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Tuesday, 21 May 2013

Business start ups - the BLS Birth/Death model is wrong

Posted on 04:11 by Unknown

The number of new business start ups is declining and the number of people in those start ups is also declining.

During Bush and Clinton 11.3 people per thousand were employed in new business start ups.
The figure for the Obama period is 7.8 per thousand.

The number of new business start ups per thousand population is also declining.
For a long period the number was around 20.
Recently it has gone down to 19.

The reasons for the decline in new business start ups are :-
Occupational licensing regimes
The increase in other government regulations
General economic uncertainty

New regulations are killing Business Start Ups and Jobs
http://www.insideronline.org/feature.cfm?id=355

New business start ups are declining.
In 2011 there were 543,000 new business start ups.
In 2012 this declined to 513,000.
http://www.cnbc.com/id/100649473

Yet despite this trend of fewer new businesses each year, the BLS are still estimating an increase in their Birth/Model numbers for the number of people employed in new businesses.

If a similar thing is happening now, to 2012, we would expect there to be a decline in the Birth/Deal model of about 20,000 per month - year to year.
This would show a cumulative minus 80,000 jobs from January to April, whereas the Birth/Death model has reported a cumulative +53,000,- an overstatement of 133,000 jobs so far this year.

Aggregated NFP payroll reports. Jobs data without the hype.
http://ian56.blogspot.co.uk/2013/05/aggregated-nfp-employment-numbers-for.html

The Bureau of Labor Statistics have not changed their model when calculating their Birth/Death statistics to reflect trends over the last few years in the declining rate of employment in new business start ups.

This is but one area where the headline numbers reported  for NFP job creation reports are over stated, misleading or just plain wrong.


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