.POUIMZ-BCPS3FWJFX t 4FQUFNCFS 

U.S. Self-Employment

Self-employment in the United States

About 1 in 9 workers was self-employed in 2009; as in the past, 

self-employment continues to be more common among men, Whites, 

Asians, and older workers, and in the agriculture, construction, 

and services industries

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Self-employment continues to be 

an important source of jobs in the 

United States. In 2009, 15.3 million 

individuals were self-employed, including 

both those who had incorporated their 

businesses and those who had not. The selfemployment rate, which is the proportion 

of total employment made up of the selfemployed, was 10.9 percent. Of all self-employed persons, 9.8 million, or nearly twothirds, were unincorporated; the remaining 

5.5 million were incorporated. From 2003 

to 2009, the total self-employment rate has 

held steady; a small decline in the unincorporated self-employment rate was partially 

offset by a similar rise in the rate of incorporated self-employment. (See tables 1 and 

2 and chart 1.) 

Since the late 1940s, data on self-employment have been collected regularly 

as part of the Current Population Survey 

(CPS), the official source of data on employment and unemployment in the United 

States.1

 In addition to classifying employment by occupation and industry, the CPS

subdivides the employed by “class of worker”—that is, wage and salary employee, selfemployed, and unpaid family worker. (See 

box, p. 40.) In 1967, it became possible to 

identify another group of self-employed 

workers: those who had reported themselves in the CPS as self-employed and had 

incorporated their businesses. Individuals 

choose to incorporate their businesses for a 

number of reasons, including legal and tax 

considerations. Since 1967, the official estimates 

of self-employment published by the Bureau of 

Labor Statistics (BLS, the Bureau) have included 

only the unincorporated self-employed. Although it is possible to identify the incorporated 

self-employed separately, these individuals are 

counted as wage and salary workers in the official statistics because, from a legal standpoint, 

they are employees of their own businesses.

This article describes the CPS measurement 

of unincorporated and incorporated self-employment, discusses historical trends in these 

data series, examines the effect of recessions on 

self-employment, provides an overview of the 

characteristics of self-employed workers, and 

concludes with an examination of the unincorporated self-employed who have paid employees. Because there are differences between 

the unincorporated and incorporated self-employed, the two groups will, for the most part, 

be discussed separately in what follows.

Trends in self-employment 

Unincorporated self-employed. The proportion 

of total employment made up of the unincorporated self-employed has fallen gradually since 

1967.2

 (See table 1.) The secular decrease in unincorporated self-employment is due primarily 

to two reasons. The first, and chief, reason is the 

well-known decline in agricultural employment, 

a dropoff in an industry in which a large share of 

employment is made up of the self-employed. At 

the same time, there also has been a steady decrease in the agricultural self-employment rate 
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since 1967. The decrease in self-employment in agriculture 

is due mainly to a decline in the number of smaller farms 

and the emergence of large farming operations. According 

to the National Agricultural Statistics Service, in 1967 there 

were 3.2 million farms with an average acreage of 355 acres; 

by 2009, the number of farms had fallen to 2.2 million and 

the average acreage had risen to 418 acres.

A second reason is an increase in the likelihood of businesses to incorporate.3

 Self-employed workers typically incorporate their businesses in order to receive traditional benefits of the corporate structure, including limited liability, tax 

considerations, and the enhanced opportunity to raise capital 

through the sale of stocks and bonds.4 From 1994 to 2009, 

the unincorporated self-employed’s share of nonagricultural 

employment declined slightly. (See table 1 and chart 1.) 

Over the same period, the proportion of nonfarm employment made up of the incorporated self-employed edged up 

from 3.4 percent to 3.9 percent. (See table 2.)

Incorporated self-employed. As mentioned previously, in 

most of the CPS tabulations of class-of-worker categories, 

the incorporated self-employed are included as wage and 

salary workers. Table 2 shows annual average data on incorporated self-employment from 1989 to 2009.5

 The share 

of total employment made up of the incorporated self-employed was about unchanged, at 2.9 percent to 3.0 percent, 

during 1989–93. Then, the implementation of the redesign 

of the CPS in 1994 affected the measurement of incorporation, and the proportion rose to 3.5 percent that year.6

 Following that, over the 1995–2002 period the incorporated 

Since January 1994, employed respondents in the 

monthly CPS have been asked the question “Last week, 

were you employed by government, by a private company, a nonprofit organization, or were you self-employed?” 

Respondents who say that they were employed by government, a private company, or a nonprofit organization 

are classified as wage and salary workers. Individuals who 

say that that they are self-employed are asked, “Is this 

business incorporated?” Respondents who say yes are the 

incorporated self-employed and are classified as wage 

and salary workers; respondents who say no are classified as unincorporated self-employed, the measure that 

typically appears in BLS publications. Since 1989, unpublished tabulations of the incorporated self-employed 

have been produced by the Bureau on a regular basis.

