June 12, 2012
-- TALLAHASSEE, Florida -- New employment dynamics data sources
are providing a new and more nuanced understanding of the labor market than ever before. An accurate understanding of labor markets is critical to the success of workforce professionals, recruiters, businesses, and many others. The Business Employment Dynamics data
produced by the Bureau of Labor Statistics show the extent to which jobs are created or destroyed by employers. An employer experiencing a growth in the number of employees from one quarter to the next is defined as creating the added jobs; while an employer experiencing a reduction in the number of employees from one quarter to the next is defined as destroying jobs.
Figure one shows the net job gains (job creation) and net job losses (job destruction)
for the US since the third quarter of 1992. The area between the lines on the chart equals the net change in employment over a quarter. The chart clearly shows the recessionary and recovery periods since 1992. The depth of the great recession is evident as the gap between jobs destroyed and jobs created. Job Creation
generally rose throughout the 1990s expansion, and was relatively flat during the 2000s expansion. Since the end of the great recession, job creation had remained at very low levels, barely above the recessionary trough. These data only go back to 1992, but over those 20 years, job creation is at its lowest levels, except for the first quarter of 2009, the very trough of the recession.Job Destruction
has a different pattern. As expected, jobs were destroyed at a high rate during both recessions, particularly during the great recession; but declined precipitously once the recession passed the trough. During the 2001 recession the number of jobs destroyed by employers peaked, dropped sharply, paused, and then dropped again. In this latest recession, the great recession, the peak in job destruction was followed by a very sharp drop, and the number of jobs destroyed continued to drop through the end of the data series (2011-Q-II) .
These data suggest that the recovery from the great recession looks a lot like the recovery from the 2002 recession. It is characterized by sluggish job creation coupled with low levels of job destruction. Growth is more a matter of keeping existing jobs and less a result of creating new jobs. The recovery of the 1990s, in contrast, was led by high levels of job creation in the national economy. For example, in the third quarter of 1998, the US economy created 8.5 million jobs, or 8.1% of all jobs. In the last period for which these data are available, the second quarter of 2011, the US created 6.9 million jobs, or 6.4% of all jobs.
Job creation in the US economy is near the lowest levels in twenty years, despite the end of the great recession. While the historically low level of job destruction is a positive aspect of the recovery, it does not seem as if the economy will truly recover until employers start adding and creating jobs at much higher levels.