Detroit Free Press
April 28, 2023
The surge in applications for new businesses, which peaked during the pandemic, remains at historic levels in Michigan and across the U.S. Just over 12,000 new business applications were submitted by Michiganders last month, an increase of 7% compared to March 2022, according to new data from the U.S. Census Bureau.
“The pandemic disrupted the lull that American entrepreneurship had settled into after the Great Recession, delivering what now looks to be a lasting bump in early-stage startup activity,” said Kenan Fikri, research director for the Economic Innovation Group, a bipartisan research and policy organization.
Michigan Business Applications
The number of people filing applications for new Michigan businesses peaked in July 2020 at just under 20,000. In the two years prior to the pandemic, seasonally adjusted business applications hovered at around 8,000 per month. Since the pandemic began, the median number of business applications has been nearly 50% higher at 11,637 per month.
Business application data are based on requests made to the IRS for an Employer Identification Number or tax ID. An application is considered high-propensity or a likely employer if the request is from a corporation that plans to hire employees and identifies a date to start paying wages or if the business falls within specific areas of lodging and food services, construction, manufacturing, retail, health care, educational or professional, scientific and technical services industries.
Nationwide, about 450,000 business applications were submitted in March — an increase of 10% year over year.
Michigan Business Applications (Seasonally Adjusted)
Not all business applicants succeed in creating a new firm and researchers have found variation in business formation rates by state. Last month the projected number of Michigan employer businesses that originated within one year from business applications was 699.
Business Formation in Michigan
“There’s still a lot we don’t know about the size and impact of these businesses,” Fikri said, “but, as more data trickles in, it’s becoming clear that something real and substantial is happening here. In many ways, the 2010s was a lost decade for American entrepreneurship; perhaps the 2020s will prove to be quite different.”