Featured Indicator: Self-Employed Workers

Any workforce analysis that seeks to understand trends or suggest strategies for the local and regional labor market is incomplete without an understanding of the self-employed workers living in the region. Labor market data from Emsi, to which Camoin Associates subscribes, allows us to dig into trends in self-employment across the United States. Emsi categorizes self-employed workers as those individuals who consider self-employment a significant part of their income and/or taking a significant part of their time. This is largely based on responses to the American Community Survey, with additional input from other sources. It is important to note that self-employment is notoriously difficult to measure, due to a paradox of underreporting by the self-employed and overcounting of self-employed individuals who engage in different types of self-employment activities (resulting in multiple tax and other form filings). While this article focuses on national level data, Emsi’s data is available down to the ZIP code level.

What is the data telling us?

As of 2020, there are nearly 10.5 million self-employed workers in the United States representing 7% of total jobs. Sectors with the highest proportion of self-employed workers include Construction; Other Services; and Professional, Scientific, and Technical Services.

 

Since 2010, the number of self-employed workers has grown, but at a slower pace than non-self-employed workers (2% vs. 10%). Based on current trends, it is expected that the past of growth in self-employment will accelerate to 4% in the coming decade while growth in other jobs slows slightly to 7%.

 

Why is this important?

Trends in self-employment are critical for economic developers to understand, in order to implement and advocate for policies that appropriately support the self-employed workforce. In light of COVID-19 this is particularly important as self-employment tends to increase during recessions and periods of high unemployment as it enables workers who lose their jobs to continue to work. Oftentimes, self-employment during recessionary periods helps people get by and does not necessarily boost innovation as self-employment during periods of economic growth does. Having a pulse on self-employment in their region can help economic developers understand where resources are needed to help promote innovation among existing and new entrepreneurs, particularly as we continue to recover from COVID-19.

 

Fossen, F.M. Self-Employment Over the Business Cycle in the USA: A Decomposition. Small Business Economics, 29 July 2020.

Goetz, S. et al. The Economic Impacts of Self Employment. Journal of Agricultural & Applied Economics, Aug. 2012.

McKernan, S. and Salzman, H. Self-Employment and Economic Mobility. The Urban Institute.

 

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