High-employment-growth firms: defining and counting them
The BED data
The BED data are longitudinally linked microdata from the BLS business register. The Quarterly Census of Employment and Wages (QCEW) program uses the BLS list of business establishments; these approximately 9.2 million establishments account for 98 percent of employment on nonfarm payrolls. The QCEW data contain high-quality, high-frequency, and timely information (for an administrative data source) on employment and wages. The QCEW data are available 6 months after the reference quarter, and the BED data are available 7 months after the end of the reference quarter. The QCEW data are used as the sampling frame and the employment benchmark for some BLS establishment-based surveys, are a major input into the Bureau of Economic Analysis National Income and Product Accounts, and are an important source of data for labor market research.
The BED data are created by linking QCEW establishments across quarters to create a longitudinal history. Establishments classified as government or private households are not in the BED data. To ensure the quality of the longitudinal establishment linkages, BLS uses a multistep process to link the microdata over time. This linkage process consists of administrative matches based on a unique identifier, a probability-based weighted match, and an analyst review match.8
The majority of BED statistics measure quarterly gross jobs gains and gross job losses. Gross job gains are the number of jobs gained by establishments that open or expand, and gross job losses are the number of jobs lost by establishments that close or contract. The subtraction of gross job losses from gross job gains yields net employment change. The quarterly gross job gains and gross job losses are published for both establishments and firms. 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, either corporate or otherwise, and may consist of one establishment or of multiple establishments aggregated by federal Employer Identification Number (EIN).
The statistics on high-growth firms presented in this article can be seen as the natural next data product from the BED program. In 2003, the BED program started publication with quarterly establishment-level statistics of gross job gains and gross job losses. In 2005, the BED expanded its product line by publishing quarterly firm-level statistics of gross job gains and gross job losses. The tabulations of gross job gains and gross job losses by firm size have become one of the most popular BED outputs. In 2010, the BED program released establishment-age and establishment-survival statistics. These statistics document the number of establishments and the employment of all establishments born in a certain year and follow establishments year by year from their birth to the current year.9 The high-growth firm statistics in this article are based on multiyear linkages of the firm-level data and are the first statistics from the BED program that track firms across long periods.
8 For a more thorough description of the source data and the longitudinal linkages in the BED program, see James 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.
9 For more information on the establishment age and survival statistics, see Leming et al., “The role of younger and older business establishments.”