Business Employment Dynamics: State Gross Flows Eric Simants and David M. Talan International Conference on Establishment Surveys Montreal, QC 21 June 2007 The views expressed here are those of the authors and do not necessarily reflect the official policy of the U.S. Bureau of Labor Statistics. U. S. Bureau of Labor Statistics

2 Overview Business Employment Dynamics (BED) Business Employment Dynamics (BED) State-level BED time series data State-level BED time series data RecessionRecession RecoveryRecovery Gross Job Gains and Gross Job Losses and its impact on Job GrowthGross Job Gains and Gross Job Losses and its impact on Job Growth

3 What is Business Employment Dynamics? Longitudinal data series constructed from quarterly cross-sectional data Longitudinal data series constructed from quarterly cross-sectional data Analyzes quarterly gross job flows Analyzes quarterly gross job flows Unit of analysis is the Establishment Unit of analysis is the Establishment An establishment is defined as an economic unit, typically located at a unique physical site and engaged in predominately one type of production activityAn establishment is defined as an economic unit, typically located at a unique physical site and engaged in predominately one type of production activity

4 BED Data Elements Gross job gains Gross job gains Sum of job gains at Expanding and Opening establishmentsSum of job gains at Expanding and Opening establishments Gross job losses Gross job losses Sum of job losses at Contracting and Closing establishmentsSum of job losses at Contracting and Closing establishments

5 State-level BED Time Series Data Data reveal some states began downturn in job growth about one year prior to the recession Data reveal some states began downturn in job growth about one year prior to the recession Jobless recovery is evident for most states 6 quarters into the recovery Jobless recovery is evident for most states 6 quarters into the recovery Job growth occurring in most states since 2003Q3 Job growth occurring in most states since 2003Q3 Are more establishments expanding or opening, or are less establishments contracting or closing?Are more establishments expanding or opening, or are less establishments contracting or closing?

6 Recession

7 Recession 2001Q1 shows the first time in the national-level BED time series where gross job losses greater than gross job gains 2001Q1 shows the first time in the national-level BED time series where gross job losses greater than gross job gains 21 states had gross job losses in excess to gross job gains in 2000Q3 21 states had gross job losses in excess to gross job gains in 2000Q3 Declining trends for gross job gains coupled with increasing trends for gross job losses in most states may have been masked in national-level time series dataDeclining trends for gross job gains coupled with increasing trends for gross job losses in most states may have been masked in national-level time series data

8 Influence of larger states on national BED time series Four largest states in regards to total employment (California, Texas, New York and Florida) comprise nearly 1/3 of total gross job gains and gross job losses nationally Four largest states in regards to total employment (California, Texas, New York and Florida) comprise nearly 1/3 of total gross job gains and gross job losses nationally Gross job gains well above gross job losses in these 4 states until 2001Q1 Gross job gains well above gross job losses in these 4 states until 2001Q1

9 Influence of larger states on national BED time series CA, TX, NY, FL combined 2000Q3 data CA, TX, NY, FL combined 2000Q3 data Gross job gains = 2,804,989Gross job gains = 2,804,989 Gross job losses = 2,553,053Gross job losses = 2,553,053 Difference = 251,936Difference = 251,936 National 2003Q3 data National 2003Q3 data Gross job gains = 8,724,000Gross job gains = 8,724,000 Gross job losses = 8,578,000Gross job losses = 8,578,000 Difference = 146,000Difference = 146,000

10 Influence of larger states on national BED time series Influence of larger states on national BED time series

11 Peak of Gross Job Losses Peak of Gross Job Losses Gross job losses peak at over 9.1 million for the entire nation in 2001Q3 Gross job losses peak at over 9.1 million for the entire nation in 2001Q3 8 states (Arizona, Colorado, Florida, Georgia, Hawaii, Nevada, Texas and Utah) do not peak until 2001Q4 8 states (Arizona, Colorado, Florida, Georgia, Hawaii, Nevada, Texas and Utah) do not peak until 2001Q4 Result of backlash from Sept 11 th tragedies or consumers tightening spending? Result of backlash from Sept 11 th tragedies or consumers tightening spending?

