Job creation and destruction in Massachusetts: Gross flows among industries

The Massachusetts economy has experienced wide swings in employment in the 1990s, losing over 10 percent of existing jobs in the 1990-91 recession (which began locally in 1989) and not surpassing its pre-recession job peak until early 1998. Within individual sectors of the economy, the losses and gains have been even greater, with many manufacturing industries losing jobs almost nonstop while some nonmanufacturing industries have expanded markedly. This article examines these employment swings and attempts to better understand their dynamic underpinnings by disaggregating them into the simultaneous job creation and job destruction that underlie any net change. The author finds that while sharply higher job destruction dominated the flows in the recession, most of the action in the expansion has been in job creation, especially in nonmanufacturing. She also finds that job creation and job destruction have been highly persistent. Five-sixths of the jobs that were created in Massachusetts nonmanufacturing industries over the 1988-89 period lasted two or more years. One key fact emerging from the analysis is that manufacturing plays a relatively small, and shrinking, role in economic change in Massachusetts.