New Employer Business Report: National and State Trends (2018)

The Kauffman New Employer Business Indicators series has been compiled in an effort to provide information on new employer businesses, a subset of all entrepreneurial activity. This report presents indicators for the United States, and all 50 states and Washington, D.C., beginning in 2005 and through the most recent year of data available for each metric.

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 2018, the national rate of new employer business actualization was 11.33%, meaning that for every 100 new business applications, about 11 businesses made a first payroll within eight quarters. For the same year, the value of this indicator ranged from 6.59% in Delaware to 17.36% in Washington, with a median of 11.30% across states.
The national rate of new employer businesses was 0.12 in 2018, meaning there were 120 new employer businesses for every 100,000 people. This ranged from 0.07 in West Virginia to 0.31 in Wyoming, with a median of 0.12 across states.
In 2014, the national new employer business velocity was 1.92, indicating that, on average, approximately six months pass between business application and first payroll. For the same year, the value of this indicator ranged from 1.46 in North Dakota to 2.37 in Washington, D.C., with a median of 1.83 across states.
In 2016, national employer business newness was 6.8%, meaning that almost 7 out of every 100 employer businesses were new businesses that made a first payroll within the first eight quarters. This ranged from 4.44% in Washington, D.C., to 8.67% in Nevada, with a median of 5.99% across states.