Tuesday, February 24, 2009

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.

5 Comments:

At 2/24/2009 11:25 AM, Blogger Walt G. said...

Professor Perry said: "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."

Try telling that to a GM worker :)

I like the use of the word "dynamism." Too many people get in a rut and think that everything will always be the same as it has always been. That has never been true. The world changes; people need to be ready for that fact.

 
At 2/24/2009 12:55 PM, Blogger 1 said...

"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"...

For those who don't want to look for work right away there is alway the following...

From the Obama Economic Stimulus blog: Learn exactly how I got this check for $12,759.62!

Get the money that the government owes you. Each year, the US Government gives out billions and billions in Grants to people just like you. No one ever thinks they can really get a grant,which makes it easier for the few people who actually try!

 
At 2/24/2009 1:40 PM, Blogger lineup32 said...

So then why would tax revenue declining? why would consumption be declining? Why would we be in a recession if employment is so great, I don't understand how these numbers could be so positive and the economic reports so negative.

 
At 2/24/2009 4:47 PM, Anonymous EJ said...

lineup,

Over this period there were still more jobs destroyed then created; hence we are in a recession. The point however of this post was that the economy is very dynamic. Even in a recession millions of jobs are created (just more are lost). For those willing to look for them, skilled in areas where labor is needed, and are ambitious enough to go after them, there are still job oportunities for people. Thats the point.

 
At 2/25/2009 9:22 PM, Blogger @sethstorm said...


Try telling that to a GM worker :)

Try telling that to a GM dominated town- significantly further south on I-75 from Detroit.

What people don't tell you about this dynamism is the lag time. Nor do they care about the non-humanity of it.

More like a lower standard of living if you think of it.

 

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