The change in the number of jobs over time is the net result of increases and decreases in employment that occur at all businesses in
the economy. BED statistics track these changes in employment at private business units from the third month of one quarter to the third month of the next. Gross job gains are the sum of increases in employment from expansions at existing units and the addition of new jobs at opening units. Gross job losses are the result of contractions in employment at existing units and the loss of jobs at closing units. The difference between the number of gross jobs gained and the number of gross jobs lost is the net change in employment.
Private Sector Establishment-Level Gross Job Gains and Gross Job Losses
Opening and expanding private sector business establishments gained 6.7 million jobs in the fourth quarter of 2008, a decrease of 110,000 from the previous quarter. Over the quarter, expanding establishments added 5.4 million jobs while opening establishments added 1.3 million jobs.
Gross job losses totaled 8.5 million, an increase of 713,000 from the previous quarter. During the quarter, contracting establishments lost 7.0 million jobs, while closing establishments lost 1.5 million jobs.
The difference between the number of gross jobs gained and the number of gross jobs lost yielded a net change of -1,755,000 jobs in the private sector for fourth quarter 2008.
Gross job gains represented 6.0 percent of private sector employment, while gross job losses represented 7.6 percent of private sector employment.
Major Industry Sector Gross Job Gains and Gross Job Losses
From September 2008 to December 2008, gross job losses exceeded gross job gains in all but two industry sectors: utilities and education and health services.
Goods-producing. Expanding and opening establishments in the goods-producing sectors accounted for 1,302,000 jobs gained, and contracting and closing establishments accounted for 2,063,000 jobs lost. This net loss of 761,000 jobs was the tenth consecutive quarter of net loss for these sectors of the economy.
Construction. In construction, gross job gains fell over the quarter to 639,000. This was the lowest level of gross job gains since the series began in third quarter of 1992. The construction sector experienced a net loss of 337,000 jobs, as gross job losses increased by 100,000 to 976,000. This was the seventh consecutive quarter of net job losses in this sector.
Manufacturing. Gross job gains fell to 378,000 while gross job losses increased to 801,000. The net loss of 423,000 jobs was the tenth consecutive quarter of net job losses in the manufacturing sector.
Service-providing. In the service-providing sectors, gross job gains decreased to 5,410,000 and gross job losses increased to 6,404,000, resulting in a net loss of 994,000 jobs. Job gains at expanding establishments decreased to 4,280,000 jobs, while job losses at contracting establishments increased to 5,226,000 jobs.
Retail Trade. In retail trade, gross job gains decreased to 835,000. Gross job losses increased to 1,181,000 for a net loss of 346,000 jobs. This was the largest net loss in this industry since the series began in 1992, driven by the lowest total of gross job gains in the history of this series.
Education and Health Services. Gross job gains increased to 841,000 jobs in the fourth quarter, while gross job losses decreased to 665,000. This industry sector is the only one which has experienced a net positive change in every quarter since this series began in 1992.
Financial Activities. Gross job losses exceeded gross job gains in the financial sector for the seventh consecutive quarter. Altough gross job gains increased to 388,000, gross job losses also increased to 497,000, resulting in a net loss of 109,000 jobs in the fourth quarter.
Number of Establishments Gaining and Losing Employment
Another way to look at the dynamics of business activities is to monitor the number and proportion of business units that are growing and declining. In the fourth quarter of 2008, the number of establishments losing jobs exceeded the number of establishments gaining jobs.
Of the 7.0 million active private-sector establishments, a total of 2,091,000 establishments lost jobs from September 2008 to December 2008. Of these establishments, 1,686,000 were contracting establishments and 405,000 were closing establishments. Of the establishments gaining jobs, 1,376,000 establishments were expanding and 368,000 establishments were opening, resulting in 1,744,000 establishments gaining jobs.
The number of closing establishments exceeded the number of opening establishments, resulting in a net loss of 37,000 private-sector establishments during the quarter. This was the seventh quarter that there has been a net decline in the number of establishments since 1992, and the fifth time a decline occurred in the past seven quarters.
Establishment Births and Deaths
From September 2008 to December 2008, a total of 189,000 new private sector nonfarm business establishments created 794,000 jobs. This was 2,000 more establishment births than in the prior quarter, but 19,000 fewer jobs were gained from these births. The jobs created by these new establishments represent 11.8 percent of total gross job gains. The historical time series of birth data shows the number of establishment births has remained around 200,000 every quarter, while employment from births dropped from a high of 1.3 million in the first quarter 1998 to a low of 794,000 in the fourth quarter of 2008.
Gross Job Gains and Losses by State
In the fourth quarter of 2008, Louisiana and North Dakota experienced net employment growth, while 48 states, the District of Columbia, Puerto Rico, and the Virgin Islands experienced net job losses. Alabama, Indiana, Michigan, Nevada, and South Carolina showed rates of gross job gains below the U.S. rate of 6.0 percent and rates of gross job losses above the U.S. rate of 7.6 percent.
Firm-level Gross Job Gains and Gross Job Losses by Size Class
From September 2008 to December 2008, the share of gross job gains accounted for by firms with 1 to 4 employees rose from 16.1 to 16.8 percent. Firms with 1,000 or more employees experienced an increase in the share of gross job losses from 19.4 to 20.7 percent.
