Fulltime Entrepreneurs Hit a High in 2022

By SBE Council at 10 January, 2023, 10:11 pm

SMALL BUSINESS INSIDER

by Raymond J. Keating –

How about a bit of good economic news? According to self-employment data from the U.S. Bureau of Labor Statistics, the total number of fulltime entrepreneurs hit a high in 2022.

In August, SBE Council pieced together the post-pandemic puzzle on entrepreneurship. And in terms of updated data, the main focus was on self-employment numbers. The BLS updated those numbers in its latest “Employment Situation” report released last week.

BLS self-employment numbers capture individuals whose primary occupation is owning a business, and that business can be unincorporated or incorporated, and self-employed can be sole proprietors or have payroll. In the end, the BLS self-employment data matters because it essentially captures individuals who are fulltime entrepreneurs. This data also are valuable for being updated monthly, as opposed to long lags (e.g., two to three years) with other data on the number of businesses in our economy.

Regarding the data itself, incorporated self-employment numbers are not seasonally adjusted, while unincorporated self-employment data come unadjusted and adjusted.

Looking at the latest month, the seasonally adjusted data showed 9.827 million unincorporated self-employed in December 2022. That was up from the previous month’s 9.686 million, but down from 9.953 million in October, and down from the year’s high hit in May at 10.054 million. And the 9.827 million in December 2022 compared to 10.06 million a year earlier.

As for the seasonally unadjusted incorporated self-employed, that registered 6.811 million in December 2022, and that was up from the 6.213 million in December 2021, and registered the highest December level in a dataset going back to 2000.

Let’s get the full picture by looking at the annual average data for combined unincorporated and incorporated self-employment.

● 2019: During the pre-pandemic 2019, total self-employment (again, annual average) registered 15.722 million (9.539 million unincorporated plus 6.183 million incorporated). That total declined to 15.535 million in 2020 (9.253 million unincorporated plus 6.282 million incorporated), when the pandemic struck.

● 2021: In 2021, the total increased to 16.072 million (9.956 million unincorporated plus 6.116 million incorporated). That was higher than the 2019 pre-pandemic level.

● 2022: Growth continued in 2022 to a total of 16.529 million (9.874 million unincorporated plus 6.655 million incorporated). And as noted in the chart below, the total number of fulltime entrepreneurs hit a record high (again, data going back to 2000).

Source: U.S. Bureau of Labor Statistics data, calculations by author

These totals line up at least directionally with the higher levels of new business applications we’ve experienced after the pandemic first struck. (See the SBE Council blog on business applications here.)

Unfortunately, there remains a growth gap even in these numbers, as levels aren’t where we would hope given the big declines tied to the Great Recession and the pandemic onset.

But imagine how entrepreneurship in the U.S. would be further thriving if policymakers were advancing a pro-entrepreneur, pro-growth agenda featuring tax and regulatory reform and relief, free trade, restrained government spending, and pro-entrepreneur, pro-work immigration reforms.

Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council. His latest book is The Weekly Economist: 52 Quick Reads to Help You Think Like an Economist.