The unprecedented rise of business applications during the COVID-19 pandemic has raised a number of questions as to what will become of these businesses – whether they become employers, how long it takes them to do so, and how new employer businesses are shaping the landscape of employer firms across the nation. In this report, we discuss findings from the Kauffman New Employer Business Indicators, which examine 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.

The Kauffman New Employer Business Indicators include four indicators and a summary index:

• Rate of new employer business actualization – the share of business applications that become employers within two years of filing an application. In 2021, the national rate of new employer business actualization was 9.16%, meaning that for every 100 new business applications, about 9 of these became employers within two years.
• Rate of new employer business – the number of startups that become new employers for every 100 people. In 2021, the national rate of new employer businesses was 0.15, meaning that approximately 150 new employer businesses were formed for every 100,000 people.
• New employer business velocity – the average amount of time, in quarters, that passes between filing a business application and hiring a first employee among those businesses that become employers within the first two years. New employer business velocity in the United States in 2017 was 2.06, meaning that it took new employer businesses, on average, 2.06 quarters, or roughly 6 months, from the time they filed a business application to the time they hired their first employee.
• Employer business newness – new employer businesses as a share of all employer firms. Employer business newness in 2019 was 6.98%, meaning that new employers were about 7% of all employer firms.

New Employer Business Actualization Speed (NEBAS) Index – reflects both the emergence (actualization) and speed (velocity) of new employer businesses. The NEBAS Index for 2017 for the U.S. was 0.70.

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