Bureau of Labor Statistics Timely Statistics on SMEs and Entrepreneurs in the U.S. Labor Market James R. Spletzer U.S. Bureau of Labor Statistics October 2009

Bureau of Labor Statistics

Today’s Presentation  Employment losses in the current recession are much greater than in recent recessions  We would like timely data on employment gains and losses by firm size, and we would like timely data on entrepreneurs  We can get both from the Business Employment Dynamics (BED) data produced by the Bureau of Labor Statistics (BLS)

Bureau of Labor Statistics Net Employment Losses During Recessions, by Firm Size

Bureau of Labor Statistics Gross Job Gains and Gross Job Losses, Firms Sized 1-19 and 500+

Bureau of Labor Statistics Gross Job Gains and Gross Job Losses, Firms Sized 1-19

Bureau of Labor Statistics Gross Job Gains and Gross Job Losses, Firms Sized 1-19

Bureau of Labor Statistics Summary: Firms Sized 1-19  Large employment losses in the current recession (through 2008:Q4) by small firms sized 1-19: -- Losses appear to be characterized by declining job creation, not increasing job destruction -Declining job creation is most evident in expanding firms and not in opening firms -There is a steep fall in the number of expanding firms in the current recession  Preliminary benchmark announcement (10/2/09) states that job losses in 2009:Q1 due to an increase in the number of business closings

Bureau of Labor Statistics Entrepreneurs in the BED  There are many empirical definitions of entrepreneurs: -Nascent entrepreneurs (Paul Reynolds, PSED) -Newly self-employed (Kauffman index of entrepreneurship, using the CPS) -New firms (using business data)  We define entrepreneurs in the BED as new establishments with positive employment -We’re working on a measure of “entrepreneurial births” that are unaffiliated with existing firms; research indicates lower levels but same trends

Bureau of Labor Statistics Entrepreneurs in the BED

Bureau of Labor Statistics Summary: Entrepreneurs in the BED  The number of entrepreneurs in the BED: - Increased steadily and Declined during 2008  There has been a long-term decline ( ) in the jobs created by entrepreneurs in the BED: - Each entrepreneur created 6.3 jobs (on average) in the period -Fell to 4.4 (on average) in the period -Why? -Is this important?

Bureau of Labor Statistics Timely Statistics on SMEs and Entrepreneurs in the U.S. Labor Market  The BED from BLS provides the most timely data in the U.S. (~8 month lag) on job gains and job losses by firm size, as well as data on business births  The BED through 2008:Q4 shows large job losses by small firms (1-19) in the current recession -- Sharp decline in the number of small firms expanding  The BED also shows substantial long-term declines in the number of jobs created by entrepreneurs

Bureau of Labor Statistics Description of the BED  The BLS Quarterly Census of Employment and Wages (QCEW) program -- Collects employment and wages -- By ownership, county, and industry -- Administrative data from the State UI systems, enhanced with quarterly survey data -- A virtual census (98%) of employees on nonfarm payrolls  First quarter 2009 (released Oct 16, 2009): -- Employment of million million establishments

Bureau of Labor Statistics Description of the BED Business Employment Dynamics (BED)  QCEW microdata linked longitudinally  Why link the microdata longitudinally?  Net changes in employment are one of the most important economic statistics  Underlying these net changes is substantial churning: businesses are continually opening, closing, expanding, and contracting  These large gross job flows have fascinating business cycle properties

Bureau of Labor Statistics Description of the BED Quarterly Press Release Gross job gains (expansions, openings, & births) and gross job losses (contractions, closings, & deaths) by industry, state, size class :Q1 data to be released November 19, :Q4 data released August 19, 2009: “From September 2008 to December 2008 the number of job gains from opening and expanding private sector establishments was 6.7 million, and the number of job losses from closing and contracting establishments was 8.5 million”

Bureau of Labor Statistics Description of the BED

Bureau of Labor Statistics Supplemental Table: Net Employment Growth by Firm Size

Bureau of Labor Statistics Supplemental Table: Net Employment Growth by Firm Size

Bureau of Labor Statistics Supplemental Table: Employment by Firm Size

Bureau of Labor Statistics Supplemental Table: Employment by Firm Size

Bureau of Labor Statistics Supplemental Table: Net Employment Growth by Firm Size

Bureau of Labor Statistics Supplemental Table: Employment by Firm Size

Bureau of Labor Statistics