Jobs Boom and Bust Individual Companies vs. MultiCorporations

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Jobs Boom and Bust Individual Companies
vs.Multi-Corporations

• Shail Butani, George Werking,
• Vinod Kapani, Paul Grden, Jenny Lin
• Annual BLS-LMI Conference
• May 2005

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Purpose

• What type of employers created jobs during the
  boom years from March 1992 to March 2001?
  
• Were these employers single unit establishments
  or parts of large nationwide multi-establishment
  companies?
  
• Were these employers small businesses or large
  companies?
  
• Were the employers who lead the expansion also
  leading the downturn of jobs from March 2001
  through March 2003?
  
• What about the turning point from March 2003
  through March 2004?
  
• How is the growth or decline spread across
  industrial sectors?
  

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Economic Periods

• Expansion period March 1992 through March
  2001
  
• Contraction period March 2001 through March
  2003
  
• Combined period March 1992 through March
  2003
  
• Turning point March 2003 to March 2004

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Data Sources

• Quarterly Census of Employment and Wages Files
  (QCEW) linked longitudinally.

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Concepts and Definitions

• Continuous establishments Establishments that
  have positive employment in March during
  consecutive years
  
• (et-1 and et 0).
• Employment generated by openings
• Establishment level Employment growth from new
  establishments that had zero employment in
  previous March and positive employment in current
  March (et-1 0 and et 0).
• Employment loss from closings
• Establishment level Employment loss from
  existing establishments that had positive
  employment in previous March and zero employment
  in current March
• (et-1 0 and et 0).
• Net of (opening closings) Employment
  generated by openings minus the employment loss
  from closings.
  

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Possible Explanations for theContinuous
MultiEstablishment Decline

• Efficiencies in operations from IT Internet,
  sophisticated answering machines, self-check out
  registers, etc.
  
• Inefficient employers do not go out-of-business
  overnight. They reduce their workforce
  incrementally.
  
• Offshoring
• Major Downsizing especially in manufacturing and
  communications and information sectors.
  

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Crossover Employers

• Single to Single
• Single to Multi 5.1 entire period
• Multi to Single - 5.5 entire period
• Multi to- Multi
• Lower bound on total growth attributable to the
  singles
  
• for the entire period is 74.5 5.1 5.5 64

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Crossover Employers (continued)

• Example
• A single employer with 100 employees in March
  1995 became a multi by March 1996 with 110
  employees.
  
• Employment change is 10 for singles
• Employment shift is 110 from singles to
  multi
  
• Total Employment Shift
• During the entire period of March 1992
  through March 2003, net employment of about 9
  million shifted from singles to multis primarily
  due to
• growth by singles,
• mergers, acquisitions, etc.,
• change in reporting basis

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Longitudinal vs. Cross-Sectional Analysis

• Longitudinal Analysis - - A cohort study over a
  fixed time period
  
• Cross Sectional Analysis - - A snapshot of the
  economy at a particular time
  
• Employment in millions
• March March Cross
  Sectional Longitudinal
  
• 2003 1992 Job
  Gains Job Gains
  
• Singles 44.4 39.9
  4.5 13.5
  
• Multis 60.7 47.1 13.6
  4.6
  
• Cross Sectional Analysis would say employment of
  multi establishment employers grew by 13.6
  million over the time period March 1992 through
  March 2003.
• Longitudinal Analysis interpretation is single
  establishment employers contributed 13.5 million
  jobs during the time period March 1992 through
  March 2003.

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Summary

• Economic expansion fueled by Single continuous
  establishments
  
• Economic contraction fueled by Multi continuous
  establishments
  
• Turning Point Year Current Period
  (March 2003-March 2004)
  
• 
  Last Period (March 1992-March 1993)
  
• Total growth - Current period one-half
  of last period
  
• Single continuous establishments growth
  - about the same
  
• Single net openings-closings growth
  about the same
  
• Multi net openings-closings growth
  about 600,000 more in current period
  
• Multi continuous establishments decline
  about 1.1 million in current period
  
• 
  vs. nearly zero in last
  period
  

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Future Directions

• Similar analysis can be performed by States for
  their data.
  
• An analysis of employment growth/decline by age
  of firm for single and multi establishment
  employers would be valuable.
  
• An analysis by size of employer broken down by
  single and multi establishment employers would
  also be valuable.