Census Bureau to add business startups as an official statistic
Census Bureau to add business startups as an official statistic
The pandemic has led to record numbers of business startups, as Americans have felt a sense of urgency to create businesses after being laid off or after deciding to quit their jobs.
This trend has captured the attention of the U.S. Census Bureau, which plans to make new business formation an official government statistic starting next month.
If there’s one economic indicator that everyone knows about, it’s probably the unemployment rate. It says a whole lot about what’s going on with the economy, but the concept hasn’t been around forever.
“We didn’t measure unemployment during the Depression. We still don’t know with any precision exactly how many people were unemployed,” said Betsey Stevenson, an economist at the University of Michigan.
Until the 1930s, she said the U.S. government could only guess at unemployment levels — and excluded women — which meant it was underestimating how bad things were.
“The Depression taught us that unemployment is a problem that we need to know about, that we need to measure and address directly,” Stevenson said.
What gets measured and how has big implications for the economy. And the fast-moving nature of the pandemic demands new measurements, said Ron Jarmin, the acting director of the Census Bureau.
“Most of our economic statistics have a frequency that just doesn’t give that sort of timely lens into how the pandemic is impacting people in the economy,” he said.
The unemployment rate tells us what the economy looked like a month ago.
But the measure of startups, taken from IRS filings for new business licenses, gives a sense of what the economy might look like tomorrow, according to economist John Haltiwanger at the University of Maryland.
“It’s like the canary in the mine,” he said. “It’s an early indicator of business activity.”
The Census Bureau started releasing this data in 2018 as kind of an experiment. As an official statistic going forward, the monthly report might include data on business location and the race, ethnicity or gender of startup founders.
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