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Entrepreneurship Facts: Announcing New Research Data on Job Creation and Destruction by Firm Age and Size

I’m delighted to announce that we now have new research data on job gains and losses by firm age and size across industries and states.

For many years, policymakers, economists, and others have debated whether small or large firms create more jobs. Our Business Employment Dynamics program, which measures gross job gains and losses to help us understand net employment changes, informs that debate with data on firm size. A related question is whether startups or older establishments create more jobs. Again, BLS has a stat for that. We have data on employment and business survival rates by the age of the establishment.

While it’s useful to know the age of an establishment—that is, a single location of a business—for some questions, we need to know the age of the firm. A firm may include several or even many establishments. To understand entrepreneurship in particular, we want to know how both the age and size of firms affect job gains, job losses, and employment growth.

With these new data we can answer many interesting questions, including:

  • How much do older firms contribute to job growth? Firms 10 years or older created 800,000 jobs, or 29 percent of the total 2.7 million net employment gain in the year ending March 2015. See the chart below.
  • How much do startup firms contribute to job growth? In the year ending March 2015, startup firms—firms less than 1 year old—created 1.7 million jobs or 60 percent of total employment growth. More than half these jobs were from firms with fewer than 10 employees.
  • How does the age or size of the firm affect the rate of business closures? In 2015, 788,000 establishments closed. Of these, 55 percent were from firms 10 years or older; 16 percent were from firms 5 to 9 years old; and 28 percent were from firms less than 4 years old. Of the establishments that closed from March 2014 to March 2015, 91,000 of them, or 12 percent of the total, had 500 or more employees.
  • Which firm-age group accounted for most job losses during the last two recessions? Firms 10 years or older lost the most jobs during both recessions. Again, see the chart below.

net-job-changes-by-firm-age

The new research data measure annual gross job gains and gross job losses by firm age and size from March of one year to March of the next. We get the data on firms from the Quarterly Census of Employment and Wages by linking individual establishments over time. Besides firm age and size, we also measure establishment age and size. We have two methods to examine size. One method compares the current size of firms or establishments with the size at the beginning of the year (the base-sizing method). The other method compares the current size with the average size over the year (the average-sizing method).

I really want to know how you like these new data and what we can do to make them more useful. I invite you to explore the data and share your comments. Your feedback will help us develop the dataset and possibly move it into our regular production. Please write your comments below, or you can email the Business Employment Dynamics staff.

6 comments on Entrepreneurship Facts: Announcing New Research Data on Job Creation and Destruction by Firm Age and Size

  1. Fernando Centeno, CED says:

    A good start, but could you profile the number & type of jobs “created” from public subsidization? Many “net jobs” are artificially created via the public sector; what are their average duration?

    How about the percentage which pays minimum wage? By census tract? By demographics? By city boundaries rather than by region? By industry/sector?

    I’m most interested in seeing the relationship between public subsidy in favor of cluster-driven job creation & actual business/job creation, but I don’t know if you are interested in this topic. This effort should be tracked as this is the manner cities are competing to become “world class” cities (excuse me, metros).

    Thank you.

    1. BLS Commissioner says:

      Thanks for your comments. We are unlikely ever to have information on jobs created from “public subsidization,” other than government jobs. Jobs in the private sector may serve customers in the public, private, or nonprofit sector, but there’s really no direct way to determine whether a private sector job exists because of one customer group or another.

      For information on minimum wage workers, BLS publishes a report each year. The most recent is at http://www.bls.gov/opub/reports/minimum-wage/2015/home.htm. The survey sample size isn’t large enough to provide information for cities or census tracts, but the report does have information for states and by demographic characteristics, industry, and occupation.

  2. Lee Koslow says:

    These data are very useful. Please do keep publishing them. I see that job gains and losses by establishment age are available at the state level. Would it be possible to publish job gains and losses by establishment size at the state level?

    1. BLS Commissioner says:

      Thanks for your comment. We do have data on establishment size at the state level. Please see http://www.bls.gov/bdm/bdmstate.htm.

  3. Mike says:

    Thanks for this enlightening data. Can you provide a simple table for us of percentage of net job gain over some reasonable time period by size of firm and age of firm? So that the total of all values in the table add to 100%? Thank you.

  4. Ian Boreham says:

    Great stats and data. I think it’s incredibly important to know that stat about % of jobs created by new companies. Was not expecting this figure to be as high as that. Breakdown of these companies by sector / industry would be extremely useful. Wage data for these jobs would also be useful. Great work.

Comments are closed.