Quarterly Data Series on Business Employment Dynamics

For release 10:00 a.m. (ET), Wednesday, July 28, 2021	USDL-21-1387
Technical Information:	[phone]	•	[e-mail] • www.bls.gov/bdm
Media Contact:	[phone]	•	[e-mail]

BUSINESS EMPLOYMENT DYNAMICS - FOURTH QUARTER 2020

From September 2020 to December 2020, gross job gains from opening and expanding private-sector establishments were 8.8 million, a decrease of 2.0 million jobs from the previous quarter, the U.S. Bureau of Labor Statistics reported today. Over this period, gross job losses from closing and contracting private-sector establishments were 6.7 million, a decrease of 188,000 jobs from the previous quarter. The difference between the number of gross job gains and the number of gross job losses yielded a net employment gain of 2.0 million jobs in the private-sector during the fourth quarter of 2020. (See chart 1, and tables A and 1.)

Chart 1. Total private-sector gross job gains and gross job losses, seasonally adjusted

March 2010 - December 2020

Thousands 25,000

20,000

15,000

10,000

Gross job gains

5,000	Gross job losses

0

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 NOTE: Shaded area represents National Bureau of Economic Research (NBER) defined recession period.

Coronavirus (COVID-19) Effect on Fourth Quarter 2020 Business Employment Dynamics

Data collection and processing methods have been impacted because of the COVID-19 pandemic. More detail can be found at www.bls.gov/covid19/effects-of-covid-19-pandemic-on-business-employment- dynamics.htm.

The change in the number of jobs over time is the net result of increases and decreases in employment that occur at all private businesses in the economy. Business Employment Dynamics (BED) statistics track these changes in employment at private-sector establishments from the third month of one quarter to the third month of the next. The difference between the number of gross job gains and the number of gross job losses is the net change in employment. (See Technical Note.) The BED data series include gross job gains and gross job losses by industry subsector, for the 50 states, the District of Columbia, Puerto Rico, and the Virgin Islands, as well as gross job gains and gross job losses at the firm level by employer size class.

Gross Job Gains

In the fourth quarter of 2020, gross job gains represented 7.4 percent of private-sector employment. Gross job gains are the sum of increases in employment due to expansions at existing establishments and the addition of new jobs at opening establishments. Gross job gains at expanding establishments totaled

7.1 million in the fourth quarter of 2020, a decrease of 1.7 million jobs compared to the previous quarter. Opening establishments accounted for 1.7 million of the jobs gained in the fourth quarter of 2020, a decrease of 348,000 jobs from the previous quarter. (See charts 2 and 3, and tables A, 1, 2, and 3.)

Gross Job Losses

In the fourth quarter of 2020, gross job losses represented 5.7 percent of private-sector employment. Gross job losses are the result of contractions in employment at existing establishments and the loss of jobs at closing establishments. Contracting establishments lost 5.4 million jobs in the fourth quarter of 2020, a decrease of 108,000 jobs from the prior quarter. In the fourth quarter of 2020, closing establishments lost 1.3 million jobs, a decrease of 80,000 jobs from the previous quarter. (See charts 2 and 3, and tables A, 1, 2, and 3.)

Chart 2. Private-sector gross job gains at expanding establishments and gross job losses at contracting establishments, seasonally adjusted: March 2010 - December 2020

Thousands

20,000

18,000

16,000

14,000

12,000

10,000

8,000	Expansions
6,000
Contractions
4,000

2,000

0 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20

NOTE: Shaded area represents NBER defined recession period.

Chart 3. Private-sector gross job gains at opening establishments and gross job losses at closing establishments, seasonally adjusted: March 2010 - December 2020

Thousands 3,500 3,000 2,500

2,000

1,500Openings

1,000

Closings

500

0 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20

NOTE: Shaded area represents NBER defined recession period.

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Establishment Births and Deaths

In the fourth quarter of 2020, the number of establishment births (a subset of the openings data) increased by 8,000, to a total of 284,000 establishments. These new establishments accounted for 912,000 jobs, an increase of 92,000 jobs from the previous quarter. Data for establishment deaths (a subset of the closings data) are available through the first quarter of 2020, when 763,000 jobs were lost at 275,000 establishments, a decrease of 27,000 jobs from the fourth quarter of 2019. (See Technical Note and table 8.)

Table A. Three-monthprivate-sector gross job gains and losses, seasonally adjusted

			3 months ended
Category	Dec.	Mar.		June		Sept.	Dec.
	2019	2020		2020		2020	2020
			Levels (in thousands)
Gross job gains.............................	7,864	6,963		5,749		10,804	8,756
At expanding establishments…	6,364	5,675		4,469		8,776	7,076
At opening establishments....	1,500	1,288		1,280		2,028	1,680
Gross job losses............................	7,051	7,736		20,366		6,901	6,713
At contracting establishments	5,725	6,288		17,470		5,473	5,365
At closing establishments......	1,326	1,448		2,896		1,428	1,348
Net employment change1.............	813	-773		-14,617		3,903	2,043
			Rates (percent)
Gross job gains.............................	6.2	5.5	4.8		9.4	7.4
At expanding establishments…	5.0	4.5	3.7		7.6	6.0
At opening establishments....	1.2	1.0	1.1		1.8	1.4
Gross job losses............................	5.5	6.1	17.0		6.0	5.7
At contracting establishments	4.5	5.0	14.6		4.8	4.6
At closing establishments......	1.0	1.1	2.4		1.2	1.1
Net employment change1.............	0.7	-0.6	-12.2		3.4	1.7

1 The net employment change is the difference between total gross job gains and total gross job losses. See the Technical Note for further information.

