The Era of Declining Self-Employment

The variety of employed Americans rose from 144,144,000 in October 2013 to 144,775,000 in November 2013, a rise of 631,000, according to Federal government data.

That’s excellent news. More people going back to work is something that everybody – left, right and center – agrees is ideal for the rustic.

But a more in-depth investigate the information shows that the employment situation isn’t pretty much as good for those Americans in business for themselves as when you work for others. Hidden within the rise within the variety of employed Americans is another trend. It’s a divergence between what has happened to people working for themselves (what economists call the self-employed) compared to these working for others (what economists call the wage-employed).

Last month, the choice of wage-employed Americans increased by 673,000, while the variety of self-employed Americans declined by 42,000. (Wage employment is total employment minus the sum of incorporated and unincorporated self-employment.)

This divergence isn’t only a one-month aberration. Consider what has happened during the last year. From November 2012 to November 2013, the variety of Americans working for others rose by 1,451,000. But, over the identical period, the collection of self-employed Americans fell by 225,000.

Both wage and self-employment took an analogous-sized hit in the course of the Great Recession, with self-employment dropping 5.5 percent between November 2007 and November 2009. Throughout the same period, wage employment declined by a comparable 5.4 percent. But since then the recovery have been uneven. Wage employment has nearly returned to levels seen before the industrial downturn. In November 2013, it was only 0.8 percent not up to it was in November 2007. Against this, self-employment has declined further, and is now 8.1 percent below its November 2007 level.

The divergence in wage and self-employment implies that fewer Americans are in business for themselves now than before the comprehensive Recession. Bureau of work Statistics (BLS) data reveal that 6 percent of the yankee population is now self-employed, versus 6.9 percent six years ago. While a difference of 0.9 percentage points may not sound like loads , it’s. If a similar fraction of the population was self-employed today as six years ago, 2,223,000 more Americans would currently be self-employed.

The history of self-employment during the last six years stands in sharp contrast to what happened over the former seven. From November 2000 to November 2007, the variety of self-employed Americans increased by 10.9 percent, while the variety of U.S. wage-employed rose by only 6.6 percent.

If policy makers are as fascinated by self-employment as they appear to be at election time, they could check out what’s been different over the last six years versus the former seven. The sooner period was much more favorable to self-employment than the latter one. Perhaps a metamorphosis in policies is responsible.

Self-Employed Photo Via Shutterstock

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