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Survival and Longevity in the Business Employment Survival and Longevity in the Business Employment Dynamics Data is a detailed research summary published in the Monthly Labor Review (May 2005) by economist Amy E. Knaup of the U.S. Bureau of Labor Statistics. It analyzes how new business establishments founded in the second quarter of 1998 survived and evolved over their first four years, using the extensive microdata of the BLS Quarterly Census of Employment and Wages (QCEW) and its derived Business Employment Dynamics (BED) series.
The study follows 212,182 new establishments—carefully defined as true births with no previous employment and no prior ties to existing firms—to track their survival, growth, employment patterns, and sectoral differences. It links each establishment quarter-to-quarter, even through mergers or acquisitions, ensuring accurate continuity of data.
Core Findings
Survival Rates:
66% of new establishments survived at least 2 years.
44% survived 4 years.
Survival rates varied surprisingly little by sector, contradicting assumptions that certain industries (like restaurants) fail dramatically faster.
The information sector had the lowest 4-year survival (38%), while education and health services had the highest (55%).
Conditional Survival:
Year-over-year survival probabilities showed no strong upward trend—firms that survived one year were not significantly more likely to survive the next, with conditional survival hovering around 81–83% nationally.
Employment Dynamics:
The study reveals that while survival rates were stable across industries, employment growth patterns diverged sharply:
The information sector had the highest growth among survivors (211% average peak growth), despite weak survival rates.
Leisure and hospitality, though large and fast-growing in establishment count, showed limited employment growth.
Manufacturing, thought to be declining, actually maintained strong employment among its surviving establishments.
Sectoral Differences:
The report uses NAICS supersectors to compare industries on multiple dimensions:
Initial employment contributions
Peak employment
Employment stability
Number of establishments
Growth trends through the recession of 2001
Sectors like professional and business services showed average survival rates but excellent employment performance, becoming one of the largest contributors to job growth among young firms.
Methodology Highlights
Establishments were tracked from 1998–2002, including through the 2001 recession.
Data excluded seasonal reopenings, administrative reclassifications, and new branches of existing firms to ensure a pure cohort of independent business births.
Mergers and spin-offs were traced through successor establishments to maintain consistent longitudinal records.
Analyses included survival curves, conditional survival tables, employment-growth tables, and cross-sector comparisons of job flows.
Overall Significance
The article demonstrates that:
Most new businesses fail early, but the rate of failure is remarkably similar across industries.
Survival alone is not a reliable measure of a sector’s economic health—employment growth tells a different story.
Even during economic downturns, some sectors (e.g., manufacturing and business services) maintain steady employment levels in surviving firms.
The BED data provide an unprecedented window into firm dynamics at the establishment level, revealing patterns that macro-level business statistics obscure.
If you’d like, I can also provide:
📌 A short executive summary
📌 A sector-by-sector comparison chart
📌 A simplified version for non-economists
📌 A cross-document comparison with your other longevity-related reports
Just tell me!
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