Quarterly U.S. Data on State Business Employment Dynamics

Although the CES is used as the standard national economic indicator of employment for the economy, it is limited because it does not reveal if the net job change was a result of job gains or job losses. The BED data, on the other hand, separates net change in employment into job gains and job losses. Using longitudinally linked establishment data, the BED calculates net change in employment as:

Change in Employment = Job Gains – Job Losses

or

Change in Employment = (expansion of jobs at existing establishments + jobs added at new establishments) – (contractions of jobs at existing establishments + jobs lost at closing establishments)

Separating net job changes into job gains and job losses this way highlights the forces behind job growth. For example, in the table below, Ohio has below-average job gains and below-average job losses. The Ohio economy has certainly experienced slow and sometimes negative growth in recent history, and high-profile reports of layoffs might lead one to think that the cause of the poor performance was the loss of jobs. In fact, according to the BED, Ohio has a job loss rate that is lower than the national average. Thus, employment growth in the state is slow because of below-average job gains.

This kind of data can be used by policymakers to decide what programs to focus on, e.g., attracting new firms to the state or retaining existing firms. The data can also be used to compare the relative stability of state labor markets. For example, Alaska has very high rates of job gains and job losses, while Connecticut has very low rates. Thus, the Alaskan labor market "churns" more than the Connecticut labor market, and the latter would be considered much more stable.