New business establishments: survival and longevity

Across sectors, 66 percent of new establishments were still in existence 2 years after their birth in the second quarter of 1998, and 44 percent were still in existence 4 years after their birth.

[Chart data—TXT]

These survival rates did not vary much by industry.

Despite the early success of the "dot-coms" during the 1990s, the information industry had the lowest 2- and 4-year survival rates, 63 percent and 38 percent, respectively. Education and health services had the highest 2- and 4-year survival rates, 73 percent and 55 percent.

According to the conventional wisdom, restaurants should bring down the averages for the sector that includes them, because they are constantly starting and failing. However, the leisure and hospitality sector’s 2- and 4-year survival rates of 65 percent and 44 percent are only slightly below average.

Data used in this analysis are from the BLS Quarterly Census of Employment and Wages (QCEW) program. To learn more, see "Survival and longevity in the Business Employment Dynamics data", by Amy E. Knaup, Monthly Labor Review, May 2005. This analysis only includes completely new entrants—that is, new firms which open a single establishment.