Archived: Rubio says more businesses are closing than opening for the first time in 35 years

"For the first time in 35 years, we have more businesses closing than starting."


— Marco Rubio on Wednesday, October 28th, 2015 in the third Republican presidential debate


Rubio says more businesses are closing than opening for the first time in 35 years

By Jon Greenberg on Wednesday, October 28th, 2015 at 9:54 p.m.


In the third Republican presidential debate, Florida Sen. Marco Rubio faced a question about his many missed votes in Congress. The CNBC moderator asked why he didn’t settle down and get more done before running for the Oval Office.

Rubio basically said that the country didn’t have time to wait for him.

"Watching this broadcast tonight, there are millions of people who are living paycheck to paycheck," Rubio said. "They’re working as hard as they ever have, everything costs more and they haven’t had a raise in decades. You have small businesses in America that are struggling. For the first time in 35 years, we have more businesses closing than starting," he said.

Rubio has talked about the birth and death of businesses before and his statistic is accurate.

We located a May 2014 report by the Brookings Institution, a Washington-based think tank, titled, "Declining Business Dynamism in the United States: A Look at States and Metros."

In that report, coauthors Robert Litan and Ian Hathaway published data that supports Rubio’s claim. Their calculations come from a collection of U.S. Census Bureau data called Business Dynamics Statistics.

"Recent evidence points to a U.S. economy that has steadily become less dynamic over time," they wrote.

They found that the rate of business failures held steady, except for an uptick during the Great Recession -- but they also found that the entry rate of new firms declined by nearly half between 1978 and 2011. "The precipitous drop since 2006 is both noteworthy and disturbing," the authors wrote.

Here’s the kicker from the report: "Business deaths now exceed business births for the first time in the 30-plus-year history of our data," the authors wrote.

Here’s a graph showing the trend line:

Technically, the crossover point occurred in 2008, so it’s not as if this happened in the past year or two. We don’t know what time frame Rubio had in mind, although he did say that households hadn’t seen a raise in decades. We checked with Litan to make sure Rubio wasn’t twisting the statistic in any way, and Litan responded that Rubio’s claim is accurate.

"It’s true," Litan told PolitiFact in June, adding, "We haven’t reversed this yet."

As for the causes, the authors of the Brookings report acknowledged being uncertain themselves. However, the report added, "it is clear that these trends fit into a larger narrative of business consolidation occurring in the U.S. economy -- whatever the reason, older and larger businesses are doing better relative to younger and smaller ones."

Our ruling

Rubio said that "for the first time in 35 years, we have more businesses dying than we do starting." The change didn’t happen in the past year or two -- it occurred in 2008 -- but in general, Rubio has accurately cited a statistic from a respected think tank’s report. The co-author of that report said he feels Rubio has stated the claim accurately. We rate Rubio’s claim True.

Sources


CNBC, Third Republican presidential debate, Oct. 28, 2015

PolitiFact, Marco Rubio says for first time in 35 years, 'we have more businesses dying than we do starting', June 2, 2015

Brookings Institution, Declining Business Dynamism in the United States: A Look at States and Metros, May 2014

Email interview with Robert Litan, nonresident senior fellow in the Brookings Institution’s economic studies program, June 2, 2015