Historically Large Decline in Job Creation from Startup and Existing Firms in the 2008-2009 Recession

The Census Bureau's Business Dynamics Statistics provides data on business dynamics for U.S. firms and establishments with paid employees. This briefing highlights some key features of the most recent BDS update, which now has data through 2009—the trough of the recent recession.

Fifth in a series of reports using data from the U.S. Census Bureau's Business Dynamics Statistics

John Haltiwanger
University of Maryland
Ron Jarmin
U.S. Bureau of the Census
Javier Miranda
U.S. Bureau of the Census

About the Business Dynamics Statistics

The Business Dynamics Statistics (BDS) is a product of the U.S. Census Bureau that measures business openings and closings, startups, job creation, and job destruction by firm size, age, industrial sector, and state. The U.S. economy is comprised of more than six million establishments with paid employees. The population of these businesses is constantly churning—some businesses grow, others decline, and yet others close. New businesses constantly replenish this pool. The BDS monitors this activity to provide a picture of the dynamics underlying aggregate net employment growth. More information about the BDS can be found at http://www.ces.census.gov/index.php/bds/bds_home.


Overview

The BDS shows a very large decline in gross job creation from existing firms as well as startups in the recession. Economy-wide job-creation rates and the job-creation rate from business startups (new firms) are lower in 2009 than in any year since at least 1980. The historically low rates in 2009 reflect many factors, the first of which is the very large decline in overall economic activity.

However, the recession exhibited not only a very large decline in overall activity, but also an especially large reduction in overall job creation, and in job creation from startups and new establishments. The historically low job creation rates from business startups combined with a secular downward trend in job creation and destruction rates over the past few decades contribute to 2009's lower job creation rates.