Many Americans want to be in business for themselves. A 2007 Organization for Economic Cooperation and Development (OECD) survey shows that 61 percent of Americans said they would prefer to be self-employed than to work for someone else.
The preference for self-employment is not surprising given the significantly higher rate of job satisfaction that self-employed people have over those who work for others. As I have discussed elsewhere, studies show that people need to earn more than twice as much to express the same level of job satisfaction working for someone else as they do working for themselves.
However, relatively few people become self-employed right out of school – self-employment is, in fact, relatively uncommon among people under the age of 25. Most people go into business for themselves after having worked for someone else.
Americans’ preference for self-employment combined with their tendency to work for others before going into business for themselves raises the question: which jobs have the greatest odds of leading to self-employment?
According to data from the Bureau of Labor Statistics (BLS), the occupation with the highest odds of leading to self employment is “door-to-door sales worker, news or street vendors, and related worker.” Almost 95 percent of people in this occupation are self-employed. The next two occupations with the highest odds of leading to self-employment are agricultural manager and construction manager, which have self-employment rates of 79.9 and 60.9 percent, respectively. (Click here for the BLS data on self employment rates by major occupational group in 2008 – Excel spreadsheet).
There are roughly 90 occupations – from actuaries to fish and game wardens to nuclear technicians to procurement clerks – that the BLS data show have no self-employment. (Before someone posts a comment or sends me an email saying that they know a self-employed actuary or game warden, let me point out that the BLS relies on surveys to figure this out and no one in their sample was self-employed. The actual incidence of self-employment might be a small fraction above zero.)
The difference across occupations in the odds of being self-employed is quite large – much bigger, in fact, than the variation across psychological traits or demographics. For instance, the odds of being self-employed are 369 times higher for writers and editors than for human resource assistants, but the odds of being self-employed are only twice as high for men as for women.
At this point, I’m sure that at least one of you is now thinking that one’s occupation may have big effect on whether a person is self-employed, but self-employment is different from owning a business. That’s true, but self-employment and business ownership are a lot more similar than you might think. These days, 36 percent of the self-employed run incorporated businesses and nearly 80 percent of U.S. businesses have no employees (as compared to about 87 percent of the self-employed).
Researchers, policy makers, and practitioners shouldn’t forget how important occupation is to explaining whether or not someone is in business for him or herself.