No. 243

 December 2004

SMALL BUSINESS

RESEARCH

SUMMARY

Self-Employed Business Ownership Rates 

in the United States: 1979-2003 

by Robert W. Fairlie, Santa Cruz, CA

under contract no. SBAHQ-04-M-0248 (2004, 28 pages)

This Small Business Research Summary (ISSN 1076-8904) summarizes one of a series of research papers prepared under contracts

issued by the U.S. Small Business Administration’s Office of Advocacy. The opinions and recommendations of the authors of this study do

not necessarily reflect official policies of the SBA or other agencies of the U.S. government. For more information, write to the Office of

Advocacy at 409 Third Street S.W., Washington, DC 20416, or visit the office’s Internet site at www.sba.gov/advo.

Purpose

Published figures from the U.S. Department of Labor,

Bureau of Labor Statistics (BLS) tell only part of the

story of the self-employed. The figures exclude the

incorporated self-employed, an increasingly popular

tax status, and generally do not include owner demographics. Fortunately, microdata are available for

users to generate customized figures. Microdata are

used here to produce more complete self-employment

figures and to follow trends in self-employed business

owner demographics.

Overall Findings

Self-employment numbers have grown slowly and

steadily since the late 1970s, and self-employment

rates have been relatively stable. In recent years,

both the counts and rates of male, female, Latino,

African American, White, and Asian self-employed

have increased.

Highlights

• The number of non-agricultural self-employed

reached 12.2 million in 2003, an increase of 716,000

or 6.2 percent from 2000’s 11.5 million. The figure

of 9.3 million published by BLS for 2003 excludes

the incorporated self-employed.

• Self-employment counts and rates (self-employed

divided by the labor force) were up from 2000 to

2003 for all genders and races, except for Asian men.

• The Asian self-employment rate (the number of

Asian self-employed divided by the number of

Asians in the labor force) peaked in 1992 at a relatively high 12.9 percent, then dropped over the next

decade to 9.4 percent in 2000 and increased to 10.4

percent by 2003. Asian self-employment figures are

available only since 1989.

• Latino self-employment increased significantly,

from 241,000 in 1979 to 1 million in 2003. The

Latino self-employment rate was 7 percent (the number of Latino self-employed divided by the number

of Latinos in the labor force) in 2003. 

• In 2003, African-American self-employment

reached its highest levels in both number, at 710,000

and rate, at 5.2 percent (the number of AfricanAmerican self-employed divided by the number of

African Americans in the labor force).

• Women’s self-employment reached 3.8 million

in 2003 and their self-employment rate was 6.8 percent (the number of self-employed women divided

by the number of women in the labor force). Men’s

and women’s self-employment exhibited similar

peaks and valleys over the 1979-2003 period.

• Male veterans’ self-employment rates (the number of self-employed male veterans divided by the

number of male veterans in the labor force) were

higher than those of nonveterans from 1979 to 2003.

In 2003, the male veteran self-employment rate was

13.7 percent. 

• Male veteran self-employment declines have

mirrored their declines in the labor force. From 1979
to 2003, male veteran self-employment fell from 2.9

million to 1.4 million, while the male veteran labor

force fell from 20.2 million to 10.4 million. 

• Regionally, the West has had the highest selfemployment rates (the number of self-employed

divided by the labor force), 1.8 percent higher than

the national average from 1979 to 2003.

• The make-up of the self-employed has changed

from 1979 to 2003. Latinos represented 3 percent of

total self-employment in 1979 and 8.5 percent by

2003. The male veteran share of the male selfemployed declined from 48.3 percent in 1979 to 17

percent in 2003. And women’s share rose from 22.5

percent in 1979 to 31.5 percent in 2003.

• The study illustrates the need to disaggregate

owner demographic categories in analyzing selfemployment trends.

Scope and Methodology

Microdata from the U.S. Census Bureau / U.S.

Bureau of Labor Statistics Current Population

Survey (CPS) program were used to update a previous report, adding 2001-2003 data to the previous

dataset. Microdata are available to the public,

although a familiarity with the Current Population

Survey is needed. See http://dataferrett.census.gov/

TheDataWeb/index.html.

The researcher turned a comparatively small

monthly survey into a rich annual dataset large

enough to show accurate trends for subclasses of

owners. (The dataset used the outgoing rotation

group). The numbers of self-employed listed in this

report exclude individuals whose secondary occupation is self-employment, individuals who spend less

than 15 hours a week on their self-employment

endeavors, and agricultural self-employment. The

figures presented in this study include incorporated

self-employed individuals, while published figures

from BLS exclude this group.

The report also discusses relatively small methodological changes in the CPS over the years and the

likely impact of those changes.

This report was peer-reviewed consistent with

Advocacy’s data quality guidelines. More information on this process can be obtained by contacting

the Director of Economic Research at

advocacy@sba.gov or (202) 205-6533.

Ordering Information

The full text of this report and summaries of other

studies performed under contract to the U.S. Small

Business Administration’s Office of Advocacy are

available at www.sba.gov/advo/research. Copies are

also available from:

National Technical Information Service

U.S. Department of Commerce

5285 Port Royal Road

Springfield, VA 22161

(800) 553-6847 or (703) 605-6000

(703) 487-4639 (TDD)

www.ntis.gov

NTIS order number: PB2005-100017

Pricing information:

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Microfiche, A01 ($14.00)

Electronic download, A00 ($ 8.95)

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