Self-employed workers: 

an update to 1983 

The number of Americans working for themselves 

continues to increase, reaching 9.1 million in 1983; 

they tend to be older than other workers, and 

although they work longer hours, their earnings are lower 

EUGENE H. BECKER 

Even in this age of big business, there are still many individuals who work for themselves . Between 1976 and 1983, 

the number of self-employed Americans increased each year, 

posting an overall gain of 23 percent, or 1 .7 million.' In 

fact, self-employment among American workers has been 

increasing for almost a decade and a half, barely pausing 

for cyclical downturns. 

When agricultural self-employment is separated from 

nonagriculture, two pictures emerge. Agricultural self-employment, which had been decreasing for decades, continued to decline through the mid-1970's. Since 1976, it has 

held steady at about 1 .6 million. Nonagricultural self-employment, in contrast, has increased each year since 1970, 

when it was 5 .2 million, to 1983, when it was 7.6 million, 

an increase of more than 45 percent.2 

Related groups 

Several groups are closely related to the self-employed, 

but are not included in their number. Among them are individuals who have incorporated their own businesses . By 

incorporation, such persons draw a wage or salary from 

their business and, consequently, are included among wage 

and salary workers .' The incorporated self-employed accounted for 2 .8 million workers in 1982, up from 2.1 million 

in 1978. 

Another group closely related to the self-employed is the 

unpaid family worker (who must work at least 15 hours a 

week in a family business to be counted in the statistics) . 

There were slightly more than 600,000 of these workers in 

1983 . As a worker group, unpaid family members have 

been declining for several decades. Since 1970, their number in agriculture has dropped by about 52 percent, compared with a 25-percent decline for those in nonagricultural 

work. (See table 1 .) 

No typical unpaid family worker exists . He or she may 

be the spouse of a doctor or dentist doing office chores or 

professional work, the child of the owner of a small store 

or business helping out after school and on weekends, or 

the relative of a family farmer putting in long hours of 

manual work.' More than three-fourths of unpaid family 

workers were women in 1983, a proportion only slightly 

smaller than in' past years . 

Finally, there is the person who holds two jobs and who 

is self-employed on the second job . Because the Current 

Population Survey counts each person only. once, dual jobholders are classified according to their primary job . The 

latest available data on multiple jobholders from the May 

1980 Current Population Survey show that about 1 .6 million 

people, or one-third of all dual jobholders, were self-employed on their second jobs .s 

Eugene H. Becker, an economist formerly with the Office of Employment 

and Unemployment Statistics, Bureau of Labor Statistics, is now with the 

Bureau's Office of Publications . 

Cyclical patterns 

The upward trend in the number of self-employed workers 

began around 1970. (See chart 1 .) Prior to then, self-em14 
Chart 1 . Self-employed workers by major industry group, 1948.84 

Millions 

I 

I - 

All industries 

v 

I 

i . 

Nonagricultural 

" .~." fi 

7 

N i 

~:. -0 - - el 

Agriculture ` 

% - 

L L 

1950 1954 1958 1962 1966 1970 1974 1978 1982 

NOTE : Shaded areas denote recessions . 

ployment had been on the decline, fueled largely by the proportional seasonally adjusted quarterly changes in selfreduction in agricultural self-employment, which in 1948 employment during recessions tends to support this idea, at 

was 4.7 million. Agricultural self-employment continued to least for the nonagricultural sector. The following tabulation 

decline through the mid-1970's, but at a much slower pace. shows percentage changes in self-employment from busiSince 1976, agricultural self-employment has leveled off at ness cycle peaks to troughs (as designated by the National 

that the decline in independent Bureau of Economic Research), 1948-82: 

a b out 1 . 6 m illi on, sugg e stin g 

family farming may be coming to an end . 

In the nonagricultural sector, there were 6 .1 million selfemployed in 1948; by 1970, the number had declined to 

5 .2 million . Not included in the 1970 total, however, was 

a large number of incorporated self-employed who, prior to 

1967, had been included .b Nonfarm self-employment began 

rising slowly in the early 1970's and more sharply in the 

second half of the decade . By 1983, the number reached 

7.6 million. 

All NonPeak Trough industries agriculture Agriculture 

IV-1948 IV-1949 . . . -0.5 4 .5 -7 .0 

111-1953 II-1954 . . . - .5 - .3 - .8 

I1-1957 11-1958 . . . -2.4 - .1 -6.7 

11-1960 1-1961 . . . 2.2 2.4 1 .8 

IV-1969 IV-1970 . . . .0 1 .5 -4.3 

IV-1973 IV-1975 . . . .5 1 .7 -2.8 

1-1980 111-1980 . . . .9 .7 1 .9 

111-1981 IV-1982 . . . 2.5 3 .2 - .8 

Several analysts have suggested that self-employment 

moves in a countercyclical fashion.' While the evidence for Nonagricultural self-employment has registered strong inthis is not overwhelmingly strong, an examination of the creases during the recovery part of the cycle since 1970. 

