Is the Job Loss Among Entrepreneurs Reversing Itself?

Elsewhere I have written that the job loss has been worse for entrepreneurs than for others since the recession began. That’s true, but, in the past couple of months, the job situation has appeared to improve among entrepreneurs.

From July through September 2008, entrepreneurs were disappearing at a fairly fast rate. The seasonally adjusted self employment rate for people working outside of agriculture fell 0.4 percent in that period. However, since October, the situation has improved. The non-agricultural self-employment rate stayed the same in November, improved in December, and declined only slightly in January (see the table below).

The Seasonally Adjusted Non-agricultural Self-Employment Rate by month from June 2008 through January 2009.

U.S. self employment rate 2008 to 2009

Source: Bureau of Labor Statistics web site

The catch is that the “improvement” in the job situation among entrepreneurs appears to be a relative one. The better self-employment rates we have seen in recent months are largely the result of a cessation in declines in the number of self-employed people, coupled with continued declines in overall employment.

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About the Author: Scott Shane is A. Malachi Mixon III, Professor of Entrepreneurial Studies at Case Western Reserve University. He is the author of nine books, including Fool’s Gold: The Truth Behind Angel Investing in America; Illusions of Entrepreneurship: The Costly Myths that Entrepreneurs, Investors, and Policy Makers Live By; Finding Fertile Ground: Identifying Extraordinary Opportunities for New Ventures; Technology Strategy for Managers and Entrepreneurs; and From Ice Cream to the Internet: Using Franchising to Drive the Growth and Profits of Your Company. I discuss the topic of this post in more detail in my book Fool’s Gold: The Truth Behind Angel Investing in America .

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Scott Shane


Scott Shane Scott Shane is A. Malachi Mixon III, Professor of Entrepreneurial Studies at Case Western Reserve University. He is the author of nine books, including Fool's Gold: The Truth Behind Angel Investing in America ; Illusions of Entrepreneurship: and The Costly Myths that Entrepreneurs, Investors, and Policy Makers Live By.

10 Reactions

  1. Could you draw the conclusion that in times of high unemployment, people are looking into the possibilities to start their own business?

    By the way: Do you rely on any special index when it comes to do an analysis of the economy and the situation for small businesses? I am working on a new piece for Open Forum there I will talk about some different indexes. I will write a longer piece on a specific index as a follow. I have been following the Purchasing Managers’ Index (Institute for Supply Management) for some time as an experienced purchaser.

  2. It’s an interesting thing about this data. It comes from the Household survey.

    Now, if you look at wage and salary data at the U.S. Census Bureau of Labor Statistics website, it doesn’t look nearly as alarming an employment picture as the newspapers and media make it sound. The media makes it sound like half the population is on the bread line (OK, I exaggerate — but still there is a disconnect there, I think).

    Very interesting….

  3. The numbers look interesting, but it is just a statistics. What about people losing their job and trying to start a business as an option?

  4. I’d assume the increase in entrepreneurs is because as more people lose their jobs they are deciding to work for themselves.

  5. The Job market for Small businesses makes up 90% of the economy so people will to step out there and promote their business will do okay.

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