useful stats

Business research and development (R&D) intensity — private sector R&D expenditures as a percentage of total gross domestic product (GDP) — is an indicator of how interested businesses are in creating new products and processes. This edition of Useful Stats expands upon previous SSTI analyses of business R&D and applies the more standardized measure of “R&D intensity” to provide additional context on the private sector’s activities within states.

An SSTI analysis of business R&D employment data from the National Science Foundation’s recently updated 2019 Business Enterprise R&D (BERD) Survey finds that nationally in 2019, R&D employment at private businesses accounted for 8.6 percent of total employment. The states where the business R&D employment shares of total employment were the greatest in 2019 were Washington (20.9 percent); Massachusetts (19.3 percent); California (17.7 percent); New Hampshire (14.7 percent); and Michigan (12.7 percent). The analysis builds on our previous examination of business R&D expenditures and focuses on R&D employment at private businesses and the level of total business R&D expenditures per R&D employee by state in 2019.

Private sector investment into research and development (R&D) is a critical component of innovation, new product development, and regional economic vitality. As a substantial performer and funder of R&D in the United States, the strength of private industry’s R&D activity in a region can provide an indication of the region’s capacity for developing and bringing innovative technologies to market. Using data from the recent release of the National Science Foundation’s 2019 Business Enterprise R&D (BERD) Survey, this SSTI analysis shows that while private companies nationally paid for the greatest share of total business R&D expenditures themselves in 2019, this was not the case for all states.

Support for small companies has long been a pillar of federal and state policies meant to drive business formation, job creation, and the resulting spillover economic benefits for regional economies. The debate remains, however, about whether smaller or larger businesses play an outsized role in the nation’s economy. This edition of Useful Stats provides some context to the argument, finding that although smaller and newer establishments accounted for the greatest amount of total job creation, job losses from small business closures reduced the group’s net job creation significantly, leaving larger companies to account for the greatest share of net job creation in 2019.

Innovations are often born from small businesses, operating with few employees, if any at all, to bring new technologies and processes to market. However, new small businesses frequently fail and are not the only source of innovation. Understanding the regional dynamics of business creation can help leaders better support their regional innovation economies, and this edition of Useful Stats builds on our previous analyses of net establishment creation and net job creation by state and by industry to explore establishment creation by state and by establishment size (as measured by the number of employees) for 2019.

Understanding the industry-level dynamics of business and job creation can help pinpoint which industries in regional economies may be hotspots for innovation activity. This edition of Useful Stats builds on previous SSTI analysis of business and job creation by state and examines data from the Census Bureau’s recently updated Business Dynamics Statistics (BDS) on net establishment and job creation in 2019 at the state and industry levels. The data serves as a useful baseline of where the economy stood prior to the pandemic’s start in 2020. While the national data shows that five industries experienced net establishment losses in 2019, industry trends at the state level vary widely with some states seeing losses across many industries while others experienced losses in only a few. There were also similar national- and state-level trends in net job creation in 2019. This analysis also provides additional context by examining the long-term state trends in these metrics from 2005 to 2019.