According to a study by the CAP, Texas emerges as
According to a study by the CAP, Texas emerges as a key state in the startup boom in the U.S. Freepik

The United States is currently witnessing a surge in startups and new businesses, especially in the migrant-heavy states of Arizona, New Mexico and Texas, according to a report by the Center for American Progress (CAP) released on Monday.

The institute revealed that the total number of likely employer business applications between 2021 and 2023 was 5.2 million— 1.3 million more than three years preceding the pandemic, 2017 to 2019, a 34 percent increase.

A surge in applications to start new businesses is a strong signal that the economy is bouncing back from the pandemic-era recession, CAP added.

"Historically, a 1 percent increase in these likely employer business applications within a state leads to roughly a 1 percent increase in new businesses employing workers within two years."

The analysis, based on U.S. Census Bureau's "Business Formation Statistics" figures, shows that every state and Washington, D.C. saw an increase in likely employer applications submitted between 2017–2019 and 2021–2023. Wyoming saw the highest increase: 93 percent with 14,000 new applications.

Southern states bordering with Mexico, which have seen large migratory waves lately, New Mexico, Arizona, and Texas among them, were also among the most entrepreneurial. Texas experienced even greater growth than Wyoming in terms of total numbers, with 135,300 applications, representing a 43% increase. Arizona saw a 55% surge, registering 37,600 new applications, while New Mexico had a 42% rise with 6,800 new applications.

There is no granular data at a county level, but the CAP used U.S. Bureau of Labor Statistics on the number of business established. The distinction lies in the fact that startup data represent genuinely new businesses, while data on the number of business establishments include multiple branches of existing businesses. For example, a new branch of a retail chain is counted as a new business establishment.

Looking at the 100 largest counties in the country, Fulton County in Georgia, which includes Atlanta, saw the fastest growth of business establishment between 2019 and 2023, at 48 percent.

Wyoming saw the highest increase at 93 percent, the CAP
Wyoming saw the highest increase at 93 percent, the CAP reported. CAP

Two counties in Texas, the state with the second largest amount of immigrants in the U.S., were also among the top 20 with highest percentage of growth in new businesses, the report showed. They were Collin County, with a growth rate of 25%, and Denton County, also at 25%.

Arizona's Maricopa County, home to Phoenix, ranked even higher in the national rankings, reaching the ninth spot with a 33% surge%. This county also stands fourth in terms of highest annual numeric population growth, according to the U.S. Census Bureau.

New Business Growth Among Large Counties (2019-2023)

  1. Fulton County, Georgia, +21.2K, 48%
  2. Wake County, North Carolina, +14.2K, 40%
  3. Davidson County, Tennessee 9.6K 40%
  4. Salt Lake County, Utah, +17K, 35%
  5. Mecklenburg County, North Carolina, +13.7K, 35%
  6. DeKalb County, Georgia, +6.1K, 34%
  7. Gwinnett County, Georgia +8.7K, 34%
  8. Hillsborough County, Florida, +15.1K, 33%
  9. Maricopa County, Arizona, +34.2K, 33%
  10. Cobb County, Georgia, +6.6K, 30%
  11. Denver County, Colorado, +9.8K, 28%
  12. Johnson County, Kansas, +6.4K, 27%
  13. Orange County, Florida, +12.3K, 27%
  14. District of Columbia, +10.8K, 26%
  15. Multnomah County, Oregon, +9.3K, 26%
  16. Jefferson County, Kentucky, +6.7K, 26%
  17. Palm Beach County, Florida, +15.2K, 26%
  18. Collin County, Texas, +6.8K, 25%
  19. Denton County, Texas, +4K, 25%
  20. Kern County, California, +4.8K, 24%

A Boom that Shows "No Sign Of Slowing Down"

The report also found that over the last three years, entrepreneurship has followed an upward trend, showing "no sign of slowing down." Likely employer applications reached 450,000 in the last quarter of 2023—120,000 (37%) more than in the last quarter of 2019.

This marks a significant uptick in comparison to previous years, as the study indicates that "likely employer applications grew only 11 percent between the fourth quarter of 2015 and the fourth quarter of 2019." The state with the largest sustained percentage increase in employer applications over this period of time was Colorado, with 116 percent.

At a national level, the number of startups—firms that are under 1 year old—increased by 16 percent between 2019 and 2023, which is more than 2 1/2 times the 2015–2019 growth rate of 6 percent, the CAP analyzed.

The surge in startups has taken place across most states. Between 2019 and 2023, the number of startups increased in 47 states and Washington, D.C., compared with only 34 states seeing increases between 2015 and 2019.

The three states with the fastest startup growth—Alabama at 65 percent, West Virginia at 62 percent, and Connecticut at 61 percent—illustrate the widespread nature of the startup boom.

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