Over time, some changes in the measurement of selfemployment have affected comparability of the data. 

Although the questions designed to determine class-ofworker status have remained relatively consistent since 

1948, a break in series took effect in 1967. Beginning 

then, a question on business incorporation was added 

and individuals identified as incorporated self-employed 

were classified as wage and salary workers. This change in 

classification had an immediate and marked impact on 

the measurement of self-employment: with the incorporated self-employed now classified as wage and salary 

workers instead of being classified as self-employed, a 

sharp decline was registered in self-employment, from 

8.1 million in 1966 to 7.2 million in 1967.

Other changes to the CPS were implemented with 

the survey redesign in 1994. After the implementation of the redesign, significantly higher proportions 

of the total employed and, particularly, of employed 

women were classified as incorporated self-employed 

and unincorporated self-employed, respectively. (For 

more information on the impact of the CPS redesign 

on self-employment estimates, see Anne E. Polivka 

and Stephen M. Miller, “The CPS after the Redesign: 

Refocusing the Economic Lens,” in John Haltiwanger, 

Marilyn Manser, and Robert Topel, eds., Labor Statistics Measurement Issues (National Bureau of Economic 

Research, Studies in Income and Wealth, vol. 60, 1998), 

pp. 249–86, on the Internet at www.bls.gov/ore/abstract/ec/ec950090.htm (visited May 7, 2010).) Finally, 

in 2003 the CPS adopted the 2002 North American 

Industry Classification System (NAICS) and the 2000 

Standard Occupation Classification (SOC) system. 

Dual-coding efforts of the U.S. Census Bureau allowed 

for revision of data back to 2000. (For more information 

on changes to the CPS implemented in January 2003, 

see Mary Bowler, Randy E. Ilg, Stephen Miller, Ed 

Robison, and Anne Polivka, “Revisions to the Current 

Population Survey Effective in January 2003,” Employment and Earnings (Bureau of Labor Statistics, February 

2003), on the Internet at www.bls.gov/cps/rvcps03.pdf

(visited May 7, 2010).)

All of these changes affect the comparability of the 

data on employment by class of worker.

The CPS measurement of self-employment
.POUIMZ-BCPS3FWJFX t 4FQUFNCFS 

Total employed and total unincorporated self-employed, by industry, annual averages, selected years, 1967–2009

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Year

All industries Nonagricultural industries Agriculture

Total

employed

Unincorporated

selfemployedPercent

Total

employed

Unincorporated

selfemployedPercent

Total

employed

Unincorporated 

selfemployedPercent

 
 
  
 
  
 
 

 
 
  
 
  
 
 

 
 
  
 
  
 
 

 
 
  
 
  
 
 

 
 
  
 
  
 
 

 
 
  
 
  
 
 

 
 
  
 
  
 
 

 
 
  
 
  
 
 

 
 
  
 
  
 
 

 
 
  
 
  
 
 

 
 
  
 
  
 
 

 
 
  
 
  
 
 

 
 
  
 
  
 
 

 
 
  
 
  
  

 
 
  
 
  
 
 

 
 
  
 
  
  

 
 
  
 
  
  

 
 
  
 
  
  

 
 
  
 
  
  

 
 
  
 
  
  

 
 
  
 
  
  

 
 
  
 
  
  

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 Table 1. 

self-employment rate ranged between 3.2 percent and 3.4 

percent. Finally, from 2003 to 2009, the incorporated selfemployed’s share of employment edged up, from 3.6 percent 

to 3.9 percent of total employment. In agricultural industries in 2009, the incorporated self-employment rate was 

7.2 percent, compared with a much larger 39.8 percent (see 

table 1) for the unincorporated self-employed.

Self-employment during recessions

In general, during labor market downturns labor force 

groups are hit hard and experience a decline in employment. This procyclical response certainly affects many of the 

self-employed, whose businesses fail as revenues fall or disappear altogether. At the same time, measures such as unemployment and involuntary part-time employment have 

always increased during recessions. Hence, a competing 

countercyclical effect could result in a rise in self-employment if laid-off wage and salary workers start businesses 

for themselves. The total number of self-employed workers 

(unincorporated and incorporated combined) in nonagricultural industries declined, on net, by about 760,000, from 

15.0 million in the fourth quarter of 2007 to 14.2 million 

in the second quarter of 2009.7

 As chart 2 shows, the total 

nonagricultural self-employment rate, 10.1 percent in the 

second quarter of 2010, has edged down recently.
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The competing procylical and countercyclical forces 

make it difficult to use monthly data from the CPS to 

determine the impact of economic downturns on the 

self-employed. An additional complication relates to how 

employment is classified in the CPS. For instance, workers 

who hold down two jobs—one a wage or salary job and 

the other a job in which the person is self-employed—are 

classified in the CPS according to the job at which they 

worked the most hours. Thus, if the self-employment job 

is a secondary job, the person would be classified as a wage 

and salary worker. If the person then loses the wage and 

salary job, as is common during recessions, he or she would 

still be counted as employed, but in the person’s own business—that is, as a self-employed worker. To that extent, 

the self-employment count would rise even though total 

employment would not be affected. In 2009, 1.4 million 

workers (1 percent of total employment) were classified 

as wage and salary workers on their primary job and selfemployed on their secondary job. 

