Birth-death adjustment is an adjustment made to survey-based estimates to account for the net effect of businesses opening and going out of business.
Why BLS makes this type of adjustment
Respondents who are asked to respond in a BLS survey come from a longitudinal database of existing businesses. Therefore, businesses that are just getting started are excluded from the opportunity of being selected to be surveyed. Likewise, businesses that close are also not included. The net birth–death adjustment accounts for economic activity that surveys cannot capture.
How BLS estimates the adjustment
Birth–death adjustments are model-based estimates. They are based on the history of business births and deaths as observed in the Quarterly Census of Employment and Wages (QCEW).