U.S. Department of Labor U.S. Bureau of Labor Statistics 

Summary 10-09 / August 2010

Issues in Labor St atistics

BLS

The role of younger and older

business establishments

in the U.S. labor market

The American economy is characterized by dynamic 

change and a constant churning of workers and 

businesses. Workers enter and exit the labor force and 

change jobs, while new businesses are formed and less 

successful ones fail. New businesses as well as existing 

businesses that are expanding create jobs and introduce 

innovative practices to the marketplace. The long-standing 

debate about the role and impact of small versus large 

businesses has expanded in recent years to consider the 

contributions of younger versus older businesses. New 

data from the BLS Business Employment Dynamics (BED) 

program that measure employment and business survival 

rates by the age of the establishment can help shed light 

on the behavior and contributions of new and young 

businesses compared with their older and more wellestablished counterparts. These new data are tabulated at 

the establishment level. An establishment is an economic 

unit that produces goods or services, usually at a single 

physical location, and engages in one or predominantly 

one activity, whereas a firm can comprise one or more 

establishments under common ownership by a corporate 

parent. 

Age of business establishments

In March 2009, about half of all private sector business 

establishments were 10 years or older, 24 percent 

were 4 to 9 years old, and 27 percent were less than 4 

years old. (See chart 1.) The older establishments—

those more than 10 years old—employed 71 percent of 

total private sector jobs, while establishments 4 to 10 

years old accounted for 18 percent of employment, and 

establishments less than 4 years old accounted for 11 

percent of employment. (See chart 2.) These new data, 

which show the number of establishments and employment 

by age of the establishment, can be used to follow a cohort 

of establishments over time. A cohort is defined in this

report as those establishments that opened during a

given year.

Survival of opening establishments

Chart 3 shows survival rates for the cohort of establishments 

that opened in March 1994. The bars in the chart labeled 

“Establishments” indicate what portion of all openings 

in March 1994 survived to a given year. The bars in the 

chart labeled “Employment” show employment of the 

surviving establishments as a percent of the cohort’s initial 

employment. The data in chart 3 show that 26 percent of 

the establishments that opened in March 1994 were still 

in business in 2009, employing 62 percent of the cohort’s 

initial employment.

Age and survival matrix

Table 1 shows the number of establishments by age of 

the establishment for the 1994–2009 period, and table 

2 shows total private sector employment by age of the 

establishment for the same period. The columns in table 

1 show the distribution of establishments by the age of the 

establishment for a specific year. Among the 5.5 million 
Issues in Labor Statistics August 2010

The role of younger and

older business establishments

in the U.S. labor market

2

Chart 1. Percent of U.S. total private establishments, by establishment age, March 2009 

10 years or older:

49%

4 to 9 years old:

24%

Less than 4 years old:

27%

Chart 2. Percent of U.S. total private employment, by establishment age, March 2009 

10 years or older:

71%

4 to 9 years old:

18%

Less than

4 years old:

11%
Issues in Labor Statistics August 2010

The role of younger and

older business establishments

in the U.S. labor marker

3

active establishments in March 1994, for example, 4.9 

million were born before March 1993 and 550,308 were 

less than a year old, having opened after March 1993 

and before March 1994. In March 2009, the number of 

establishments born before March 1993 was 2.3 million, 

while the number of surviving establishments that opened 

after March 1993 (and having an age of 15 years or less) 

totaled 4.5 million. In March 2009, about two-thirds (66.4 

percent) of all active establishments had opened after 

March 1993. The columns in table 2 show the employment 

distribution by age of establishments. In March 1994, the 

establishments that had been born before March 1993 

employed 87.2 million (95.5 percent) of the total 91.3 

million jobs, whereas in March 2009 the establishments 

that had been born before 1993 employed 57.8 million 

(54.4 percent) of the total 106.2 million jobs. 

The rows in table 1 show a time series of the number of 

establishments for a given age. For example, the first row 

shows the number of establishments that are less than a 

year old—establishments that opened during the previous 

year. The number of establishment openings during the 

period from March 2008 to March 2009 is a record low for 

both the lowest number of openings and the lowest number 

of jobs gained from openings since the data series began 

in March 1994. The number of establishment openings fell 

from 626,845 in March 2008 to 549,377 in March 2009, 

representing 77,468 fewer openings. In March 2008, 

opening establishments accounted for 3.3 million jobs, 

which fell to 2.8 million jobs in March 2009, a decrease 

of half a million jobs. The largest number of openings 

Chart 3. Survival rates of March 1994 annual openings

120

100

80

60

40

20

0

Survival Rates

 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 200 2008 2009

20

18

16

14

12

10

8

6

4

2

0

Average size of survivors

Establishments Employment Average size of survivors
Issues in Labor Statistics August 2010

The role of younger and

older business establishments

in the U.S. labor market

4

occurred in March 2006, when 667,341 establishments 

opened representing 3.6 million jobs. The largest number 

of jobs attributable to openings occurred in March 1999, 

when 609,569 establishments opened with 4.7 million 

jobs. (See tables 1 and 2.) Since then, the number of jobs 

from establishment openings has been on a downward 

trend, falling sharply in the 2001 recession and then again 

in 2009 during the recent economic downturn.

