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New Employer Business Indicators in the United States: National and State Trends (2020)

The Kauffman New Employer Business Indicators series provides users with measures to track trends surrounding the emergence of new employer businesses, their representation in the population and among all firms, and the time it takes these businesses to become employers. Explore the national and state trends from 2020.

Written by Travis Howe, Sameeksha Desai and Hayden Murray

The New Employer Business Indicators are constructed using publicly available data from three administrative data sources – the Business Formation Statistics, Business Dynamics Statistics, and Population Estimates Program. These sources include data on people and new and established businesses at the state and national levels, and can include projected data for some years.

What are the New Employer Business Indicators?

  • New employer business actualization – The share of business applications that become employers (achieve a first payroll) within eight quarters of the application.
  • Rate of new employer businesses – The number of startups that become employers for every 100 people.
  • New employer business velocity – The average amount of time it takes, in quarters, between business application and first payroll, conditioned on a business making payroll within eight quarters.
  • Employer business newness – New employer businesses as a share of all employer firms.

Report Highlights:

  • In 2020, the national rate of new employer business actualization was 9.41%, meaning that between 9 and 10 out of every 100 new business applications are projected to make first payroll within eight quarters. This was down from 10.69% in 2019 and 11.09% in 2018.
  • In 2019, the national rate of new employer businesses was 0.11, indicating that there would be about 110 new employer businesses for every 100,000 people. This was down from 0.12 in 2018.
  • In 2016, the national new employer business velocity was 2.01, indicating that, on average, it took a little over six months between business application and first payroll. This was slightly larger than the national new employer business velocity in 2015 (1.98) and in 2014 (1.94).
  • In 2018, national employer business newness was 7.01%, meaning that about 7 out of every 100 employer businesses were expected to be new businesses that made a first payroll within their first eight quarters. This was up from 6.65% in 2017 and 6.63% in 2016.
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