Established in 1915, Monthly Labor Review is the principal journal of fact, analysis, and research from the Bureau of Labor Statistics, an agency within the U.S. Department of Labor.

Each month, economists, statisticians, and experts from the Bureau join with private sector professionals and State and local government specialists to provide a wealth of research in a wide variety of fields—the labor force, the economy, employment, inflation, productivity, occupational injuries and illnesses, wages, prices, and many more.

The December Review
Our yearend issue for 2008 contains a rich variety of articles that summarize, in each case, years of research intended to shed light on how businesses come and go, how they operate, and which of their activities might most likely be shifted overseas.

We begin this month with a focus on a topic of perennial interest for observers of “job creation” and “job destruction,” namely, the measurement of business “births” and “deaths” for entire firms or individual business establishments. Akbar Sadeghi describes the culmination of more than 2 years of research on the development of methods and concepts that are designed to illuminate aspects of business formation and survival.

The dynamism of the United States economy is legendary, and data from the Bureau of Labor Statistics Business Employment Dynamics program have served to flesh out an empirical portrait of precisely how job gains and losses relate to business births and deaths. The alternative definitions and methods described in the article provide another step forward in our understanding of this vitally important subject, a topic all the more relevant given current events in the Nation’s—and, indeed, the world’s—labor markets.

How do young adults spend their money? And how does this affect their economic status? Geoffrey Paulin examines data from the Consumer Expenditure Survey for this important demographic group (single, nevermarried persons aged 21 to 29 years), who typically are facing the challenges of starting careers, establishing initial financial footholds, and determining what kinds of purchases are essential at this stage in their lives. He deepens his analysis by comparing spending patterns for this target group in recent years with their counterparts in the mid-1980s, and ponders just which group might be considered better or worse off economically.

In an attempt to shed more light on how workplaces and industries are changing, a classification system has been developed that describes basic business processes of firms and the business functions that are associated with those processes. As Sharon P. Brown describes, this system is now being used in the BLS Mass Layoff Statistics (MLS) program. The system is derived from existing literature on business processes, models of firms’ activities, current research on outsourcing, the results of a feasibility study conducted by the program, and the program’s ongoing collection of relevant information. In this article, mass layoff events are examined in light of changes in specific business functions, such as human resources management.

In a somewhat similar vein, Roger J. Moncarz, Michael G. Wolf, and Benjamin Wright summarize efforts that have been underway for a number of years to identify service-providing occupations that might be susceptible to “offshoring.” They describe a system designed to identify characteristics that make an occupation vulnerable, and then they review past and projected patterns of employment and wages for 160 such jobs.

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Volume 131, Number 12
December 2008

The births and deaths of business establishments in the United States 3
The results of BLS research on various methods for counting births and deaths of establishments and businesses will allow better measurement of U.S. entrepreneurship
Akbar Sadeghi

Expenditure patterns of young single adults: two recent generations compared 19
Differences in spending patterns for young, never-married adults in 2004–05 and their counterparts in 1984–85 may reflect differences in demographics
Geoffrey Paulin

Business Processes and Business Functions: a new way of looking at employment 51
A new BLS classification system used in conjunction with the Agency’s Mass Layoff Statistics program yields fresh information
Sharon P. Brown

Service-providing occupations, offshoring, and the labor market 71
A BLS analysis identifies 160 service-providing occupations and ranks their susceptibility to offshoring
Roger J. Moncarz, Michael G. Wolf, and Benjamin Wright

Departments
Labor month in review 2
Book reviews 87
Current labor statistics 89
Index to volume 131 165

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The Births and Deaths of Business Establishments in the United States
Bureau of Labor Statistics economists have tested various methods for defining and counting births and deaths of establishments and businesses; the results of their research will allow BLS to better measure entrepreneurship in the United States

The role of entrepreneurs in the American economy is legendary. One of the unique characteristics of the U.S. economic system is the freedom to start a business relatively easily and quickly.

Indeed, one of the engines of growth is the employment and wages generated by new businesses. It is also an economic reality that businesses close frequently. The interplay of business births and deaths is not fully understood with the existing range of economic measures available from U.S. statistical agencies.

The story of entrepreneurship also entails a neverending search for new and imaginative ways to combine the factors of production into new methods, processes, technologies, products, or services. These efforts lead to the growth of new businesses, the decline of less productive ones, and the reallocation of resources from less profitable businesses and establishments to more profitable ones.

This process is often referred to as “creative destruction,” a concept popularized by the economist Joseph Schumpeter.

This article describes more than 2 years of research and development of concepts and methods. These findings lead towards a greater understanding of the role and dynamics of business formations and business deaths, of business survival, and of the changing contribution of American entrepreneurs. This work is expected to lead to the publication of new data series with quarterly estimates of business births and deaths under the BLS Business Employment Dynamics (BED) program, an outgrowth of the Quarterly Census of Employment and Wages (QCEW) program.

In this article, the terms “births” and “deaths” refer to the births and deaths of entire firms or individual establishments. When the word “business” is used in the context of this article, it refers to both establishments and firms. However, establishment births and deaths are the article’s main focus. ...

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