PROTECTING SMALL BUSINESS, PROMOTING ENTREPRENEURSHIP

Troubling Data on Full-Time Self-Employment

By at 7 February, 2024, 2:13 pm

by Raymond J. Keating –

The U.S. Bureau of Labor Statistics (BLS) offers a monthly update on an important measure of entrepreneurship, i.e., the number of self-employed. The numbers are included in the monthly employment report.

Not only does the data cover unincorporated and incorporated self-employed, but these two sets of numbers cover individuals who identify themselves as full-time entrepreneurs.

The incorporated monthly data is not seasonally adjusted, so to get a full picture of full-time entrepreneurship, we need to look at the combined annual averages for self-employed (that is, incorporated plus unincorporated).  Also, the incorporated data only go back to 2000.

Given these parameters, total self-employed had hit a high of 16.15 million in 2007. It subsequently declined with the Great Recession to 14.58 million in 2011. The subsequent recovery was sluggish, at best, getting back to 15.72 million in 2019. During the pandemic year of 2020, self-employment dropped to 15.53 million. However, growth was fairly strong in 2021 and 2022 – hitting 16.07 million in 2021 and 16.53 million, a new annual high, in 2022.

That new high, of course, was most welcome.

However, in 2023, total self-employment declined to 16.41 million. Unincorporated self-employed for the year declined (from 9.87 million in 2022 to 9.73 million in 2023), while incorporated self-employed inched up (from 6.66 million in 2022 to 6.68 million in 2023).

In the end, total self-employment in 2023 (again, annual average of 16.41 million) did not substantively grow since 2007 (annual average of 16.15 million).

While we certainly celebrate and appreciate the growth of new business applications and business establishment births post-pandemic (as noted in other sets of data), and the apparent growth in part-time entrepreneurship (with the hope that many part-time entrepreneurs become full-time), this stagnation in full-time entrepreneurship (by the way, entrepreneurs with and without employees) is a troubling 16-year-long trend that raises concerns over innovation, and economic, income and employment growth into the future.

Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council. His latest books on the economy are The Weekly Economist: 52 Quick Reads to Help You Think Like an Economist and The Weekly Economist II: 52 More Quick Reads to Help You Think Like an Economist.

 

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