Labor Market Dynamism Brings Us Net Gains
From March 2008 to June 2008, the number of job gains from opening and expanding private sector establishments was 7.3 million, and the number of job losses from closing and contracting establishments was 7.8 million, according to data on Business Employment Dynamics released today by the Bureau of Labor Statistics.
Opening and expanding private sector business establishments gained 7.3 million jobs in the second quarter of 2008, an increase of 128,000 from the previous quarter. Over the quarter, expanding establishments added 5.9 million jobs while opening establishments added 1.4 million jobs.
Gross job losses totaled 7.8 million, an increase of 351,000 from the previous quarter. During the quarter, contracting establishments lost 6.3 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 -493,000 jobs in the private sector for second quarter 2008.
Note: Over this period, gross job gains exceeded gross job losses in five industry sectors: natural resources and mining, utilities, information, education and health services, and other services.
MP: The Business Employment Dynamics report reveals some interesting information about the constant churning of jobs and the dynamic nature of the market economy, even during recessions. We hear so much about the overall job losses in the economy, that one would almost think that there are no new jobs being created at all. The data tell a different story.
Consider that during the second quarter of 2008, despite the recession, there were almost 6 million new jobs added from existing companies expanding, and almost 1.5 million new jobs created from new businesses opening. Although it is true that there was a net loss of -493,000 jobs in the second quarter, we don't often hear about, or think about, the millions of new jobs that are continually created, even during an economic slowdown.
Recession or not, new jobs are being created all the time, while other jobs are being eliminated or destroyed, due to the dynamic nature of the economy, innovation, entrepreneurship, new technology, etc. Although those workers losing their jobs now won't be appreciating the dynamic nature of the job market, we shouldn't lose sight of the fact that without the dynamism of the market, and without the constant turnover of jobs, we wouldn't gain the significant benefits in the form of increased wealth, greater prosperity and a higher standard of living that market dynamism brings.