November 1, 2014

Employment by the Self Employed

If you are looking for a job working for someone in business for him or herself, focus on the incorporated self-employed. While only a fraction of self-employed people employ anyone else, those whose company is incorporated are much more likely to have employees than those whose business is unincorporated.

Moreover, the unincorporated self-employed are much more likely than the incorporated self-employed to run micro enterprises. According to Bureau of Labor Statistics (BLS) data, 95.2 percent of people in business for themselves who have not incorporated have fewer than ten employees as compared to only 80.1 percent of those who have incorporated.

The gap in the odds of having a “medium-sized” small businesses is even higher. As the figure below shows, 17.2 percent of incorporated self-employed people have 10 to 99 employees, but only 3 percent of the unincorporated self-employed do.

Strangely, the gap shrinks for “large” small businesses. According to the BLS estimates, 2.7 percent of the incorporated self employed have 100 or more workers, as compared to 1.9 percent of the unincorporated self-employed.

Fraction of Self-employed People with Different Numbers of Employees:

Source: Created from Bureau of Labor Statistics data, courtesy of Steve Hipple

7 Comments ▼
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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.

7 Reactions

  1. This is an interesting article. I will be taking the leap soon to run my own business dealing with European Accommodation service.
    I will be self employed in the beginning, outsourcing many aspects of my business before employing people.

    At the moment, I am staring up the Everest, trying to climb it.

    Thanks again for the informative statistics.

    Norbert

    • Norbert,
      All the best on your venture. I took the leap of faith a few years back and have chronicled my experience on my website http://www.self-employment-guide.com. Please have a look. Hopefully it will help you with your journey.
      That website is for all those folks that are self-employed or self-employment aspirants. I will really appreciate if you can share your story as you travel this path, with the rest of us on that website.
      Thanks and good luck.

      • Hi Manas,

        Thank you for the info. I have checked out your site and found some interesting topics. Oh! by the way, I love the humour.
        Yes, I had this in the plan for around the past 4 years. In-fact, what I have in plan for my accommodation site in terms of platform/function does not exist on the net.I can say this after thorough research.I already have around 5-10 clients without even being able to show them a demo of how it works. I told a few I.T. people I can trust, and they thought this idea can be something special on the net. I am upbeat.

        Thanks. I will read your site later in the day.

  2. I would be curious what the definition of ‘incorporated’ is. My first thought is a business that is incorporated, as in a corporation. However, I imagine for the sake of this article, it also includes LLC (Limited Liability Companies), which is a legal business entity that many entrepreneurs choose over becoming a corporation.

  3. Great article, Thanks for all the information!

  4. Thank you for the insightful article. The statistics are are very interesting.

  5. interesting stats. thanks for posting this.

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