Business Employment Dynamics

Frequently Asked Questions

  1. What are Business Employment Dynamics?
  2. How are Business Employment Dynamics data calculated?
  3. What are the sources of Business Employment Dynamics?
  4. What is the scope of Business Employment Dynamics?
  5. What is not included in Business Employment Dynamics?
  6. What are the differences between Business Employment Dynamics data and Current Employment Statistics (CES) and the Quarterly Census of Employment and Wages (QCEW), or ES-202, program data?
  7. What is the difference between Business Employment Dynamics and the Job Openings and Labor Turnover Survey (JOLTS)?
  8. What is the reference period?
  9. How is the net change in employment measured?
  10. How are the rates for gross job gains and losses calculated?
  11. How are establishments linked over time?
  12. What is seasonal adjustment?
  13. How are Business Employment Dynamics seasonally adjusted?
  14. What are openings?
  15. What are expansions?
  16. What are closings?
  17. What are contractions?
  18. Are the Business Employment Dynamics data from a survey?
  19. What are the uses of Business Employment Dynamics data?

What are Business Employment Dynamics?

The Business Employment Dynamics statistics track changes in employment at the establishment level, revealing the dynamics underlying net changes in employment. These data include the number and rates of gross jobs gained at opening and expanding establishments, as well as the number and rates of gross jobs lost by closing and contracting establishments.

How are Business Employment Dynamics data calculated?

The Business Employment Dynamics (BDM) data are compiled by the U.S. Bureau of Labor Statistics from the administrative records of the Quarterly Census of Employment and Wages (QCEW), or ES-202, program. This program is a quarterly census of all establishments under State unemployment insurance programs, representing about 98 percent of employment on nonfarm payrolls. The administrative records are linked across quarters to provide a longitudinal history for each establishment. The linkage process allows the tracking of net employment changes at the establishment level, which in turn allows the computation of gross jobs gained at opening and expanding establishments and gross jobs lost at closing and contracting establishments.

What are the sources of Business Employment Dynamics?

Business Employment Dynamics are derived from reports of employment and wage data for workers covered by unemployment insurance (UI) and Unemployment Compensation for Federal Employees (UCFE). The reports are a result of the administration of State unemployment insurance programs that require most employers to pay quarterly taxes based on employment and wages of workers covered by UI. For more information on State unemployment insurance, visit the website of the Employment and Training Administration of the Department of Labor.

The data are compiled from quarterly contribution reports submitted to the states by employers. In addition to the quarterly contribution reports, employers who operate multiple establishments within a State complete a questionnaire, called the "Multiple Worksite Report," which provides detailed information on the location of their establishments. These reports are based on place of employment rather than place of residence.

What is the scope of Business Employment Dynamics?

Gross job gains and gross job losses are derived from longitudinal histories of over 6.4 million private sector employer reports out of 8.2 million total reports of employment and wages submitted by States to BLS in the fourth quarter 2002.

What is not included in Business Employment Dynamics?

Major exclusions from UI coverage are self-employed workers, religious organizations, most agricultural workers on small farms, all members of the Armed Forces, elected officials in most States, most employees of railroads, some domestic workers, most student workers at schools, and employees of certain nonprofit organizations.

Gross job gains and gross job losses data do not include government employees, private households, and establishments with zero employment. Data from Puerto Rico and Virgin Islands also are excluded from the national data.

What are the differences between Business Employment Dynamics data and Current Employment Statistics (CES) and the Quarterly Census of Employment and Wages (QCEW), or ES-202, program data?

The net change in employment from this new data series will not match the estimates from employment series such as the monthly Current Employment Statistics survey (CES) or the totals from the ES-202 program. The CES estimates are based on a sample of establishments, while gross job gains and gross job losses are based on a quarterly census of administrative records. In addition, the CES has a different coverage, excluding the agriculture sector but including establishments not covered by the unemployment insurance program. Business Employment Dynamics data have a more limited scope than ES-202 data. These data, in contrast to ES-202 data, exclude government employees, private households, and establishments with zero employment.

What is the difference between Business Employment Dynamics and the Job Openings and Labor Turnover Survey (JOLTS)?

