PROTECTING SMALL BUSINESS, PROMOTING ENTREPRENEURSHIP

BLS Data Reveals Hopeful Trend on Self-Employment

By at 4 February, 2022, 7:16 pm

by Raymond J. Keating –

The January employment report from the U.S. Bureau of Labor Statistics includes the latest estimates on the self-employed.

The report offers two measures of self-employment.

The first is unincorporated self-employed, with seasonally adjusted data going back to 1948. As noted in the following chart, after a steady and dramatic decline from 1950 to 1970, which reflected people moving out of farming, growth was robust into 1997.

It then declined some, with growth resuming from 2002 through 2006. A period of decline again took hold, which accelerated when the pandemic hit.

Source: Federal Reserve Bank of St. Louis, FRED

Self-employment growth resumed in May 2020, and turned out quite robust through July 2021. (As seen clearly in the following chart.)

And we have since seen, though, there has been some decline. Still, the January 2022 level remains above the February 2020 level.

Source: Federal Reserve Bank of St. Louis, FRED

The second measure is incorporated self-employed, with non-seasonally adjusted data going back to January 2000. One can see in the following chart that the trend was generally up from 2001 to 2007, then general stagnation to 2016, and some uneven growth into early 2020. Then the pandemic hit.

Source: Federal Reserve Bank of St. Louis, FRED

If we take a look at comparable January data, there were 6.366 million incorporated self-employed in January 2022 compared to 5.938 million in January 2021. In pre-pandemic January 2020, there were 6.472 million self-employed.

The January 2020 level was the highest January level in the dataset, with January 2022 then registering second highest.

If we combine non-seasonally adjusted data for incorporated and unincorporated self-employed, we see that the total went from 15.698 million in January 2020 to 15.231 million in January 2021 to 15.930 million in January 2022.

So, in rough terms, we saw a loss of 467,000 self-employed during the first near-year of the pandemic (from January 2020 to January 2021), and then a gain of 699,000 self-employed in the next year (January 2021 to January 2022). That means as of January 2022 self-employment is up by about 232,000 versus the pre-pandemic level.

These data point to the fact that small businesses, as represented by the self-employed, were hit hard by the pandemic, but that we also have seen growth in entrepreneurship during the recovery. That is consistent with the surge in new business applications data we have seen, and provides hope for further recovery and economic expansion looking ahead.

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

 

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