Characteristics of the self-employed

Demographics. In 2009, the rate of self-employment for 

older workers continued to be higher than that for younger workers.8

 For the most part, the analysis that follows 

will focus primarily on the unincorporated self-employed; 

in many cases, demographic characteristics of the unincorporated and incorporated self-employed are similar. 

(See table 3.) The unincorporated self-employment rate 

among workers ages 65 years and older was very high 

(18.1 percent); in contrast, the rates were much lower for 

their counterparts ages 16 to 19 years (1.6 percent) and 20 

to 24 years (2.1 percent). (See table 4.) The chief reason 

is that younger workers rarely have accumulated the capiTotal employed and total incorporated self-employed, by industry, annual averages, 1989–2009

<*OUIPVTBOET>

Year

All industries Nonagricultural industries Agriculture

Total

employed

Incorporated

self-employed Percent Totalemployed

Incorporated

self-employed Percent Totalemployed

Incorporated

self-employed Percent

 
 
  
 
  
  

 
 
  
 
  
  

 
 
  
 
  
  

 
 
  
 
  
  

 
 
  
 
  
  

 
 
  
 
  
  

 
 
  
 
  
  

 
 
  
 
  
  

 
 
  
 
  
  

 
 
  
 
  
  

 
 
  
 
  
  

 
 
  
 
  
  

 
 
  
 
  
  

 
 
  
 
  
  

 
 
  
 
  
  

 
 
  
 
  
  

 
 
  
 
  
  

 
 
  
 
  
  

 
 
  
 
  
  

 
 
  
 
  
  

 
 
  
 
  
  

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 Table 2. 
.POUIMZ-BCPS3FWJFX t 4FQUFNCFS 

 Chart 1. Nonagricultural self-employment rates, 1990–2009, annual averages

         

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tal and the managerial skills required to start a business, 

whereas many older workers may be able to acquire these 

resources through their own efforts or through access to 

credit. Moreover, research has shown that older workers 

who have retired from wage and salary jobs may become 

self-employed to supplement their retirement income.9

Unincorporated self-employment rates are higher 

for men than women. In 2009, 8.3 percent of men were 

among the ranks of the unincorporated self-employed, 

compared with 5.6 percent of women. Unincorporated 

self-employed men are more likely than their female counterparts to be working in occupations that employ large 

proportions of self-employed workers—for example, construction and extraction. 

Whites continued to be more likely than Blacks or 

Hispanics to operate their own businesses. In 2009, 

the unincorporated self-employment rate for Whites 

was 7.4 percent while the rates for Blacks and Hispanics were 4.5 percent and 6.1 percent, respectively. The 

rate for Asians was 6.6 percent.10 Foreign-born workers 

and U.S. natives were about equally likely to be self-employed in 2009.11 The unincorporated self-employment 

rate for the foreign born was 7.4 percent, compared with 

7.0 percent for U.S. natives.12

With regard to educational attainment, unincorporated 

self-employment rates were lowest for individuals with an 

associate’s degree (6.6 percent) and highest for those with 

less than a high school diploma (9.9 percent). (See table 4 

and chart 3.) In occupations held by workers with less than 

a high school diploma, unincorporated self-employment 

rates were highest for management occupations (mostly 

farmers and ranchers), personal care and service occupations, and construction and extraction occupations.

Among the incorporated self-employed, the self-employment rate was highest (6.6 percent) for individuals 

with advanced degrees. Indeed, the rate for those with an 

advanced degree was about 3 times the rate for their counterparts with less than a high school diploma (2.0 percent). 

In occupations held by workers with advanced degrees, 

incorporated self-employment rates were highest for those 

in legal occupations, health care practitioner and technical 

occupations, and sales and related occupations.

