The number of high-growth firms increased the most in the educational services sector, consistent with the growth of private charter schools, mentoring services, and edtech over the period. Alternately, high-growth firms in mining decreased the most relative to their 1978 values, which one might expect as the U.S. offshored resource-intensive industries and adopted mining approaches that required fewer workers.
In terms of sector proportions, finance and insurance had the smallest decrease in the percentage of firms that are high growth, dropping 1.19 percentage points from 2.86% in 1978 to 1.67% in 2021, while construction had the largest at 5.34 percentage points over the same period, from 8.39% to 3.05%.
The BDS-HG breaks down firm growth rates into nine growth rate bins, ranging from -2 to 2. To view the ranges of each bin, the formulas used, and other methodological items, refer to BDS-HG’s methodology page. Firms are considered “high-growth” by the authors of the data as long as they fall into the growth rate bin of 0.8-2. The -2 bin represents exits, which were not used in SSTI’s calculations of the percentage of firms that are high-growth, while the 2 bin represents entries.
Sector and industry-level data is available and uses North American Industry Classification System (NAICS) distinctions at the two, three, and four-digit levels. This article explores the data using two and four-digit NAICS codes. Two-digit NAICS codes represent sectors, while four-digit codes represent industry groups. Read more about NAICS codes on the Census website.
Changes in the number of high-growth firms by sectorThe five sectors with increases in the number of high-growth firms since 1978 were: educational services (75% or 1,091 firms); professional, scientific, and technical services (43% or 4,376); arts, entertainment, and recreation (37% or 827); administrative and support and waste management and remediation services (32% or 2,432); and, health care and social assistance (17% or 2,049).
The number of firms in information stayed the same over the 44 years, while the remaining 13 sectors decreased.
As mentioned previously, high-growth firms in mining had the largest relative decrease, at 77%, or 855 firms, followed by: management of companies and enterprises at 73%, or 450 firms; agriculture, forestry, fishing and hunting, at 69%, or 1,008 firms; and, manufacturing at 65%, or 8,220 firms. See Figure 1 below for the remaining sectors’ trends.
Figure 1 shows up to five sector line charts of the number of high-growth firms from 1978 to 2021. To adjust the data displayed, click on the search bar titled “Enter series to show,” and either type or scroll and click on up to five sectors. The y-axis (number of firms) will automatically be scaled to account for the minimum and maximum values, allowing for more granular changes to be seen clearly. For example, mining has the largest relative decrease in high-growth firms but a comparatively smaller base of firms, so by isolating this sector on the chart, the trends can be more easily seen.
For more:
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