Economic News

Self Employment And The U.S. Economy

Self-employment has a significant impact on the economy of the United States. The growth is the number of self-employed people in the U.S. over the decades has helped to reduce the joblessness rate. Self-employment also has a positive impact on salary and wage employment as well as poverty reduction and per capita income growth. Many of the self-employed are able to identify business opportunities in which they are able to make a lucrative income with limited skills. With some vision, connections, finances and creativity, people can make a good living being self-employed.

A Growing Body Of Data

A monthly sample survey collected through the Current Population Survey has been gathering data on self-employment in the United States since the 1940s. The surveys have been collected from about 60,000 households annually and asks questions about employment about people 16 years and older. The official Bureau of Labor Statistics self-employment estimates since 1967 show the number of people who own their own businesses. They examine self-employment trends of people from various socioeconomic and demographic groups. This includes information on paid employees of the self-employed.

Millions Of Incorporated And Unincorporated Businesses

In the United States, self-employment is a major source of jobs. In 2015, 15 million people, or 10.1% of the U.S. workforce, were self-employed. About 9.5 million self-employed people incorporated their businesses. The other 5.5 million businesses were not incorporated. Most self-employed people incorporate their businesses and use the corporate structure to receive traditional benefits. Those benefits typically include tax considerations, limited liability and the ability to use stocks and bond to raise capital.

A Dip In Self-Employment Rates

The self-employment rate has dropped over the last few decades. In 1994 the percent of the workforce that was self-employment was 12.1%. It fell to 10.1% by 2015. This drop in the self-employment rate coincides with a decrease in agricultural employment. This may be because large farming operations have been taking over and consolidating small farms. Many people who work in the agriculture industry list themselves as self-employed. Between 1994 and 1999, the percent of unincorporated self-employed people was between 3.2 and 3.5%. From 2000 to 2008, the self-employment rate went up from 3.3 to 4%. The from 2010 t0o 2015 the self-employed rate dropped to 3.7%

More Self-Employed Older Workers

Research shows that there tends to be more self-employed older workers than younger ones. Workers aged 65 and up had the highest rate of self-employment at 15.5%. For workers between the ages of 16 and 24, the self-employment rate was 1.9%. One possible reason older workers tend to have a higher rate of self-employment is because they tend to have more managerial skills and enough capital saved to start their own businesses. Plus, they also have access to the credit necessary to finance a business. While all age groups have more unincorporated businesses than incorporated one, the older the self-employed person is, the more likely they are to have an incorporated business.

More Men Are Self-Employed Than Women

Men have a better chance than women of working in occupations where they hire self-employed workers. Therefore, it is no surprise that while men are 7.4% of the unincorporated self-employed, the unincorporated self-employment rate for women is 5.2%. When it comes to incorporated self-employed businesses, men own 4.9% of them while women own 2.3% of them. Two of the reasons for this disparity is because there are more men working in the construction industry and more men tend to have management experience on their jobs.

Education And Self-Employment

The level of education a person has doesn’t limit their interest in being self-employed. People who are over 25 years of age and don’t have a high school diploma have the highest rate of unincorporated self-employment at 10%. People with bachelor’s degrees have a self-employment rate of 6.2%. People with master’s degrees have a self-employment rate of 5.2%. People with professional degrees have a self-employment rate of 9.1%. However, people with professional degrees have the highest rate of incorporated self-employment at 12.2%. People with doctoral degrees have an incorporated self-employment rate of 8.4%. People who do not have a high school diploma have an incorporated self-employed rate of 2.1%.

Self-Employment Rates Of Veterans And Non-Veterans

Research shows that veterans usually have a self-employment rate that is higher than non-veterans. They are more likely to be self-employed than nonveterans. Veterans have an unincorporated self-employment rate of 7.1^. On the other hand, non-veterans have an unincorporated self-employment rate of 6.4%. Veterans tend to have a higher self-employment rate than non-veterans because of their demographic profile. Self-employed veterans are more likely to be older, male, and have more skills and experience than non-veterans. About 40% of self-employed veteran are 55 or older compared to 21% of self-employed non-veterans.

Self-Employment Rates By Race

In the United States, Whites are more likely to be self-employed business owners than Asians, Blacks or Hispanics. For Whites, the unincorporated self-employment rate is 6.9%. Hispanics have an unincorporated self-employment rate of 6.4%, while the unincorporated self-employment rate for Blacks is 3.6%. Asians on the other hand, have an unincorporated self-employment rate of 5.4%. When it comes to incorporated businesses, both Whites and Asians have a self-employment rate of 4%. However, foreign born workers in the United States have a self-employment rate of 7.6%, while workers born in the United States have a 6.1% self-employment rate.

The Reality Of Being Self-Employed

There are many benefits of being self-employed. But there are also many responsibilities. While most people picture setting their own schedule, working toward their dream and being their own boss, being self-employed also has many challenges. Self-employed people must find jobs that provide a good income, buy all the supplies and equipment needed to do the job, pay the required taxes to the IRS and build their business from scratch. While doing all of those things might be difficult, for a growing number of people, owning a business is the American dream. Plus, the self-employed play a vital role in keeping the American economy vibrant.