Chart of the week: High propensity business applications are stagnant in D.C.

January 24, 2025
  • Meredith Gavin

The Business Formation Statistics (BFS) from the US Census Bureau tracks weekly business applications nationally and by state and business formations monthly. The BFS uses EIN registration as a measure of business applications, tracking registrations to formation, citing the number of business applications that turn into business formations within four and eight quarters. Business applications are further broken down into High Propensity Business Applications (HBA), which includes Corporate Applications (CBA) and Businesses with Planned Wages (WBA).[i]

The BFS data indicate a downward trend in the percentage of HBAs to total business applications between the mid-2000s and today. When examined more broadly, the data show that while total business applications have increased over time, HBAs have remained relatively flat in the District. While total business applications have trended upward since the mid-2000s, HBAs have remained flat. As a result, the percentage of HBAs to total business applications has trended downward. The same trend can be observed in Maryland, Virginia, and West Virginia, with the gap between total business applications and HBAs widening over time.

While industry-specific data is not available at the D.C.-level, national data show variation in HBA growth by industry.[ii] For example, applications in the Accommodation and Food Services industry, which are always considered high propensity, have trended upward. In contrast, total applications in Education Services have trended upward, while HBAs for Education Services have stagnated. Health care industries exhibit a stable uptick in both total business applications and HBAs. Future exploration of industry-specific conditions in D.C. may illuminate the impact or prevalence of such trends on the local economy.


[i] A November 2024 report from the U.S. Census Bureau revealed a leading correlation between HBAs and nonfarm employment. That is, if the data showed an uptick in HBAs, there would be a correlated uptick in nonfarm employment eleven months later. The correlation was especially notable, as it compares to existing Principal Federal Economic Indicators (PFEIs). While D.C.-level data was unable to capture the correlation at the local level, HBAs remain a valuable tool for understanding the local and regional economies. Principal Federal Economic Indicators (PFEIs) are used as benchmarks for overall economic activity and health. They include housing starts, construction spending, business inventories, homeownership rates, and more. https://www.census.gov/economic-indicators/

[ii] Applications in certain industries and sub-industries, as defined by the North American Classification System (NAICS), automatically qualify as HBAs. This includes all applications in Accommodation and Food Services and some applications in Construction, Manufacturing, Retail, Professional, Scientific, and Technical Services, Educational Services, and Health Care.

Author

Meredith Gavin

Program Manager
D.C. Policy Center

Meredith is the Program Manager at the D.C. Policy Center. In her role, she manages publications, communications, and outreach.  

Prior to joining D.C. Policy Center, Meredith interned with (re)Chicago and served an AmeriCorps Vista year with the EnVision Center at the Philadelphia Housing Authority. In both roles, she worked to identify ways to improve access to and efficiency of public services.  

Originally from Reading, Pennsylvania, Meredith holds a Bachelor of Arts from Temple University and a Master of Public Policy from the University of Chicago Harris School of Public Policy.  

You can reach her at meredith@dcpolicycenter.org.