Tables 5 and 6 show trends in nonagricultural self-employment rates from 1989 to 2009 for unincorporated and 

incorporated business owners. Over this period, the rates 

of unincorporated and incorporated self-employment have 
644FMG&NQMPZNFOU

 .POUIMZ-BCPS3FWJFX t 4FQUFNCFS

 Chart 2. Nonagricultural self-employment rate (total, incorporated and unincorporated), seasonally 

adjusted, quarterly averages, 2000–10

          

Percent











 Percent











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been consistently higher among men, Whites, and older 

workers. Incorporated self-employment rates also were 

above average for Asians from 2000 to 2009. During the 

same timespan, the unincorporated self-employment rate 

for Hispanics rose from 4.8 percent to 6.2 percent. However, 

the incidence of unincorporated self-employment declined 

for many of the other major demographic groups over this 

period. From 2000 to 2009, incorporated self-employment 

rates rose for most of the major demographic groups: men, 

women, Whites, Asians, and Hispanics. The increase was 

largest among individuals ages 45 to 54 years.

Work schedules and multiple jobholding. In 2009, 41.0 percent of the nonagricultural unincorporated self-employed 

worked part time—that is, 1 to 34 hours per week; the 

proportion has increased sharply since 2006.13 The data on 

work schedules presented in this section use an “at work” 

concept, and employed persons who were absent from their 

jobs during the entire survey reference week are excluded. 

Unincorporated self-employed women were more likely 

than their male counterparts to work part time in 2009: 

about 1 in 3 unincorporated self-employed men worked 

part time, compared with approximately half of their female counterparts. (See table 7.)

The incorporated self-employed were less likely than the 

unincorporated self-employed to work part time: in 2009, 

22.6 percent of the incorporated self-employed in nonagricultural industries worked part time. As was the case for 

the unincorporated self-employed, female incorporated 

business owners were more likely than their male counterparts to be employed part time.

Reflecting the sharp slowdown in economic activity related to the most recent recession, the share of the 

unincorporated self-employed working part time for economic reasons increased in 2009.14 Sometimes referred 

to as involuntary part-time workers and considered to be 

underemployed, these individuals wanted full-time work, 

but worked less than 35 hours during the survey reference 

week primarily because of slack work (a reduction in hours 

in response to poor business conditions) or their inability to 

find full-time work.

Among the unincorporated self-employed working part 

time for economic reasons in 2009, the vast majority (nearly 

90 percent) reported “slack work or business conditions” as 

the main reason for working such a schedule. Since reaching a recent low of 5.3 percent in 2006, the proportion of 
.POUIMZ-BCPS3FWJFX t 4FQUFNCFS 

the unincorporated self-employed in nonagricultural industries employed part time for economic reasons rose to 12.8 

percent in 2009. Between 2006 and 2009, 36.2 percent of 

the rise in involuntary part-time employment among the 

unincorporated self-employed was in construction and an 

additional 24.3 percent of the increase was among the unincorporated self-employed working in the professional and 

business services industry.

As was the case for wage and salary workers, unincorporated self-employed men were much more likely than their 

female counterparts to work full time (65.1 percent and 49.3 

percent, respectively).15 The average workweek of unincorporated self-employed men was nearly 6 hours longer than that 

for women (37.8 hours and 32.0 hours, respectively). Average weekly hours worked by unincorporated self-employed 

men and women have declined in recent years.16

Unincorporated self-employed, incorporated self-employed, and wage and salary workers, by selected 

characteristics, 2009 annual averages

Characteristic Unincorporated self-employed Incorporated self-employed Wage and salary workers1

Total Men Women Total Men Women Total Men Women

Age

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 Table 3. 
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Occupation and industry

Occupation. The self-employed are found in a wide variety of occupations. For example, unincorporated self-employment rates were highest for workers in construction 

and extraction occupations (15.9 percent); management, 

business, and financial occupations (11.2 percent); and 

sales and related occupations (8.8 percent). (See table 8.) 

Within construction and extraction occupations, unincorporated self-employment rates were highest for 

carpenters, carpet installers, and painters. Management, 

business, and financial occupations with relatively high 

unincorporated self-employment rates included construction managers, property managers, and management analysts. A number of jobs in sales and related occupations 

lend themselves to business ownership. For example, unincorporated self-employment rates were high for insurance agents, real estate brokers, and door-to-door salesworkers and street vendors.

Self-employment rates had a somewhat different pattern for incorporated business owners than for the unincorporated self-employed. Among the incorporated 

self-employed, business ownership rates were highest for 

management, business, and financial occupations (9.8 percent) and for sales and related occupations (6.5 percent). 

(See table 8.) In management, business, and financial occupations, incorporated self-employment rates were highest for chief executives, farm managers, and construction 

Self-employment rates, by selected characteristics, 2009 annual averages 

Characteristic

Self-employment rates1

Unincorporated self-employed Incorporated self-employed

Total Men Women Total Men Women

Age

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.POUIMZ-BCPS3FWJFX t 4FQUFNCFS 

managers. Sales and related occupations with relatively 

high incorporated self-employment rates included managers of retail and nonretail salesworkers, real estate brokers, and insurance agents.

