment and wages of workers covered by unemployment insurance. In addition to the quarterly reports, employers with more than one establishment in a state complete a questionnaire, called the "Multiple Worksite Report." The report provides detailed information on the location and industry of each of the employer's establishments. BLS also conducts an Annual Refiling Survey (ARS) on approximately one-third of businesses to verify and update their industry classifications and addresses. As a result, changes in the industrial and geographical compositions of the economy are captured in a timely manner and reflected in BLS statistical programs. QCEW employment and wage data in first quarter 2014 included 9.4 million employer reports of employment and wages. These reports are based on the employer's location, rather than where the worker lives.

The Business Employment Dynamics database links establishments and firms in the QCEW database over time to determine whether they gained or lost jobs. We call this linking of an establishment's or firm's records over time a "longitudinal" link.

Unit of Analysis

BLS defines an establishment as an economic unit that produces goods or services, usually at a single location, and engages in one or mainly one activity. BLS identifies establishments by the unemployment insurance and reporting unit numbers. In contrast, a firm is a legal business, either corporate or otherwise, and may consist of one or several establishments. BLS determines the age and size of firms based on establishments with the same owner. BLS uses the employer tax identification numbers (EIN) as a proxy firm identifier to determine the owners of establishments. For single establishments, firm and establishment characteristics are the same.

The establishment is the unit of analysis in measuring gross job flows. However, we use information about establishments and firms to determine their age and size and report gross job gains and gross job losses by age, firm size, and establishment size. This method allows BLS to provide alternative measures of age by size.

Age and Size Definitions

Age

The age of an establishment is the difference between the reference period and the first time an establishment reported positive employment.

The age of a firm is classified using the age of the oldest establishment within a firm.
Five distinct age groups are available:

Less than 1 year old
1 to 4 years old
5 to 9 years old
10 years and older
All ages

Size

BLS uses two methods to determine size: base size and average size. The base size is employment in March of the previous year. The average size is the average of employment in March of the current year and March of the previous year. Size classes for openings are determined by their employment in March of the reference year.

The establishment size is the employment reported for a single establishment. The firm size is the total employment from all establishments reported under the same EIN.

Eight size classes are available:

1 to 4 employees
5 to 9 employees
10 to 19 employees
20 to 49 employees
50 to 99 employees
100 to 499 employees
500 or more employees
All sizes

The five age groups and eight size classes produce 40 age-by-size categories.

Research Data Series

Four tables are available for each of the 40 age-by-size categories:

Table 1: Gross job gains and gross job losses
Table 2: Gross job gains and gross job losses as a percent of total employment
Table 3: The number of establishments by direction of employment changes
Table 4: The number of establishments by direction of employment as a percent of total establishments

We provide these tables in XLSX files, one for each sizing method and business characteristic (firm or establishment). The numbering of tables 1–4 is extended by A or B to indicate average or base sizing and by E and F to indicate establishment or firm characteristics. Data by major industry sectors are organized in different worksheets of the same file.