BLS Report Highlights New Business Not Creating Jobs

February 1st, 2011
in econ_news

Econintersect: From the President on down, politicians continue to mouth the importance of jobs growth.  This did not start with the Obama Administration - but has been front and center for over 100 years.

The BLS's Business Employment Dynamics Summary for the 2Q2010 highlights the dysfunction between words and results.  One chart particularily shows this dysfunction. 

Follow up:

The above Chart 3  shows the trend line only for job openings and closings at new business being born or loss of jobs at business dying.  It ignores gains or losses at existing business.   While economists continue to mouth that small business is the incubator of jobs - the BLS documentation is saying that the jobs growth effect of new business startups is declining.

The positive news from this chart is that fewer businesses are dying - and that follows a similar trendline.

This is old data (even though just released), and the jobs picture is currently better then the graphs show.  The graph shown below (Chart 1) shows the effect of job losses and gains for all business.

Over the period of Chart 1, the population grew almost 10%, yet the job losses and gains have a negative bias.

source: BLS


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1 comment

  1. Jeff Miller Email says :

    I have been analyzing the Business Dynamics series for several years. Most people ignore it, even though it represents hard data -- a good way to keep score on the accuracy of the monthly predictions about job changes.

    I don't understand your emphasis on what you call a trend in BOTH the increase and decrease in jobs at new businesses. Why is that important? It is much more meaningful to look at the net change in jobs, as I did in this article (now needing an update)

    Your "trend" is more about the churn in business births and deaths. The chart shows a lot of churn in the dot com era, a fairly flat period of five or six years, and a decline during the recession.

    I'll make you a little bet: The churn is going to increase as part of the economic rebound. But why do we care about churn?

    More importantly, I urge you to look at net job creation from new businesses -- more interesting and meaningful.

    And finally, I welcome the idea that someone else is taking a look at this valuable source of information.

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