The amount of new startups and the reopening of existing establishments — known as “establishment births” — in Idaho exceeded the number of business applications in 2025. Startup failure rates in the state also decreased over the year, with three out of four still in business after a year, according to recent U.S. Census data.
Business applications and private establishment births
Before the pandemic, Idaho’s startups were already growing quickly — business applications and new establishment births were both up about 30% from 2015-2019. The 2020-2021 period supercharged that growth — applications rose 31% and actual business births jumped nearly 49%.
From 2020-2023, pandemic-era federal aid provided startup capital that drove Idaho business applications to record levels. However, the 2021–2024 decline in establishment births was, in part, a correction from this artificially elevated baseline, and a large share of applications never converted to viable establishments.
Business applications in Idaho sustained high levels again in 2025, hovering near 10,400 per year as new establishment births also increased to 12,326. This rebound resulted from a convergence of factors, including business applications finally converting to businesses, Federal Reserve rate cuts reducing borrowing costs and cooling inflation.
After three straight years of decline, the 9% increase from 2024 in Idaho’s establishment births hints that conditions may be slowly improving, though a full recovery will depend on whether borrowing costs continue to ease.
Figure 1. Business applications and private establishment births, Idaho
Sources: U.S. Census Bureau; U.S. Bureau of Labor Statistics-Business Employment Dynamics
While Idaho’s establishment births have consistently exceeded business applications over the past 20 years, the nation has experienced the opposite trend. U.S. business applications have consistently outnumbered establishment births by hundreds of thousands, with the gap widening from about 278,000 to 416,000 between 2015-2025.
As shown in Figure 2 below, new business applications in the U.S. decreased in 2022, 2024 and 2025. As a result, private establishment births also tailed off, falling by 1.4% in 2025.
Figure 2. Business applications and private establishment births, U.S.*
Sources: U.S. Census Bureau; U.S. Bureau of Labor Statistics-Business Employment Dynamics
Startup failure rates
Idaho’s startup failure rates are also counter to the national trend. From 2022-2025, new startup failure rates declined in Idaho from 30.5% to 23.4%. Despite a peak in 2022, the adjustment of establishment births and the stabilizing effect of mentorship, incubator and incentive programs has driven Idaho’s failure rate back down in recent years, as Figure 3 highlights.
Even after accounting for changes in the business cycle, 77% of Idaho startups are still operating after their first year, pointing to a healthy and resilient entrepreneurial environment.
Figure 3. Startup failure rate, Idaho and U.S.**
Source: Business Employment Dynamics (BED), The U.S. Bureau of Labor Statistics (BLS)
Employment from new startups
After Idaho’s steady 14-year trend of job growth from startups, a sharp decline by about 4,000 jobs, or 15.3%, was seen in 2025, while nationally there was an increase of 26,000 jobs, or 0.8%. Despite the recent decline, Idaho’s job growth from startups is still higher than it was in 2019 by 2,800 jobs, or 14%.
The rapid population growth in Idaho since 2020 has created new local markets, including housing, retail and services, and has allowed young establishments to hire more quickly compared with the nation as a whole. That demand along with favorable workforce programs has eased payroll costs, encouraging startups to staff immediately rather than delay hiring.
Figure 4. Employment from new startups, Idaho and U.S.
Source: Business Employment Dynamics (BED), The U.S. Bureau of Labor Statistics (BLS)
At its peak in 2001, new startups in Idaho employed an average of nearly six employees, while nationwide the average was 6.5 employees. Since 2006, neither the nation nor the state has been able to average more than six workers per new startup formed. Many fledgling businesses have become too small in terms of how many workers they can afford to hire. Or depending on the industry, they may require fewer workers due to innovations in technology, like automation.
The state has worked to reverse downturns in new startup employment by offering tax incentives and workforce development programs to encourage hiring. From 2022-2023, Idaho experienced the first increase since 2014 in the number of workers per new startup. From 2023-2024, higher rates of workers per new startup and tighter lending screened out smaller scale businesses, leaving larger, better‑capitalized startups the capacity to hire at formation.
While Idaho’s average decreased slightly in 2025 to three employees per startup, this is not far behind the national average and is a return to 2018 levels, as seen in Figure 5 below.
Figure 5. Average employment per new startup, Idaho and U.S.
Source: Business Employment Dynamics (BED), The U.S. Bureau of Labor Statistics (BLS)
Since its economic recovery in 2013, Idaho separated itself in a positive direction and has continued to outpace the U.S. in relative employment from new startup shares out of all existing private establishments, as shown in Figure 6 below.
At its highest point in 2001, over 5% of total private employment in Idaho was from newly formed establishments. The state’s employment from startup growth has been unable to accelerate to that level again, approaching 4% in 2022 but falling back down to 3% in 2025. Despite the decline, this was still higher than the U.S.’s share of 2.6% in 2025.
Figure 6. Employment from new startups as a share of total private establishments, Idaho and U.S.
