US businesses are getting old. Literally.
According to recently released data from the US Census, almost exactly half of US businesses are more than 10 years old in 2016. It’s a dramatic change from two decades ago, when fewer than 40% of businesses were over 10.
Though the average age of US firms has been going up for decades, the speed of the change accelerated after the Great Recession. The reason is a lack of startups.
Unlike many other measures of the US economy, like unemployment and household income, new business creation has not returned to pre-recession levels.
The economist Lucas Puente follows small-business trends for Thumbtack, a company that matches customers with local professionals online. Puente thinks the recent trends are a cause for concern. “The fact that 125,000 fewer businesses were started in 2016 than in 2006—despite the economy being 15% bigger overall—should be concerning to policymakers from both sides of the aisles, given the central role that new businesses play in both net job creation and innovation,” Puente told Quartz.
What’s going on? As Quartz noted in a previous story, it may be that startups are struggling in this era of rising market concentration. Since the 1980s, the share of all sales going to the top firms increased in most industries. Startups may have a hard time competing with huge firms, which out pays them for talent and may attempt to drive them out of the industry. Previous Brookings research found there are fewer startups in states where a smaller number of companies dominate the market (pdf).