The diagonals in table 1 can be used to determine 

the number of establishment deaths for different cohorts. 

For the cohort of 550,308 establishments that opened 

in March 1994, for example, 439,281 had survived for 1 

year and thus 111,027 had gone out of business. After 

15 years (March 2009), 143,308 establishments (26.0 

percent) of the 550,308 establishments that opened 

in March 1994 were still in business. The statistics on 

the diagonals of table 2 show the employment levels of 

surviving establishments. The 550,308 establishments 

that opened in March 1994 opened with about 4.1 million 

jobs. The 439,281 establishments that survived for 1 

year had 4.1 million jobs in March 1995, and the 143,308 

establishments that survived for 15 years had employment 

of 2.6 million in March 2009, or 61.9 percent of the cohort’s 

initial employment.

The trend line in chart 3 labeled “Average size of 

survivors” is calculated by dividing the employment 

levels in table 2 by the number of establishments in table 

1. This line shows that for the cohort of establishments 

that opened in March 1994, the average size of surviving 

establishments is increasing over time: from 7.5 

employees per establishment in 1994 to 17.8 employees 

per establishment in 2009. There are at least two possible 

reasons that the average size of surviving establishments 

increases over time. First, the employment levels at the 

surviving establishments are likely to grow from their 

initial levels. Second, if smaller establishments are more 

likely to die and larger establishments are more likely to 

survive, the composition effect of a declining number of 

smaller establishments and a growing number of larger 

establishments will increase the average size of surviving 

establishments.

This Issues paper was prepared by economists Carol 

Leming, Akbar Sadeghi, James R. Spletzer, and David 

M. Talan of the Office of Employment and Unemployment 

Statistics, Bureau of Labor Statistics. The data in this 

report are from the Business Employment Dynamics 

(BED) program at the Bureau of Labor Statistics. The 

data by age of establishment highlighted in this report are 

annual (not quarterly), with a reference date of March, and 

are created by comparing employment and the number 

of establishments from March in the reference year to 

March in the previous year. The age of establishments is 

defined using the first quarter in which an establishment 

reports positive employment in the Quarterly Census of 

Employment and Wages (QCEW). The BED data series 

starts in the second quarter of 1992, and thus the first 

measurable annual (March to March) comparison is March 

1993 to March 1994. For more information, contact Akbar 

Sadeghi. Email: Sadeghi.akbar@bls.gov; Telephone: 

(202) 691-5094. Information in this report will be made 

available to sensory-impaired individuals upon request. 

Voice phone: (202) 691-5200. Federal Relay Service: 

1-800-877-8339. This report is in the public domain and 

may be reproduced without permission.
Issues in Labor Statistics August 2010

The role of younger and

older business establishments

in the U.S. labor market

Table 1. U.S. total number of private sector establishments, by age

Age class March 

1994

March 

1995

March 

1996

March 

1997

March 

1998

March 

1999

March 

2000

March 

2001

New openings 

 Less than 1 year old 550,308 584,184 588,326 614,966 609,584 609,569 634,276 630,875

Surviving establishments

 1 year 439,281 462,440 464,613 484,847 491,318 485,427 500,436

 2 years 376,955 400,420 397,930 422,260 421,058 412,144

 3 years 336,753 353,160 355,231 372,473 367,167

 4 years 301,872 319,643 318,382 329,015

 5 years 276,271 289,156 287,106

 6 years 252,261 263,137

 7 years 231,645

 8 years

 9 years

 10 years

 11 years

 12 years

 13 years

 14 years

 15 years

 Born before March 1993 4,929,617 4,594,292 4,288,218 4,036,175 3,787,248 3,585,936 3,383,450 3,198,075

Total 5,479,925 5,617,757 5,715,939 5,852,927 5,934,641 6,060,228 6,156,483 6,219,600

5
Issues in Labor Statistics August 2010

The role of younger and

older business establishments

in the U.S. labor market

Table 1. Continued—U.S. total number of private sector establishments, by age

Age class March 

2002

March 

2003

March 

2004

March 

2005

March 

2006

March 

2007

March 

2008

March 

2009

New openings 

 Less than one year old 612,069 609,378 602,667 632,510 667,341 656,107 626,845 549,377