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Industries

Gross job gains exceeded gross job losses in all 13 industries in the fourth quarter of 2020. The service- providing industries experienced a net job increase of 1.8 million in the fourth quarter of 2020. Within the service-providing industries, the professional and business services sector had the largest over-the- quarter net employment gain, adding 652,000 jobs. This was the result of 1.8 million gross job gains and

1.2 million gross job losses. The leisure and hospitality sector experienced 1.4 million gross job gains and 1.3 million gross job losses in the fourth quarter of 2020. The goods-producing industries had a net job increase of 292,000 in the fourth quarter of 2020. Of the goods-producing industries, the construction sector showed a net increase of 146,000 jobs, the manufacturing sector had a net increase of 145,000 jobs, and the natural resources and mining sector added 1,000 jobs. (See table 3.)

Firm Size

In the fourth quarter of 2020, firms with 1-49 employees had a net employment increase of 476,000. Firms with 50-249 employees had a net employment gain of 355,000. Firms with 250 or more employees had a net employment increase of 1.0 million. (See tables 4 and 5.)

States

Gross job gains exceeded gross job losses in 47 states, Puerto Rico, and the U.S. Virgin Islands in the fourth quarter of 2020. (See tables 6 and 7.)

For More Information

Additional information on gross job gains and gross job losses is available online at www.bls.gov/bdm. This information includes data on the levels and rates of gross job gains and gross job losses by firm size, not seasonally adjusted data and other seasonally adjusted time series not presented in this release, charts of gross job gains and gross job losses by industry and firm size, and answers to frequently asked questions. Additional information about the Business Employment Dynamics data can be found in the Technical Note of this release or can be obtained by emailing [e-mail].

The Business Employment Dynamics for First Quarter 2021 are scheduled to be released on Wednesday, October 27, 2021 at 10:00 a.m. (ET).

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Technical Note

Special technical note: The following technical note details procedures regularly adhered to for tabulating the quarterly Business Employment Dynamics series on private-sector gross job gains and gross job losses. Data collection and processing methods have been impacted by the COVID-19 pandemic. More detail can be found at www.bls.gov/covid19/effects-of-covid-19-pandemic-on-business-employment-dynamics.htm

The Business Employment Dynamics (BED) data are a product of a federal-state cooperative program known as Quarterly Census of Employment and Wages (QCEW). The BED data are compiled by the U.S. Bureau of Labor Statistics (BLS) from existing QCEW rec- ords. Most employers in the U.S. are required to file quarterly reports on the employment and wages of workers covered by unemployment insurance (UI) laws and to pay quarterly UI taxes. The QCEW is based largely on quarterly UI reports which are sent by businesses to the State Workforce Agencies (SWAs). These UI reports are supplemented by two additional BLS data collections to render administrative data into economic statistics. Together these data comprise the QCEW and form the basis of the Bureau's establishment universe sampling frame.

These reports are used to produce the quarterly QCEW data on total employment and wages and the longitudinal BED data on gross job gains and losses. The QCEW is also the employment benchmark for the Current Employment Statistics (CES), Occupational Employment Statistics (OES), and Job Openings and Labor Turnover Survey (JOLTS) programs and is a major input to the Bureau of Economic Analysis's Personal Income Accounts.

In the BED program, the quarterly QCEW records are linked across quarters to provide a longitudinal history for each establish- ment. The linkage process allows the tracking of net employment changes at the establishment level, which in turn allows the estimation of jobs gained at opening and expanding units and jobs lost at closing and contracting units.

Differences between QCEW, BED, and CES employment measures

The Bureau publishes three different establishment-based employment measures for any given quarter. Each of these measures-Quar- terly Census of Employment and Wages, Business Employment Dy- namics, and Current Employment Statistics-makes use of the quarterly UI employment reports in producing data; however, each measure has a somewhat different universe coverage, estimation proce- dure, and publication product.

Differences in coverage and estimation methods can result in somewhat different measures of employment change over time. It is important to understand program differences and the intended uses of the program products. (See table.) Additional information on each program can be obtained from the program websites shown in the table.

Coverage

Employment and wage data for workers covered by state UI and Unemployment Compensation for Federal Employees (UCFE) laws are compiled from quarterly contribution reports submitted to the

SWAs by employers. In addition to the quarterly contribution re- ports, 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 estab- lishments. These reports are based on place of employment rather than place of residence. UI and UCFE coverage is broad and basically comparable from state to state.

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 small nonprofit organiza- tions.

Gross job gains and gross job losses in this release are derived from longitudinal histories of 8.3 million private-sector employer reports out of 10.4 million total reports of employment and wages submitted by states to BLS in the first quarter of 2020. Gross job gains and gross job losses data in this release do not report estimates for government employees or private households (NAICS 814110) and do not include establishments with zero employment in both previous and current quarters. Data from Puerto Rico and the Virgin Islands are also excluded from the national data. The table below shows, in millions of establishments, the number of establishments excluded from the national gross job gains and gross job losses data in the first quarter 2020.

Number of active establishments included in

Business Employment Dynamics data at the national level

Millions

Total establishments QCEW program……….10.4

Excluded: Public sector…………………..0.3

Private households…………… 0.2

Zero employment……………..1.6

Total establishments included in Business

Employment Dynamics data………………...8.3