A number of jobs in professional and related occupations have relatively high (above 10 percent) incorporated 

self-employment rates. For instance, the rate was very 

high for dentists, architects, physicians, and lawyers.

Industry. Major industries with the highest unincorporated self-employment rates were agriculture, forestry, 

fishing, and hunting (39.8 percent); construction (17.5 

percent); other services, which include automotive services, 

barber shops, and drycleaning services (15.0 percent); and 

professional and business services (13.3 percent). (See 

table 8.)

Within the agriculture, forestry, fishing, and hunting 

sector, unincorporated self-employment rates were highest for animal production, crop production, and support 

activities for agriculture and forestry. Industries in the 

“other services” sector that had high rates of unincorporated self-employment included personal and household 

goods repair and maintenance, beauty salons, and nail salons. In the professional and business services sector, the 

share of total employment comprising the unincorporated 

self-employed was largest in specialized design services; 

landscaping services; and other professional, scientific, 

and technical services.

Among the incorporated self-employed, rates of selfemployment were highest for construction (9.2 percent) 

and professional and business services (8.0 percent). 

Within the professional and business services sector, incorporated self-employment rates were highest for specialized design services and for management, scientific, 

and technical consulting services.

Self-employment and paid employees

Beginning in January 1995, two questions were added to 

the CPS to determine whether the unincorporated selfemployed had any paid employees and, if so, the number 

of employees they usually employed. Table 9 presents data 

on the presence of paid employees from 2000 to 2009. According to these estimates, the incidence of employment 

of individuals (other than the owner) in an unincorporated self-employed business is relatively uncommon. In 

2009, 13.6 percent of the unincorporated self-employed 

had paid employees,17 a decline from the 18.7 percent reg-

 Chart 3. Self-employment rates, by educational attainment, 2009 annual averages

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istered in 2000. (See table 9 and chart 4.)

Of the 1.3 million unincorporated self-employed with 

employees in 2009, 79.8 percent had 1 to 4 employees. 

The proportion with more than 20 employees was very 

small, less than 4 percent. These percentages have held 

fairly steady over the 2000–09 period. Men were nearly 

twice as likely as women to have paid employees: in 2009, 

16.6 percent of unincorporated self-employed men had 

employees, compared with 8.6 percent of their female 

counterparts. The proportions have decreased for both 

men and women since 2000. The vast majority (about 

80 percent) of male and female unincorporated self-employed workers with employees had 1 to 4 employees.

IN 2009, ABOUT 1 IN 9 U.S. WORKERS was self-employed, 

either unincorporated or incorporated. In recent years, the 

share of total employment composed of the self-employed 

has held steady, with a secular decline in unincorporated 

self-employment partially offset by a slight rise in business incorporation.

As in the past, unincorporated and incorporated selfemployed workers in 2009 were more likely to be men, 

Incidence of unincorporated self-employment in nonagricultural industries, by sex, race or ethnicity, and age, 

1989–2009

<*OQFSDFOU>

Year Total

Sex Race or ethnicity Age

Men Women White

Black or

African

American

Asian Hispanic

or Latino

16 to 19

years

20 to 24

years

25 to 34

years

35 to 44

years

45 to 54

years

55 to 64

years

65

years

and

older

      –        

      –        

      –        

      –        

      –        

      –        

      –        

      –        

      –        

      –        

      –        

              

              

              

              

              

              

              

              

              

              

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 Table 5. 
.POUIMZ-BCPS3FWJFX t 4FQUFNCFS 

White, and older. Asians were more likely to be found 

among the ranks of the incorporated self-employed. The 

incidence of unincorporated self-employment was highest for individuals with less than a high school diploma; 

by contrast, the incorporated self-employment rate was 

highest for those with an advanced degree. Both the unincorporated and incorporated self-employed were most 

likely to work in agriculture, construction, and services. 

Reflecting the downturn in business conditions has been 

a rise in involuntary part-time work among the unincorporated self-employed since 2006. In 2009, 13 percent 

of unincorporated self-employed workers were employed 

part time for economic reasons. CPS data show that 

most of the unincorporated self-employed do not have 

paid employees, and of those who do, most employ few 

workers. Unincorporated self-employed men were nearly 

twice as likely as their female counterparts to have paid 

employees. Over the 2000–09 period, the proportion of 

the unincorporated self-employed who have paid employees has declined for both men and women. 

