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December 2005, Vol. 128, No. 12
Employment dynamics of individual companies versus multicorporations
Shail Butani, George Werking, and Vinod Kapani
JOBS! JOBS! JOBS! The U.S. economy had tremendous job growth during most of the 1990s. Between March 1992 and March 2001,1 the private sector added 21.5 million jobs, an average gain of 2.4 million jobs per year, and unemployment rates slid to about 4 percent. In contrast, between March 2001 and March 2003,2 the economy entered a contraction period, losing approximately 3.5 million jobs, that is, an average loss of 1.75 million jobs per year, with unemployment rates edging upwards to about 6 percent. Subsequently, the job market rebounded, with a gain of 786,000 jobs between March 2003 and March 2004, while the unemployment rate ticked to just below 6 percent.
The sharp contrast from the prolonged expansion period to the contraction period has left many questions to consider, such as: What kind of employers created the jobs that led to the job boom and extremely low unemployment rates in the 1990’s? Were these single establishment employers or parts of large nationwide multi-establishment companies? Were the employers who led the expansion also leading the downturn of jobs from March 2001 through March 2003? Who were the employers leading the growth in jobs during the turning point period from March 2003 through March 2004? This research provides answers to these and other questions.
This article classifies employers as single- versus multi-establishment firms, which are further broken down into continuous establishments—those in existence during the past and current year in March—and newly opened or closed establishments. All measures are disaggregated by major industrial sectors. The analysis uses traditional measures of net job gains and net job losses to profile the employment contribution by type of employer during the expansion period, March 1992 through March 2001; the contraction period, March 2001 through March 2003; and the recent post-contraction period, March 2003 through March 2004.
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1 During the expansion period, total change for single establishment firms is 13.1 million and 8.4 million for multiestablishment firms, or a total growth of 21.5 million for the private sector. See appendix table A–1.
2 During the, contraction period, total change for single establishment firms is 362,000 and a loss of 3,827,000 for multi-establishment firms, or a total loss of 3.5 million jobs in the private sector. See appendix table A–1.
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