Understanding Business Dynamics An Integrated Data System for America's Future (2007) / Chapter Skim
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1 Introduction and Motivation
1 Introduction and Motivation
Pages 13-27
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From page 13... ...
1.1 THE CURRENT SYSTEM Data on business activity are useful for a broad spectrum of research, policy, and commercial purposes. Business data provide key building blocks for national and local statistics on income, output, employment, productivity, investment, prices, and other economic measures.
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From page 14... ...
has developed the Business Employment Dynamics database, and now regularly produces quarterly statistics on gross job gains and losses by industry, region, and business size class. The Census Bureau has developed the Quarterly Workforce Indicators, which provide measures of worker separations and accessions and related measures of job gains and losses at the local economy level.
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From page 15... ...
We emphasize the need for better measurement of younger and smaller businesses, including their evolution over time, and richer analyses of their 2Both BLS and the Census Bureau actively used their business registers to study the impact of Hurricane Katrina and to adjust statistics. The detailed location data in their registers permitted measurement and assessment of the businesses impacted by the disaster and to make adjustments to business survey estimates for nonresponse by businesses in the impacted area.
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Given the scarcity of resources for new statistical programs and the desire to keep respondent burden low, key elements of our recommendations stress more effective use of existing data collection instruments, continued development of longitudinal data sets, and greater interagency collaboration in the sharing and linking of data sources within the federal government. We also suggest forms of cooperation between the federal statistical agencies and nongovernmental producers of business data that can yield richer data sets on business characteristics and outcomes while respecting confidentiality requirements.
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Recent natural disasters such as Hurricane Katrina highlight the need for timely information on local business activity. Challenges in the measurement of business activity at the national, industry, and regional level are many and well known.
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Possible sources of these discrepancies include inconsistent treatment of the self-employed, multiple job holders, and off-the-book workers that might show up in household surveys but not in establishment surveys and administrative records. Yet another challenge is to generate the core measures of business activity on a timely basis.
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Thus, there is a close connection between individual business dynamics and the fortunes of workers and their families. Better measurement of business activity, especially at young and small businesses, is also essential for addressing other key economic issues.
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Some of the dramatic outcome differences among young businesses reflect high levels of experimentation with different business methods, production processes, organizational structures, new products, and new locations. Preliminary research findings suggest that each cohort of entering businesses is quite heterogeneous, and that entrants often experiment with a variety of new methods, products, and processes.5 Some of these businesses discover or develop commercially successful innovations, become profitable and expand rapidly, thereby contributing to employment gains and productivity growth.
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For example, the Federal Reserve conducts a survey on small business financing that produces much useful information. The latter survey is a rich data resource for these issues but, with no intended criticism of this very valuable survey instrument, it offers far too little given the above characterization of business dynamics.
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From page 22... ...
this would significantly improve the ability of the FOMC to detect business cycle turning points. Next, consider national and local policy planners attempting to evaluate the impact and plan for the future in response to economic dislocation from natural disasters like Hurricane Katrina or from military base closings and realignment.
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. Nonstatistical purposes include using information for administrative, regulatory, law enforcement, judicial, or other purposes that may affect the rights, privileges, or benefits of a respondent.
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contribute to advances in scientific knowledge. The rationale for the public purpose principle is straightforward: Government administrative record systems and survey databases generate enormous public value in terms of informing decision makers (including those in the private sector)
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When data products help meet business information and planning needs, not only does it contribute to a well-functioning economy, it may enhance the data collection enterprise itself by encouraging higher response rates and participation by businesses. By promoting more effective use of government databases, application of the public purpose principle may produce a more favorable attitude among respondents to government reporting requirements and surveys.
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From page 26... ...
For business data, this points to the need for building up the statistical infrastructure for measuring dynamics. In other words we need to collect information on rapidly growing sectors in the economy where activities of smaller and younger firms are disproportionately important, but for which data coverage is weak.
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Chapter 3 describes the ideal business data system. The discussion is intended to outline the objectives for further development of the system while at least keeping in the background the many factors constraining the collection of and access to business data.
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