Here’s an odd quirk of this pandemic-recession; while there’s been a surge of business closures, there’s also been a surge of new business formations.
The Wall Street Journal highlighted this recently. Applications for employer ID numbers are up 19% so far this year, at 3.2 million as of mid-September, versus just 2.7 million at the same time last year.
Now, some of those new “businesses” may in fact just be independent contractors and gig workers who aren’t going to employ other people. But applications by “likely employers” are also running up 12% versus the same period last year, to 1.1 million. What’s more, they’re running at the strongest pace since 2007 (chart below).
Let’s be sure to note this won’t fully offset the loss of approximately 700,000 businesses this year, according to economist Steven Hamilton of George Washington University. Less than half of new businesses typically make it longer than