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The Census Bureau recently released data on the number of new businesses with employees created in 2013, and the figures are disappointing. The rate of creation of new employer businesses in the United States remains depressed.
The Census Bureau’s Business Dynamics Statistics (BDS) database tracks the number of new employer businesses created every year going back to the late 1970s. Using BDS data, I created a chart (below) that shows the rate at which new employers are started every year, both as a fraction of the number of existing businesses with employees and per thousand residents.
The figures show a disturbing trend. Americans are creating companies with paid employees at roughly half the rate they did 35 years ago. New employer firms accounted for 16.5 percent of all employer firms in 1977, but only 8.0 percent in 2013. In 1977, Americans founded 2.6 new employers for every thousand people. By 2013 that rate was down to 1.29.