Self-Employment Since 2000





The media is full of stories about what’s happened to the stock market, overall job creation, and other economic measures since the start of the millennium. But little of this attention has been devoted to entrepreneurial activity. So I thought I’d summarize a few numbers about what happened to self-employment from 2000 through 2008.

Overall, growth in self-employment has been flat. The Bureau of Labor Statistics (BLS) data show that from 2000 through 2008, the total number of non-farm self-employed people increased only 0.2 percent, less than the rate of growth of the labor force.

However, the overall growth in self-employment masks differences in the goods and services sectors of the economy. From 2000 through 2008, self-employment shrank 2.6 percent in the goods sector, but grew 1.1 percent in the service sector (private households and the government are excluded from this calculation).

Even comparing the goods and services sectors hides wide variation across industries in what has happened to self-employment. In the table below, I’ve summarized the percentage change in the number of self-employed people in different industry sectors.

The differences between industry sectors are substantial. For instance, the number of people working for themselves in wholesale trade fell 15.3 percent from 2000 through 2008, but the number of self-employed in both educational services and mining increased 29.3 percent.

Change in self-employed numbers

In short, from 2000 through 2008, the number of self-employed grew slightly, and did not keep up with the increase in the size of the labor force. The number of people working for themselves rose in the service-providing part of the economy, but fell in the goods-producing portion. Self-employment grew in some industry sectors, but shrank in others. Rates of growth were highest in mining and educational services and lowest in agriculture and wholesale trade.

8 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.

8 Reactions

  1. It’s the “numbers game” explained for those that take a statistic at face value. Thanks Scott.

  2. This statistic may reflect the fact that it is generally much cost prohibitive to start any business that requires the purchase of inventory. Initial start up costs can be a significant barrier to entry — especially when it is next to impossible to get financing for a start up business.

  3. It couldn’t have been otherwise. From the beginner’s point of view, the dynamics of economics in general and of stock market in particular lack flexibility. I think that’s why the rates raised in the service-providing sector and went down in agriculture, manufacturing or trade. The more specialized the sector, the less chances for the self-employed to succeed…

    Lloyd

  4. Being raised on a farm, I understand how farms are getting bigger and pushing out the “family farms”. But how in the world do you get such a large increase in the mining industry? Is it people putting up their own oil pumps or what? I though mining was all about huge operations.

  5. Anita Campbell

    I think this is interesting, Scott.

    But I question the BLS numbers. You see, I do not think the BLS is in tune with the way small businesses operate today.

    A lot of small businesses get started as fledglings and don’t necessarily show up on radar screens as businesses until they start to take off. The way people work today is a whole different thing compared with 10 years ago.

    The government doesn’t care about that, because their mantra is “jobs jobs jobs”.

    But whether the business “creates jobs” is a separate issue from what I consider important, which is: are these businesses buying products and services in the marketplace? Are they active in the stream of commerce? Are they bringing money in the door, regardless of whether they call it a “job.” And the answer is, “YES!”

    Check out this document, for instance, from Trimtabs, which explains the what and why of how self-employment numbers are understated:

    http://www.trimtabs.com/site/TTSampleResearch/TrimTabsResponseToBLSFAQ.pdf

    I’d be interested in your take on this TrimTabs document, Scott. What do you think of it?

  6. If you are considering buying a business and want to understand the real issues from a real buyer visit my blog at http://insightersguidetobusinessacquisitions.wordpress.com/

  7. It is sad to see agriculture declining, and being one of the biggest self-employment industries in decline because food security is one of the most important barriers against poverty and dependence on handouts and charity.

    Then mining is showing the biggest growth, which is even more worrying. Just what exactly are these self employed people mining? How sustainable are they engaging in these processess? Can our planet really handle this kind of approach in the long run?

  8. I wonder why is mining on such a rise? Don’t you need a fairly large capital to get started in this industry?

    On the other hand, the agricultural decline was to be expected, not just in the US, but many other countries as well. Such a shame.

    Nevertheless, very interesting info there Scott.

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