U.S. business applications rose 15% as hiring plans fell

By Grace Kim

New-business applications in the U.S. rose some 15% year over year as of June, while applications from businesses that planned to hire workers declined, according to the Bank of America Institute.

The gap has widened in recent years. The institute associated it with a change in startup design. “More companies are being started with leaner operating models,” its report said.

Bank of America Institute researchers pointed to the spread of AI tools as one reason founders can launch with a smaller staff. They described that link as a possibility, not a settled explanation for every change in business applications or hiring plans.

The report identified three areas of work that digital tools may automate: administrative tasks, bookkeeping and content creation. In the researchers' view, automating those functions could reduce the number of employees needed when a company opens.

“If AI or other digital tools can help founders automate administrative tasks, bookkeeping or content creation, the upfront need for employees could be lower than in past startup cycles,” the researchers wrote. “That would help explain why headline applications can rise even as those with planned wages lag.”

The institute's 15% figure covers applications overall. It reported a decline for businesses with planned hiring but gave no percentage for that decline. The split widened between company formation and planned payroll.

In plain terms, more Americans are trying to start businesses, but those applications aren't producing a matching rise in planned hiring.

Why are fewer new businesses planning to hire?

A separate Nasdaq analysis of Census Bureau data found that AI-enabled founders of one-person businesses, or “solopreneurs,” increasingly drive America's new-business boom.

Nasdaq economist Michael Normyle said: “the acceleration in business formation has come almost entirely from those one-person companies.”

His analysis of the Census data showed:

• Applications from one-person companies surged 20% since early 2025.
• Applications from companies likely to hire remained nearly flat.

The contrast matters because planned hiring has lagged the overall application total. The Bank of America Institute said the split could mean fewer new jobs for today's job seekers, at least initially.

The institute also stopped short of saying lean operations will persist. Its researchers said it remains to be seen whether the businesses will add workers later. A lower starting staff count, therefore, does not settle a company's longer-term hiring plans.

Nasdaq's Census-based analysis attributes the acceleration almost entirely to one-person companies, while applications from likely-to-hire businesses remain nearly flat.

Is AI already replacing small-business jobs?

A separate Bank of America analysis of small-business operations adds an important limit to the AI narrative. It found that many small businesses are increasing their technology spending. Even so, that analysis said there were “still limited signs that AI is replacing jobs” over the longer term.

The Bank of America Institute draws a distinction between adopting technology and demonstrating labor replacement. Its researchers said the evidence suggests AI may make it easier to form a business. They stopped short of calling it a proven driver of broad-based productivity gains across small businesses.

“For now, we think evidence suggests that AI may be making it easier to form a business rather than a proven driver of broad-based small business productivity gains,” the researchers wrote.

The researchers did not rule out the early staffing effects described in the formation report. They said automation of administration, bookkeeping or content creation could lower initial staffing needs. Their conclusion does not establish that AI has already replaced jobs or produced broad-based small-business productivity gains.

The hiring outlook is similarly unsettled. The institute said lean launches could mean fewer openings for job seekers now, but it remains to be seen whether the businesses will add workers later. The cited research does not yet resolve that timing question.

The institute's figures show two trends: new-business applications are rising, and many small businesses are boosting technology spending. Its evidence on job replacement remains limited over the longer term.

The near-term trade-off is a surge in formations without a matching rise in planned hiring; the long-term test is whether those lean companies eventually add workers.