12 Peak of Gross Job Losses

13 Peak of Gross Job Losses

14 Great Lake States Great Lake States 5 (IL, IN, MI, OH and WI) states have gross job losses greater than gross job gains in 2000Q3 – NY and PA only 2 that didn’t 5 (IL, IN, MI, OH and WI) states have gross job losses greater than gross job gains in 2000Q3 – NY and PA only 2 that didn’t Began showing negative job growth 2 quarters prior to national data Began showing negative job growth 2 quarters prior to national data 3 (IN, MI, WI) have gross job losses greater than gross job gains 2000Q3 through 2001Q4 3 (IN, MI, WI) have gross job losses greater than gross job gains 2000Q3 through 2001Q4

15 Great Lake States Great Lake States

16 Recovery Recovery Gross job losses declined rapidly in most all states after 2001Q4 Gross job losses declined rapidly in most all states after 2001Q4 Only 13 (AZ, GA, HI, ID, KS, LA, MS, NE, NV, SC, TX, UT, WY) states show gross job gains in 2006Q3 greater than gross job gains in 1996Q3 Only 13 (AZ, GA, HI, ID, KS, LA, MS, NE, NV, SC, TX, UT, WY) states show gross job gains in 2006Q3 greater than gross job gains in 1996Q3 Since 2003Q3 less than half of all states show gross job gains less than gross job losses in 2 quarters or more Since 2003Q3 less than half of all states show gross job gains less than gross job losses in 2 quarters or more

17 Recovery

18 Recovery 29 states have gross job losses greater than gross job gains in 2006Q3 29 states have gross job losses greater than gross job gains in 2006Q3 CA, MO, NY, OH and PA show lowest levels of gross job gains ever in 2006Q3CA, MO, NY, OH and PA show lowest levels of gross job gains ever in 2006Q3 On the brink of another recession or just temporary adjustment from extremely low levels of gross job losses seen in 2006Q1? On the brink of another recession or just temporary adjustment from extremely low levels of gross job losses seen in 2006Q1?

19 Trends in Gross Job Gains and Gross Job Losses Difference between summed gross job gains and summed gross job losses from 2002Q1 – 2006Q3 is positive in all but 5 states Difference between summed gross job gains and summed gross job losses from 2002Q1 – 2006Q3 is positive in all but 5 states However, 22 states have declining trends for gross job gains However, 22 states have declining trends for gross job gains Trends for gross job losses showing faster declines than trends for gross job gains is how many states are realizing job growth Trends for gross job losses showing faster declines than trends for gross job gains is how many states are realizing job growth

20 Trends in Gross Job Gains and Gross Job Losses Trends in Gross Job Gains and Gross Job Losses

21 Regional Trends Mid-Atlantic (DE, MD, NJ, PA, VA, WV) Mid-Atlantic (DE, MD, NJ, PA, VA, WV) Only 6 states nationally have larger difference between gross job gains and gross job losses than VA over the past 5 yearsOnly 6 states nationally have larger difference between gross job gains and gross job losses than VA over the past 5 years PA has not had a quarter where gross job losses exceed gross job gains since 2003Q3 and has only happened in 2 quarters in MD since 2003Q1 (2006Q2 and 2006Q3)PA has not had a quarter where gross job losses exceed gross job gains since 2003Q3 and has only happened in 2 quarters in MD since 2003Q1 (2006Q2 and 2006Q3)

22 Regional Trends Northeast and Midwest Northeast and Midwest Only 5 (CT, IA, MN, NE and SD) states have positive trends for gross job gains and declining trends for gross job losses since 2002Q1Only 5 (CT, IA, MN, NE and SD) states have positive trends for gross job gains and declining trends for gross job losses since 2002Q1 Only 4 (IA, MN, NY and WI) states are in the top half of states in regards to differences of summed gross job gains and summed gross job losses since 2002Q1Only 4 (IA, MN, NY and WI) states are in the top half of states in regards to differences of summed gross job gains and summed gross job losses since 2002Q1

23 Regional Trends West and Southeast West and Southeast Six (AZ, CA, FL, NV, TX and WA) states showing the largest positive differences between summed gross job gains and gross job losses since 2002Q1Six (AZ, CA, FL, NV, TX and WA) states showing the largest positive differences between summed gross job gains and gross job losses since 2002Q1 Only 7 (AK, CA, KS, KY, MO, NC and TN) states out of 27 showing declining trends in both gross job gains and gross job losses since 2002Q1Only 7 (AK, CA, KS, KY, MO, NC and TN) states out of 27 showing declining trends in both gross job gains and gross job losses since 2002Q1

24 Summary Short-run ebbs and flows of economic activity and job growth are unavoidable Short-run ebbs and flows of economic activity and job growth are unavoidable State level BED time series data will prove useful in understanding the underlying labor market forces driving employment dynamics State level BED time series data will prove useful in understanding the underlying labor market forces driving employment dynamics

25 Contact Information Eric Simants Eric Simants 202/ / Dave Talan Dave Talan 202/ / Group Group