December 19, 2014

Unemployment Rate Falls In September But What Happened To Self Employment?

Given the hubbub about the large drop in September’s unemployment rate, it’s not surprising that few of the other numbers released received much attention. But I think we ought to also think about what happened to the self-employment numbers, and not just because I care about entrepreneurship.

bag over face

Because only about 10 percent of Americans work for themselves, self-employment doesn’t drive the overall jobs number the way wage employment does. But it’s important nonetheless. Unlike increases in wage employment, increases in self-employment might lead to future job creation because some self-employed people hire others.

A big jump in self-employment, particularly the incorporated self-employed who are more likely to hire others, might translate into job gains down the road.

Unfortunately, the figures for self-employment weren’t nearly as good as the overall figures last month. The number of self-employed Americans rose by a seasonally adjusted 31,000 in September, 2012. The percentage increase was only one third that of people employed by others.

The self-employed who run their own corporations – the biggest employers among the self-employed – had the weakest gains. Seasonally adjusted, the number dropped by 43,000 people last month.

Over the long term, the numbers are improving, but not as fast as one might hope. Incorporated self-employment is still down by 188,000 (or 3.4 percent) since January 2009.

Moreover, as a fraction of the population, it is down more. Because the population has grown substantially over the past four years, we still need to add 399,000 more incorporated self-employed people to get back to the same fraction of the population in incorporated self-employment as we had in December of 2008.

The almost twitter length message here is this: Incorporated self-employment hasn’t been improving as fast as wage employment, didn’t improve much in September, and still has a ways to go to get back to where it had once been.

Unemployment Drops Photo via Shutterstock

5 Comments ▼

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.

5 Reactions

  1. Your twitter length message is 38 characters too long.

  2. Marty,

    I am not sure whether you are being serious or poking a little fun here. You are right, of course, so I will change it to say “almost twitter length”

    Thanks,

    Scott

  3. I agree, it would be great to see more self-employed people out there. Are current policies just not supporting/encouraging the self-employed.

  4. Being incorporated self employed since 1995, I fear not being able to pay the increases in doing business. I am not able to increase the rate of service and products to business expenses. The increase in business expenses are eating away at any profits. I don’t see where any business loans will help because of the rate of increase in business expense. My business will most likely fall in the category of lost businesses, adding to, lost self incorporated business. I am also not hiring anyone else to help improve employment rates as I did in 1996. Not a good outlook. We need the cost of doing business not to climb at the rate it is and the cost of living not to increase at the rate it is as well.

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