Maine Job Creation from the Birth or Death of Establishments
Read the full report | What is Maine’s business climate? That is an age-old question usually answered with one anecdote or another. Depending on one’s vantage point, Maine’s business climate could be too hot, too cold or just about right. Unfortunately, creating public policy using anecdotes often leads to a “shotgun” approach to legislation where a lot of tiny problems gets addressed but no one is able to put together a view of the bigger picture. A large part of the problem has been a lack of detailed empirical data on Maine’s businesses—until now.
This study is the second of many studies that will use a powerful new database of Maine’s businesses called the National Establishment Time-Series (NETS) Database. NETS is based on the far-reaching Duns & Bradstreet Marketing Information file that has nationally tracked more than 36.5 million establishments between 1989 and 2007. The file tracks businesses via an assigned “DUNS number,” the business equivalent of a personal Social Security number. As such, the NETS database is the most comprehensive establishment-level census available.
Maine’s state level file contains data for 161,351 commercial, not-for-profit and government establishments between 1989 and 2007. As of 2007, approximately half of those establishments (84,326) still exist with the remainder having either closed, moved out-of-state, or consolidated. These Maine establishments, in 2007, employed 702,028 people.
Every year in Maine, existing establishments close their doors while new ones take their place. In the process, the employees of these establishments must make the transition from their old employer to a new employer. Some may end up working within the same industry or region, other will have to retrain and/or relocate. Understanding this dynamic process relating to the opening and closing, hereafter “births and deaths,” of establishments is vital to ensuring public policy aids rather than hinders job creation. This study finds that establishment births are the most vital factor in the economy’s ability to create new jobs.