In the Year to March 2022, Florida Closed 11.2% of Its Workplaces, the Most of Any State. It Opened 13.9%

Census counts every workplace with a payroll, every year. The states with the highest closure rates tend to be the states with the highest opening rates, and they have been in every year since 1979.

What the count covers

The Business Dynamics Statistics are built from the Census Bureau’s register of every business with paid employees. A workplace here is an establishment: one physical location, a shop, an office, a plant, a restaurant. It counts as closed when it had employees one March and none the next, and as opened when it had none one March and employees the next. Each year in the data runs from March to March. A location sits in exactly one state, so establishments can be added up state by state, and the 51 state rows sum exactly to the national total.

In the year to March 2022, about 697,000 workplaces closed nationwide, 9.5% of the total, and about 854,000 opened, 11.7%. In Florida, 61,219 closed and 76,030 opened. That closure rate, 11.2%, was the highest of any state; Colorado’s was within a tenth of a point. At the other end, South Dakota closed 7.7%, Pennsylvania 8.1% and Nebraska 8.2%. Every one of the 51 opened more workplaces than it closed that year.

The states that close fastest open fastest

Sort the states by how fast their workplaces closed in the year to March 2022 and split them into five groups. The 10 with the highest closure rates, 10.8% together, also opened the most: 13.2%. Each group down the list opened at a lower rate, until the 10 states with the lowest closure rates, 8.3% together, opened 9.8%. Eight of the 10 states with the highest closure rates were also among the 10 with the highest opening rates.

This is the normal shape of the data, not a feature of one year. In every year from 1979 to 2022, states with higher closure rates tended to have higher opening rates too. Florida is the steadiest example. In the 18 years to March 2005 through March 2022, it had the highest closure rate of any state 10 times and was never lower than third, except in the year to March 2021, when it was ninth. In all 18 it ranked in the top five for openings, and in 16 it was in the top three.

The states with the highest closure rates tend to be the states with the highest opening rates.

The years when closures won

There are years when closures outnumber openings almost everywhere. In the year to March 2009, 11.6% of workplaces nationwide closed and 9.3% opened, and closures outnumbered openings in 50 of the 51. By the year to March 2015 that was down to 2. In the year to March 2021 it was 15, and in the year to March 2022, 0. The records count what happened. They do not say why.

What to take from this if you run a small one

A high closure rate around you is not, on its own, a sign of a market that is failing. In these records it travels with a high opening rate: the states with the highest closure rates tend to have the highest opening rates too. That is a market with a lot of movement in it, and movement cuts both ways. A larger share of the field is new each year, and a larger share is gone. If you are in one of the high-turnover states, plan as if the field will look different in a year. In Florida, by this count, more than one workplace in ten closed within the year, and about one in seven was new.

Three limits worth holding. These are workplaces, not companies: a chain that shuts one location and opens another shows up as one closure and one opening. The records do not say why a workplace closed, or whether its owner moved, sold, retired or failed. And they cover only places with paid employees; businesses run by the owner alone are outside the count. The latest year Census has published, to March 2023, is provisional and is left out here.

Published by The Lonely Entrepreneur — the community and coaching platform for entrepreneurs who are building alone. lonelyentrepreneur.com

This article is for educational purposes and is not a substitute for professional financial or legal advice.