Characteristics of Survival: Longevity of Business Establishments in the Business Employment Dynamics Data

Amy Knaup


An examination of the U.S. economy reveals that about 60% of business establishments which opened in second quarter of 1998 were still in existence 24 months later. The largest drop in surviving businesses occurs within the first six months, when 13% of establishments are no longer operating. This paper uses the data from the new Business Employment Dynamics series to characterize opening establishments for the period of 1998-2000 according to two-digit NAICS sector, location, employment levels, ownership status, and survival rates based upon these characteristics. Survival rates across two-digit NAICS sectors vary from 53% in the educational services sector to 74% in the utilities sector. Contributions to the number of opening establishments, however, vary more widely, from one percent to nearly 50% of establishments. Both survival rates and employment depend heavily on location and ownership status, while time to peak employment seems unaffected by either.