Incidence of incorporated self-employment in nonagricultural industries, by sex, race or ethnicity, and age, 

1989–2009

<*OQFSDFOU>

Year Total

Sex Race or ethnicity Age

Men Women White

Black or

African 

American

Asian

Hispanic 

or 

Latino

16 to 19

years

20 to 24

years

25 to 34

years

35 to 44

years

45 to 54

years

55 to 64

years

65 

years

and

older

      –        

      –        

      –        

      –        

      –        

      –        

      –        

      –        

      –        

      –        

      –        

              

              

              

              

              

              

              

              

              

              

NOTE %BUBGPS  BOE MBUFS BSF OPU EJSFDUMZ DPNQBSBCMF XJUI

EBUBGPSFBSMJFSZFBSTCFDBVTFPGBNBKPS SFEFTJHOPG UIF$14BOE UIF

JOUSPEVDUJPOPGDFOTVTCBTFEQPQVMBUJPODPOUSPMT
BEKVTUFEGPSBOFTUJ

NBUFEVOEFSDPVOU#FHJOOJOHJO
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QPQVMBUJPODPOUSPMTGPS$FOTVTBOEOFXJOEVTUSZBOEPDDVQBUJPOBM

DMBTTJöDBUJPOTZTUFNT%BTIJOEJDBUFTEBUBOPUBWBJMBCMF

 Table 6. 
644FMG&NQMPZNFOU

 .POUIMZ-BCPS3FWJFX t 4FQUFNCFS

Unincorporated self-employment in nonagricultural industries, by full- and part-time status, nature of reasons for 

part-time work, and usual hours of work at all jobs, 2000-09 annual averages

Category 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Full- or part-time status 

and nature of reasons for 

part-time work

5PUBM
ZFBSTBOEPMEFSBU

XPSL	UIPVTBOET
 
 
 
 
 
 
 
 
 
 


 Percent          

'VMMUJNF          

1BSUUJNF          

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"UXPSLQBSUUJNFGPS

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.FO
ZFBSTBOEPMEFSBU

XPSL	UIPVTBOET
 
 
 
 
 
 
 
 
 
 


 Percent          

'VMMUJNF          

1BSUUJNF          

"UXPSLQBSUUJNFGPS

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"UXPSLQBSUUJNFGPS

OPOFDPOPNJDSFBTPOT           

8PNFO
ZFBSTBOEPMEFSBU

XPSL	UIPVTBOET
 
 
 
 
 
 
 
 
 
 


 Percent          

'VMMUJNF          

1BSUUJNF          

"UXPSLQBSUUJNFGPS

FDPOPNJDSFBTPOT           

"UXPSLQBSUUJNFGPS

OPOFDPOPNJDSFBTPOT           

Average usual hours of work 

#PUITFYFT

 Total          

'VMMUJNF          

1BSUUJNF          

Men:

 Total          

'VMMUJNF          

1BSUUJNF          

8PNFO

 Total          

'VMMUJNF          

1BSUUJNF          



 3FGFST UP UIPTFXIPXPSLFE  UP IPVSTEVSJOH UIF SFGFSFODF

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 3FGFSTUPQFSTPOTXIPVTVBMMZXPSLQBSUUJNFGPSBOPOFDPOPNJD

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 PS

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 CVU

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SFGFSFODFXFFL

 Table 7. 
.POUIMZ-BCPS3FWJFX t 4FQUFNCFS 

Self-employment rates,1 by occupation and industry, 2009 annual averages

<*OQFSDFOU>

Occupation and industry

Unincorporated self-employed Incorporated self-employed

Total Men Women Total Men Women

Occupation

5PUBM
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Industry

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 4FMGFNQMPZNFOUSBUFTBSFDBMDVMBUFECZEJWJEJOHUIFOVNCFSPGTFMGFNQMPZFEXPSLFSTJOBTQFDJöFEXPSLFSHSPVQCZUPUBMFNQMPZNFOUJOUIF

HSPVQ

 Table 8. 
U.S. Self-Employment

 .POUIMZ-BCPS3FWJFX t 4FQUFNCFS

Unincorporated self-employed workers by presence and number of paid employees, 2000–09 annual averages

Characteristic 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

5PUBM
ZFBSTBOEPMEFS

	UIPVTBOET
 ........................... 
 
 
 
 
 
 
 
 
 


1FSDFOUXJUIOPQBJE

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1FSDFOUXJUIQBJE

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5PUBMXJUIQBJEFNQMPZFFT

	UIPVTBOET
 ....................... 
 
 
 
 
 
 
 
 
 


 Percent ................................          

oFNQMPZFFT ...............          

oFNQMPZFFT ...............          

oFNQMPZFFT ..........          

PSNPSFFNQMPZFFT ..          

.FO
ZFBSTBOEPMEFS

	UIPVTBOET
 ......................... 
 
 
 
 
 
 
 
 
 


1FSDFOUXJUIOPQBJE

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1FSDFOUXJUIQBJE

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	UIPVTBOET
 ....................... 
 
