2018 New Employer Business Report: National and State Trends

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. The series provides users with measures to track trends in the emergence of these businesses, their representation in the population and among all firms, and the time it takes these businesses to become employers. 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. Rate of new employer business actualization: This indicator reflects the proportion of all new business applications that become employer businesses within eight quarters. 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. Rate of new employer businesses: The rate of new employer businesses reflects new employer businesses in the population. 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 in 2018, with a median of 0.12 across states. New employer business velocity: New employer business velocity is the average amount of time it takes, in quarters, for a new business application to become an employer, assuming it does so within eight quarters. 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. Employer business newness: Employer business newness captures new employer businesses as a share of employer firms, regardless of age. 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 in 2016, with a median of 5.99%. We also calculate the New Employer Business Actualization Speed (NEBAS) Index, a snapshot reflecting both the emergence (actualization) and speed (velocity) of new employer businesses. In 2014 (the most recent year for which data are available), the national NEBAS index was 0.76. The value of this measure in 2014 ranged from 0.60 in Washington, D.C., to 0.93 in South Dakota, with a median of 0.79 across states. The Kauffman New Employer Business Indicators series has been compiled in an effort to provide information on new employer businesses and provides users with measures to track trends in the emergence of these businesses, their representation in the population and among all firms, and the time it takes these businesses to become employers.