Understanding the churn of businesses – the rate at which new establishments open (entries) and existing ones close (exits) – is crucial for gauging how active and adaptable an economy is. A key indicator is the entry/exit ratio, which is the number of new establishments divided by the number of closures in a given period. An entry/exit ratio above 1.0 signifies net growth in the number of businesses (more openings than closures), while a ratio below 1.0 indicates net decline. This dynamic is important because new businesses contribute to innovation and job creation, whereas closures can signal economic stress or structural changes.
In recent years, Oregon has experienced remarkable shifts in these dynamics. After several decades of relatively low startup activity, the past few years have seen a general and widespread increase in new business formation. According to the U.S. Census Bureau’s Business Formation Statistics, 2023 marked another record year for new business applications in both the U.S. and Oregon – a surprising boom emerging from the economic uncertainty of the 2020 pandemic recession.
This blog post examines Oregon’s business dynamics through three lenses – time, sector, and geography – using data from the 2022 National Establishments Time Series Database. I discuss the annual trends in business entries and exits from 2012 to 2022, compare entry/exit ratios across industries, and map the ratio across Oregon’s counties.
Entry and Exit Trends Over Time (2012–2022)
Data source: 2022 National Establishment Time-Series Database
Figure 1 illustrates Oregon’s annual business entries and exits over the past decade. The early 2010s show Oregon still recovering from the Great Recession’s aftermath – from 2012 through about 2014, exits outnumbered entries. From 2015 onward, Oregon experienced a sustained period in which new establishments consistently outpaced business closures. The COVID-19 pandemic in 2020 briefly disrupted this trajectory, resulting in a slight decline in the number of new establishments. This mirrors a national trend where, after the initial pandemic shock, the U.S. saw a wave of new business applications, with 2021–2022 far exceeding historical levels. According to data from the Bureau of Labor Statistics (BLS) Business Employment Dynamics, Oregon added around 18,950 new private payroll businesses in 2022, while roughly 16,600 businesses closed that year. Oregon posted the fastest growth in new establishments of any state in 2023, according to recent data released by the Bureau of Labor Statistics, Business Employment Dynamics.
Which Sectors Are Driving Growth?
The dynamics vary widely across industries. Figure 2 presents entry/exit ratios for Oregon’s major sectors over the period 2012–2022, illustrating which industries experienced net growth in establishments and which experienced net losses. Nearly all service industries in Oregon have ratios well above 1.0, indicating that far more establishments opened than closed in those sectors during the 2012–2022 period. The industry with the most significant net gain is the Public Administration sector. This sector comprises government establishments that perform legislative, judicial, and administrative functions for federal, state, tribal, and local governments. Roughly 2.8 new public-sector establishments opened for every one that closed during that time frame.
Data source: 2022 National Establishment Time-Series Database
Among other industries, there is robust net expansion in areas like Administrative & Support Services (e.g., temp agencies, janitorial and waste management firms), Real Estate & Rental, Educational Services, Accommodation & Food Services, Health Care & Social Assistance, Arts, Entertainment \& Recreation, Transportation & Warehousing, and Professional & Technical Services. These sectors all exhibit entry/exit ratios of approximately 1.5 or higher (meaning 50% more openings than closures). For example, Oregon’s Hospitality sector (Accommodation & Food) shows about 1.79, reflecting the boom in eating and drinking places and hotels. In recent years, the fastest growth in new business formation nationally has been in industries like retail, food services, transportation, and professional services, each seeing roughly a 60% increase in new business applications just from 2019 to 2023.
A few sectors in Oregon have entry/exit ratios around or below 1.0, indicating net stagnation or contraction in the number of establishments over the 2012–2022 period. Several Manufacturing categories fall into this group: for instance, Manufacturing of Wood/Paper/Chemicals (ratio 1.02) and Manufacturing of Metals/Machinery/Electronics (1.00) both saw the same number of closures as openings. This is consistent with the long-run challenges for manufacturing – automation, globalization, and industry consolidation – which have led to fewer total factories and mills even as output in some areas rises.
Regional Variations: Entry/Exit Ratio by County
Figure 3 below highlights substantial variation in entry/exit ratios across Oregon. Many rural counties exhibit relatively high ratios. The pattern is more mixed across urban counties. Counties in the northern part of the state, particularly along and just south of the Columbia River, tend to have higher entry/exit ratios.
Data source: 2022 National Establishment Time-Series Database
Conclusion
Oregon’s trend in establishment entries and exits from 2006 to 2022 shows a surge in net business growth, but with significant variation across sectors and counties. Overall, the economy seems to be tilting toward services and innovation. The high entry/exit ratios in education, health, professional services, hospitality, and tech-related fields emphasize the growth of a service-driven economy. These sectors often benefit from population growth, changing consumer preferences, and lower barriers to entry (e.g., it’s easier to start a food cart than a lumber mill). In contrast, the few sectors with stagnant or declining establishment numbers tend to be capital-intensive industries or those facing long-run decline.
Policymakers should continue to nurture this entrepreneurial momentum. That means maintaining support for small businesses and startups through programs such as technical assistance and startup incubators, accessible financing (microloans, venture capital), and a reasonable regulatory climate that doesn’t pose undue barriers to entry. However, a good policy approach must also recognize the nuances behind the numbers. High entry counts are encouraging, but not all new businesses survive, and not all create substantial employment. In fact, evidence shows that a large share of job growth comes from the expansion of existing firms rather than new firm births.