 
 
 
 
 
 
 
 


 Percent ................................          

oFNQMPZFFT ...............          

oFNQMPZFFT ...............          

oFNQMPZFFT ..........          

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8PNFO
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	UIPVTBOET
 ......................... 
 
 
 
 
 
 
 
 
 


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1FSDFOUXJUIQBJE

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5PUBMXJUIQBJEFNQMPZFFT

	UIPVTBOET
 .......................          

 Percent ................................          

oFNQMPZFFT ...............          

oFNQMPZFFT ...............          

oFNQMPZFFT ..........          

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NOTE 5IF FTUJNBUFT TIPXO XFSF UBCVMBUFE GSPN PVUHPJOH SPUBUJPO

HSPVQT POMZ #FDBVTF UIF TBNQMFGPS UIFTF UBCVMBUJPOT JT MJNJUFE UP POF

quarter of the full CPSTBNQMF
FTUJNBUFTPGUIFVOJODPSQPSBUFETFMGFNQMPZFE

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BMTPXJMMCFMFTT UIBO UIF SFMJBCJMJUZPG UIFFTUJNBUFTCBTFEPO UIFGVMMCPS

TBNQMF

 Table 9. 
.POUIMZ-BCPS3FWJFX t 4FQUFNCFS 

 Chart 4. Proportion of the unincorporated self-employed with paid employees, 2000–2009 annual averages

         

Percent



















 Percent



















Notes

ACKNOWLEDGMENT: The author thanks Gaim T. Medhin for 

tabulating the data on unincorporated self-employed workers by presence and number of paid employees.

1

 The CPS is a monthly sample survey of about 60,000 households 

that provides information on the demographic characteristics of the 

labor force and the employment status of the noninstitutional population ages 16 and older.

2

 Earlier data on self-employment included both the unincorporated and incorporated self-employed, and the combined series showed 

a steady decline from 10.8 million (18.5 percent of the total employed) 

in 1948 to 8.1 million (11.1 percent of the total employed) in 1966; 

essentially all of the decline in self-employment over this period was in 

agriculture.

3

 Data from the Internal Revenue Service (IRS) show that the total number of corporations rose from 3.7 million in 1990 to 5.9 million in 2007. From 1990 to 2007, the number of S corporations rose 

from 1.6 million to 4.0 million. An S corporation is a corporation that 

has between 1 and 100 shareholders and passes net income (or losses) 

through to shareholders in accordance with chapter 1, subchapter S, of 

the IRS Revenue Code. In contrast to the number of S corporations, the 

number of C corporations edged down from 2.1 million to 1.9 million. 

A C corporation is a corporation that, for Federal income tax purposes, 

is taxed under subchapter C of chapter 1 of the IRS Revenue Code. In 

recent years, there has been a sharp increase in the number of limitedliability companies (LLCs). IRS data show that the number of LLCs rose 

from about 17,000 in 1993 to 1.8 million in 2007. A business structure 

allowed by State statute, an LLC is similar to a corporation in that it 

provides owners with personal limited liability for the company’s debts 

and actions. However, unlike a corporation, an LLC is not considered 

separate from its owners for tax purposes. Instead, similar to a partnership or sole proprietorship, an LLC is considered a “pass-through entity,” meaning that business income passes through the business to the 

members of the company, who report their share of profits (or losses) in 

their individual income tax returns. The Federal Government does not 

recognize an LLC as a classification for tax purposes, and every LLC

business entity must file as a corporation, partnership, or sole proprietorship. According to IRS data, about 90 percent of LLCs were organized 

as either partnerships or sole proprietorships.

4

 In a recent blog post on the Small Business Trends website, Scott 

Shane cited additional reasons that might be motivating business owners to incorporate, including a rise in the importance of limited liability, 

given the greater legal exposure that the self-employed face; lower costs 

and greater ease of incorporating; rising health care costs and a desire to be 

able to list these costs as tax deductions; and a possible increase in the tax 

benefits gained by incorporating. (See Scott A. Shane, “More of the SelfEmployed Incorporate,” Feb. 15, 2010, on the Internet at smallbiztrends.

com/2010/02/more-of-the-self-employed-incorporate.html (visited 

Apr. 12, 2010).) In addition, anecdotal evidence suggests that business 

owners might choose to incorporate because of the enhanced status 

afforded by incorporation and because many attorneys and accountants 

advise unincorporated business owners that it would be in their best 

interests to incorporate their businesses.
644FMG&NQMPZNFOU

 .POUIMZ-BCPS3FWJFX t 4FQUFNCFS

5

 Estimates of incorporated self-employment for selected years are 

available before 1989. These data show that incorporation has become 

more common over time, increasing from 1.5 million in 1976 to 2.1 

million in 1979 and 2.8 million in 1982; as a share of total employment, the percentage rose from 1.8 percent, to 2.2 percent, to 2.8 percent over the same points in time.