Surviving establishments

 1 year 476,603 480,147 482,456 476,970 505,825 522,402 506,611 466,388

 2 years 420,217 407,194 413,127 417,061 416,725 434,755 441,487 415,846

 3 years 359,735 370,872 362,695 368,526 374,177 369,646 380,100 374,366

 4 years 326,578 324,227 336,672 330,536 336,474 337,285 329,503 329,953

 5 years 295,624 296,814 297,045 308,498 303,956 308,761 305,318 290,769

 6 years 261,977 271,612 274,497 274,316 286,307 280,488 283,457 272,627

 7 years 241,818 242,268 252,155 255,544 256,621 266,809 259,839 256,966

 8 years 214,308 225,660 226,438 234,907 240,228 239,862 248,303 236,939

 9 years 200,055 212,037 212,058 222,482 225,603 224,308 228,026

 10 years 188,375 198,987 200,103 209,328 212,103 206,452

 11 years 178,224 188,367 189,026 197,478 196,550

 12 years 170,401 178,396 178,765 183,526

 13 years 161,338 169,327 167,999

 14 years 153,018 158,579

 15 years 143,308

 Born before March 1993 3,031,547 2,894,237 2,771,252 2,654,487 2,557,451 2,459,019 2,365,639 2,261,431

Total 6,240,476 6,322,464 6,419,416 6,542,624 6,726,458 6,838,825 6,882,101 6,739,102

6
Issues in Labor Statistics August 2010

The role of younger and

older business establishments

in the U.S. labor market

Table 2. U.S. total private sector employment, by establishment age

Age class March

1994

March

1995

March

1996

March

1997

March

1998

March

1999

March

2000

March

2001

New openings 

 Less than one

 year old 4,124,589 4,356,753 4,358,117 4,631,669 4,698,777 4,702,798 4,648,531 4,279,589

Surviving establishments

 1 year 4,140,247 4,310,177 4,320,141 4,688,205 4,703,529 4,745,334 4,640,059

 2 years 4,015,342 4,264,561 4,243,438 4,606,320 4,706,632 4,565,297

 3 years 3,953,116 4,178,140 4,172,895 4,560,353 4,505,182

 4 years 3,872,507 4,078,687 4,116,944 4,337,230

 5 years 3,741,091 4,012,095 3,943,158

 6 years 3,677,756 3,845,425

 7 years 3,531,829

 8 years 

 9 years 

 10 years 

 11 years 

 12 years 

 13 years 

 14 years 

 15 years 

 Born before

 March 1993 87,161,030 86,090,920 83,851,788 82,239,976 80,544,590 78,675,066 77,189,256 74,855,770

Total 91,285,619 94,587,920 96,535,424 99,409,463 102,225,657 104,680,386 107,656,901 108,503,539

7
Issues in Labor Statistics August 2010

The role of younger and

older business establishments

in the U.S. labor market

Table 2. Continued—U.S. total private sector employment, by establishment age

Age class March

2002

March

2003

March

2004

March

2005

March

2006

March

2007

March

2008

March

2009

New openings 

 Less than one

 year old 4,163,828 3,842,243 3,595,392 3,579,940 3,567,959 3,469,671 3,287,287 2,795,992

Surviving estab-

 lishments

 1 year 3,977,966 3,952,078 3,769,430 3,567,784 3,625,577 3,524,413 3,359,194 2,954,637

 2 years 4,242,325 3,802,166 3,851,857 3,725,214 3,567,546 3,549,678 3,355,107 3,029,566

 3 years 4,207,021 4,058,894 3,739,230 3,819,766 3,697,327 3,478,056 3,393,578 3,011,326

 4 years 4,136,490 3,976,764 3,951,418 3,689,933 3,815,787 3,626,492 3,317,487 3,049,427

 5 years 3,962,604 3,899,287 3,863,841 3,871,419 3,657,766 3,722,550 3,475,703 3,008,940

 6 years 3,637,556 3,712,108 3,794,035 3,777,403 3,863,535 3,565,983 3,557,047 3,162,011

 7 years 3,548,383 3,457,995 3,608,769 3,738,457 3,749,411 3,796,101 3,421,207 3,241,096

 8 years 3,299,941 3,367,056 3,370,907 3,540,254 3,709,830 3,672,686 3,662,837 3,111,469

 9 years 3,140,189 3,280,932 3,323,313 3,504,922 3,646,190 3,551,148 3,358,694

 10 years 3,047,333 3,206,286 3,291,677 3,431,074 3,524,875 3,256,010

 11 years 2,984,942 3,172,414 3,219,552 3,317,874 3,242,990

 12 years 2,936,957 3,093,552 3,122,788 3,010,094

 13 years 2,880,427 3,001,040 2,847,083

 14 years 2,795,367 2,746,340

 15 years 2,553,476

 Born before

 March 1993 70,597,646 67,833,688 66,047,694 65,088,487 64,333,072 63,317,590 61,945,835 57,827,400

Total 105,773,760 105,042,468 105,920,838 107,913,198 110,493,780 111,994,015 112,088,374 106,206,551

8