Creating jobs

Americans filed nearly 6 million business applications in 2025, the most in two decades, and about one-third of those applications will likely become businesses that produce jobs and paychecks within 12 months, according to the Census Bureau.

Between 2005 and 2019, new business applications rose steadily year over year, except during the Great Recession of 2008 and 2009. Applications rose by nearly 40% during that time, from about 2.5 million to almost 3.5 million, before jumping to about 4.4 million in 2020 during the COVID pandemic. They have remained elevated since then according to Federal Reserve data. More than 3 million applications have been filed in the first six months of 2026.

Many economists attribute the current numbers to the rapid incorporation of artificial intelligence. More than half of small-business founders used AI to start their business last year, and 50% said the technology made the process significantly faster or cheaper, according to a recent report from payroll and benefits service provider Gusto.

“I do not necessarily believe that AI will improve profitability, but I think AI is the biggest explanation for the increase in the last 12 to 24 months,” said David Bahnsen, managing partner of the Bahnsen Group. “The initial post-COVID bump in 2020–2021 had to do with a variety of less serious ‘stay at home’ business endeavors.”

Applications don’t directly equate to opening new businesses that produce jobs and paychecks. Many entrepreneurs apply for an employer identification number but don’t intend to hire employees. Opening a business bank account, for example, requires an EIN.

Typically about one-third of applications have a high probability of creating jobs. Applications from existing corporations or those that indicate they are hiring employees or have begun paying employees are more likely to become functioning businesses within a year. The retail trade consistently has the highest number of applications, but the construction, manufacturing, and healthcare sectors are more likely to provide jobs.

“One-third is a fair estimate in terms of how many will be ‘productive,’” Bahnsen said. “If the number were over 5 million but the fraction of success was declining, it would be an offset. That is not and is not expected to be the case.”

Artificial AI outlook?

More than three-fourths of small businesses are using artificial intelligence to improve operations, according to a recent Goldman Sachs survey. More than 80% of roughly 1,300 ­participants in a business incubator program said AI has increased efficiency and productivity. Nearly 90% said AI is supporting or augmenting, instead of replacing, their existing workforce. But the positive outlook may be more aspirational than operational. Those surveyed said they have privacy and security concerns and still lack technical expertise to successfully use and evaluate AI in their businesses. Information, professional, scientific, and tech-services businesses are early adopters of AI, but less than half said they had used it in any of their business functions in the previous two weeks, according to the Census Bureau. —T.V.