6

 As was the case for total employment, the 1994 increase was 

particularly pronounced among women. (See Anne E. Polivka and 

Stephen M. Miller, “The CPS after the Redesign: Refocusing the Economic Lens,” in John Haltiwanger, Marilyn Manser, and Robert Topel, 

eds., Labor Statistics Measurement Issues (National Bureau of Economic 

Research, Studies in Income and Wealth, vol. 60, 1998), pp. 249–86, 

especially pp. 275–77.)

7

 The National Bureau of Economic Research (NBER), the generally recognized arbiter of recessions in the United States, designated 

June 2009 as the trough of the recession that began in December 2007.

8

 A recent report examined the rate of business creation at the business owner level. The author found that, in 2009, the largest increases in 

entrepreneurship came from older individuals and Blacks. (See Robert W. 

Fairlie, “Kauffman Index of Entrepreneurial Activity: 1996–2009” (Kauffman Foundation, May 2010), on the Internet at www.kauffman.org/

research-and-policy/kauffman-index-of-entrepreneurial-activity.aspx 

(visited May 27, 2010).

9

 For an analysis of transitions into and out of self-employment 

among older workers who have career jobs, see Michael D. Giandrea, 

Kevin E. Cahill, and Joseph F. Quinn, “Self-Employment Transitions 

among Older American Workers with Career Jobs,” Working Paper 

684 (Chestnut Hill, MA, Boston College, April 2008), on the Internet 

at fmwww.bc.edu/ec-p/wp684.pdf (visited Apr. 16, 2010).

10 In a recently published book, Robert W. Fairlie and Alicia M. 

Robb conducted in-depth research on why businesses owned by Asian 

Americans (or, simply, Asians) tend to be more successful than Whiteowned and Black-owned firms. Also exploring the broader question of 

why some of the self-employed are successful and others are not, the 

authors found that a high level of startup capital is the most important 

factor contributing to the success of Asian-owned businesses and that 

the lack of startup capital for Black businesses contributes to their relative lack of success. Moreover, higher levels of educational attainment 

among Asian business owners explain much of their success relative to 

both White- and Black-owned businesses. Finally, the authors found 

that Black self-employed workers have fewer opportunities than their 

White counterparts to acquire work experience through family businesses. (See Robert W. Fairlie and Alicia M. Robb, Race and Entrepreneurial Success (Cambridge, MA, MIT Press, 2008).)

11 Beginning in 1994, questions on nativity and U.S. citizenship 

status were added to the basic monthly CPS. Respondents were asked 

to name their country of birth. Those who said that they were born in 

the United States, Puerto Rico, or another U.S. territory or that they 

were born abroad of an American parent or parents are classified as 

U.S. natives. Individuals who provided another response are classified 

as foreign born.

12 Research on foreign-born self-employment conducted by Maude 

Toussaint-Comeau determined that, on average, the self-employment 

rate of the foreign born was somewhat higher than that of the native 

born. However, there was wide variation in the rates by country or 

region of origin. Toussaint-Comeau found that differences in personal 

and human capital characteristics and length of time residing in the 

country are potential sources of differences in self-employment rates 

among the different groups. (See Maude Toussaint-Comeau, “Selfemployed immigrants: an analysis of recent data,” Chicago Fed Letter, 

no. 213 (Chicago, Federal Reserve Bank of Chicago, April 2005), on 

the Internet at www.chicagofed.org/digital_assets/publications/chicago_fed_letter/2005/cflapril2005_213.pdf (visited May 11, 2010).)

13 Full time is defined as 35 or more hours per week.

14 The proportion of the incorporated self-employed working part 

time for economic reasons rose from 2.1 percent in 2006 to 5.6 percent 

in 2009.

15 In 2009, the proportion of unincorporated self-employed men in 

nonagricultural industries who worked 49 or more hours per week was 

25.1 percent, compared with 16.8 percent of their female counterparts.

16 In 2009, the 35.6-hour average workweek for the unincorporated 

self-employed (men and women combined) in nonagricultural industries 

was the lowest in the history of the series, which began in 1976.

17 The incorporated self-employed were much more likely than the 

unincorporated self-employed to have paid employees. The February 

2005 Contingent and Alternative Work Arrangements Supplement to 

the CPS collected data on the presence of employees of incorporated 

self-employed workers. According to estimates from the supplement, 

about 2.8 million (56.2 percent) of the 5.1 million incorporated selfemployed workers had paid employees. Of the 2.8 million, 50.4 percent 

employed 1 to 5 workers while 14.0 percent had 20 or more employees.