Source: Business Employment Dynamics (BED), The U.S. Bureau of Labor Statistics (BLS)
New startup shares
In addition to jobs created, another economic indicator for Idaho and the U.S. is the growth of new startups that have operated for less than a year, as shown in Figure 7 below.
Despite a decrease in the past three years, Idaho’s annual number of new startups grew from 3,249 to 7,938 between 1994-2025 — a 144% net increase, or 3% on an annual basis. By comparison, the number of new startups nationwide grew at a slower rate of 72%, or 2% annually.
Idaho’s new startup rates are cyclical and interest‑rate sensitive. From 2020-2022, Idaho experienced a 55% increase in new startups from 6,500 to over 10,000. However, from 2023-2025 there was a 22% decrease, or 2,200 fewer startups. This was partially due to the normal business cycle where higher‑quality startup concepts win out, rather than a broad drought in business formations.
When interest rates and inflation remain high, consumer spending slows down in addition to some business investment and expansion. However, the state’s number of startups in 2025 is still higher than in 2021 when the state enjoyed such rapid and unprecedented startup growth.
Figure 7. New startups, Idaho and U.S.
Source: Business Employment Dynamics (BED), The U.S. Bureau of Labor Statistics (BLS)
From 1994-2004, the share of new startups in operation out of total private establishments hovered around 10-11% both in Idaho and the U.S, as shown in Figure 8. In the leadup to the Great Recession, Idaho’s share grew to around 12% before plummeting to nearly 7% in 2010. Nationwide, it bottomed out at 8% the same year. Since 2013, the share has somewhat tracked for both the state and nation.
By 2022, roughly 16 out of every 100 total private establishments in Idaho and 12 out of every 100 total private establishments in the U.S. were less than a year old. As of 2025, this rate has decreased to about 12 startups out of 100 total private establishments for Idaho but remains higher than the nation’s rate of 10.5.
The percentage of new startups out of total private establishments in Idaho is still greater than it was 20 years ago. Strong post‑recession recovery and sustained new startup entry momentum has consistently lifted Idaho’s share above the national benchmark.
Figure 8. New startups as share of total private establishments, Idaho and U.S.
Source: Business Employment Dynamics (BED), The U.S. Bureau of Labor Statistics (BLS)
Entrepreneurship rate
Idaho fosters a relatively favorable entrepreneurial environment. The state’s fast population growth plus a lower-cost environment, in terms of taxes and cost of living, invite more labor force participants to found startups.
Since 2012, Idaho has outpaced the nation in its entrepreneurship rate — the ratio of startups per 1,000 civilians in the labor force (CLF), as shown in Figure 9 below. The entrepreneurship rates of both Idaho and the U.S. peaked in 2022 at nearly 11 and seven, respectively. However, both rates have decreased to just under eight for Idaho and six for the U.S. in 2025.
Figure 9. Entrepreneurship rate, Idaho and U.S.
Source: Business Employment Dynamics (BED), The U.S. Bureau of Labor Statistics (BLS)
Conclusion
Startup failure rates in Idaho have decreased, leaving a small but healthy pipeline of businesses in a position to grow and hire. Additionally, new establishment births saw an uptick in 2025 after three straight years of decline. While one year of growth doesn’t confirm a trend, it does suggest more applicants from the backlog are finally converting into actual businesses and is an encouraging early signal to observe as broader economic uncertainty persists.
Ryan.Whitesides@labor.idaho.gov, regional economist
Idaho Department of Labor
208-696-2347
Notes
*Idaho and U.S. establishment births are author’s own estimates for 2025, Q3 and Q4.
**The 2024 startup failure rate is preliminary, and there may be revisions next year to the Bureau of Labor Statistics Business Employment Dynamics data from which this figure is derived.
Sources:
U.S. Census Bureau. “Business Formation Statistics, August 2025.” Accessed March 2026. https://www.census.gov/econ/currentdata/?programCode=BFS&startYear=2015&endYear=2025&categories[]=TOTAL&dataType=BA_HBA&g
eoLevel=ID&adjusted=1¬Adjusted=0&errorData=0
U.S. Bureau of Labor Statistics. “Business Employment Dynamics, January 2026.” Accessed March 2026. https://www.bls.gov/bdm/business-employment-dynamics-data-by-age-and-size-idaho.htm
U.S. Bureau of Labor Statistics. “ Table 5. Number of private sector establishments by age, March 2025.” Accessed March 2026. bls.gov/bdm/id_age_total_table5.txt
U.S. Bureau of Labor Statistics. “ Table 8. Private sector establishment births and deaths, seasonally adjusted, June 2025.” Accessed March 2026. https://www.bls.gov/news.release/cewbd.t08.htm
U.S. Bureau of Labor Statistics. “ Table 9. Private sector establishment births and deaths, seasonally adjusted, June 2025.” Accessed March 2026. bls.gov/web/cewbd/id_table9.txt
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