PROTECTING SMALL BUSINESS, PROMOTING ENTREPRENEURSHIP

May Jobs Report: Recovery Continues, with a Hopeful Spike in Self-Employment

By at 4 June, 2021, 11:00 am

The last time that the number of unincorporated self-employment hit the 10 million mark was in August 2008 – nearly 13 years ago.

by RAYMOND J. KEATING –

As highlighted in the latest employment report from the U.S. Bureau of Labor Statistics, the jobs recovery continued in May. But most interesting was a major spike up in self-employment.

The establishment survey showed total nonfarm payroll employment increased by 559,000 in May. Meanwhile, the household survey pointed to job growth of 444,000 during the month.

(As the BLS notes, “This news release presents statistics from two monthly surveys. The household survey measures labor force status, including unemployment, by demographic characteristics. The establishment survey measures nonfarm employment, hours, and earnings by industry.”)

The household survey tends to better capture small business and startup activity. It’s also the part of the monthly employment report that provides key data on the labor market.

With the 444,000 increase in employment, the household survey showed the employment-population ratio inching up from 57.9 percent in April to 58.0 percent in May. However, the labor force actually declined slightly, by 53,000, with the labor force participation rate declining slightly from 61.7 percent in April to 61.6 percent in May.

To put those numbers in perspective, in pre-pandemic February 2020, the labor force participation rate stood at 63.3 percent, and the employment population ratio at 61.1. So, with the number of employed at 151.6 million in May 2021 versus 158.7 in February 2020 – still down by about 7.1 million – much work remains.

Self-Employment Spikes

However, most interesting and encouraging, if this level holds and grows in coming months, the number of unincorporated self-employment – a measure of entrepreneurship – jumped from 9.65 million in April to 10.0 million in May.

That was a huge leap up. For good measure, the last time that the number of unincorporated self-employment hit the 10 million mark was in August 2008, that is, nearly 13 years ago.

Source: Federal Reserve Bank of St. Louis, FRED

Alongside other positive indicators, such as the increase in the number of new business applications (see SBE Council’s brief), let’s hope that this increase in May in the number of self-employed signals the beginnings of a rebirth of entrepreneurship, which is vital for economic growth going forward.

Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council.

 

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