High-propensity business application

Definition

A new business application the Census expects to become an employer.

Why It Matters

The formation series counts applications for an employer identification number, and most of them never hire anybody. The high-propensity subset is the half worth reading as a signal about competition and about the supply of businesses to buy. The Census Bureau identifies it from characteristics on the IRS form associated with a high rate of business formation, among them that the applicant is a corporation. It also publishes the average number of quarters between an application and the business actually forming. So a spike in applications in a trade is not a spike in competitors, and the series measures the gap instead of leaving it to guesswork.

In numbers: A trade files 1,000 applications in a quarter and 300 of them are high-propensity. The 700 are mostly sole traders and side ventures; the 300 are the ones that may hire, and the series says how many quarters pass before they do.