The JOLTS data measure hires and separations. Although it is an establishment survey, these statistics measure changes that happen to the individual worker. Thus, they are commonly referred to as worker flows.

The Business Employment Dynamics data measure job changes at the establishment level. They do not account for employment changes within the establishment that may, for example, keep its employment constant. Thus, job flows measure what is happening to establishments.

What is the reference period?

All establishment-level employment changes are measured from the third month of each quarter. Establishments report employment for the pay period including the 12th of the month.

How is the net change in employment measured?

The Business Employment Dynamics statistics measure the net change in employment at the establishment level. These changes come about in one of four ways. A net increase in employment can come from either opening establishments or expanding establishments. A net decrease in employment can come from either closing establishments or contracting establishments. Gross job gains include the sum of all jobs added at either opening or expanding establishments. Gross job losses include the sum of all jobs lost in either closing or contracting establishments. The net change in employment is the difference between gross job gains and gross job losses.

How are the rates for gross job gains and losses calculated?

Gross job gains and gross job losses are expressed as rates by dividing their levels by the average of total private employment in the current and previous quarters. This provides a symmetric growth rate. The rates are calculated for the components of gross job gains and gross job losses and then summed to form their respective totals. These rates can be added and subtracted just as their levels can. For instance, the difference between the gross job gains rate and the gross job loss rate is the net growth rate.

How are establishments linked over time?

The linkage process matches establishments' unique State Employment Security Agency (SESA) identification numbers (SESA-ID). Between 95 to 97 percent of establishments identified as continuous from quarter to quarter are matched by SESA-ID. The rest are linked in one of three ways. The first method uses predecessor and successor information, identified by the States, which relates records with different SESA-IDs across quarters. Predecessor and successor relations can come about for a variety of reasons, including a change in ownership, a firm restructuring, or a UI account restructuring. If a match cannot be attained in this manner, a probability-based match is used. This match attempts to identify two establishments with different SESA-IDs as continuous. The match is based upon comparisons such as the same name, address, and phone number. Finally, an analyst examines unmatched records individually and forces a match, if possible.

What is seasonal adjustment?

Over the course of a year, the levels of employment and the associated job flows undergo sharp fluctuations due to such seasonal events as changes in the weather, reduced or expanded production, harvests, major holidays, and the opening and closing of schools. The effect of such seasonal variation can be very large.

Because these seasonal events follow a more or less regular pattern each year, adjusting these statistics from quarter to quarter can eliminate their influence. These adjustments make non-seasonal developments, such as declines in economic activity, easier to spot. The adjusted figure provides a more useful tool with which to analyze changes in economic activity.

How are Business Employment Dynamics seasonally adjusted?

The employment data series for opening, expanding, closing, and contracting establishments are independently adjusted using X-12 ARIMA software and the net changes are calculated based on the difference between gross job gains and gross job losses. Similarly, the establishment counts data series for opening, expanding, closing, and contracting establishments are independently adjusted and the net changes are calculated based on the difference between the number of opening and closing establishments.

What are openings?

These are either establishments with positive third month employment for the first time in the current quarter, with no links to the prior quarter, or with positive third month employment in the current quarter following zero employment in the previous quarter.

What are expansions?

These are establishments with positive employment in the third month in both the previous and current quarters, with a net increase in employment over this period.

What are closings?

These are either establishments with positive third month employment in the previous quarter, with no positive employment reported in the current quarter, or with positive third month employment in the previous quarter followed by zero employment in the current quarter.

What are contractions?

These are establishments with positive employment in the third month in both the previous and current quarters, with a net decrease in employment over this period.

Are the Business Employment Dynamics data from a survey?

No. These data are derived from a quarterly census of all establishments under State unemployment insurance programs, representing about 98 percent of employment on nonfarm payrolls.

What are the uses of Business Employment Dynamics data?

The published Business Employment Dynamics estimates track changes in employment at the establishment level, and thus provide a picture of the dynamics underlying the aggregate net employment growth statistics. The gross job gain and gross job loss statistics will be particularly useful in decomposing the forces behind net changes in employment.

Last Modified Date: January 6, 2004

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