Seasonally adjusted quarterly averages Millions 

15 
MONTHLY LABOR REVIEW July 1984 " Self-Employed Workers in 1983 

Table 1 . Employment by major industry group and class of worker, 1970-83 

Total Agricultural Nonagricultural 

Year Self- Wage and Unpaid Self- Wage and Unpaid Self- Wage and Unpaid employed salary family employed salary family employed salary family 

1970 . . . . . . . . . . . . 

1971 . . . . . . . . . . 

7,031 

7,077 

70,645 

71,286 

1,001 

1 001 

1,810 

1 750 

1,154 

1 166 

499 

479 

5,221 69,491 502 

1972 . . . . . . 

1973 

7,157 74,010 

, 

986 

, 

1,792 

, 

1,225 467 

5,327 

5,365 

70,120 

72 785 

522 

. . . . . 519 

1974 . . . . . . 

7,254 

7,455 

76,847 

78,460 

962 

880 

1,780 

1 758 

1,267 

1 366 

422 

391 

5,474 

, 

75,580 540 

, , 5,697 77,094 489 

1975 . . . . . . . . . . 

1976 . . . . . . . . . . 

7,427 

7,429 

77,551 

80,519 

869 

806 

1,722 

1,646 

1,301 

1,344 

386 

342 

5,705 

5 783 

76,249 

79 175 

483 

1977 . . . . . . . . . . . 464 

1978 . . . . . . . . . . . . . 

7,694 

8,047 

83,481 

87,205 

841 

795 

1,580 

1 618 

1,360 

1 452 

343 

316 

, 

6,114 

, 

82,121 498 

1979 . . . . . . . . . . . . . . 8,384 89,674 767 

, 

1,593 

, 

1,451 304 

6,429 

6,791 

85,753 

88,222 

479 

463 

1980 . . . . . . . . . . . . . . 

1981 . . . . . . . . . . . . . . 

8,642 

8,735 

89,950 

91,006 

711 

656 

1,642 

1 638 

1,425 

1 464 

297 

266 

7,000 88,525 413 

1982 . . . . . . . . . . . . . . 

1983 

8,898 89,967 661 

, 

1,636 

, 

1,505 261 

7,097 

7,262 

89,543 

88 462 

390 

401 . . . . . . . . . . . . . . 9,140 91,075 616 1,565 1,579 240 7,575 , 

89,500 376 

During downturns, however, it has tended to stabilize or 

increase moderately after a decline. In effect, nonagricultural self-employment has come out of each of the cyclical 

downturns since 1970 somewhat earlier than its wage and 

salary counterpart. One possible reason for this may be the 

length and intensity of the recessions themselves (except for 

the 1980 downturn) . When persons who are self-employed 

on their second job lose their primary wage and salary job 

dt.e to an economic downturn, their self-employment, if 

conwafed, becomes their primary job. In addition, some 

people may enter self-employment upon the loss of a wage 

and salary job. Self-employment growth during the first full 

year of recovery from the 1981-82 recession was exceptionally large-360,000, or 4 percent-when compared with 

other postwar recovery periods .8 

Demographic characteristics 

Self-employed workers tend to be older than wage and 

salary workers. Whereas younger workers rarely have the 

financial and skill resources needed to start their own businesses, many older workers can marshal these resources 

either through their own efforts or through access to available credit . In addition, older workers who have retired from 

wage and salary jobs often become self-employed to supplement their retirement income . 

Although the average age of self-employed persons has 

dropped in recent years, those age 45 and over continue to 

account for a large share (45 percent) of all self-employed 

workers. The downtrend in age distribution is more pronounced among the self-employed than among wage and 

salary workers . The percentages of the total accounted for 

by each of three age groups are shown in the following: 

1979 1983 Change 

Self-employed : 

16-24 . . . . . . . . . . . . 6.6 6.1 -0.5 

25-44 . . . . . . . . . . . . 44 .3 48.6 4.3 

45 and over . . . . . . . 49 .0 45 .2 -3.8 

Wage and salary : 

16-24 . . . . . . . . . . . . 24 .1 21 .3 -2.8 

25-44 . . . . . . . . . . . . 45.9 50.5 4.6 

45 and over . . . . . . . 30.0 28 .2 - 1 .8 

Blacks are considerably less likely than the population at 

large to be self-employed. While this was true in 1979, it 

was even more so in 1983, as the proportion of self-employed blacks dropped from 5.5 to 3.8 percent. At the same 

time, their number declined by more than 100,000, or 23 

percent, while that of their wage and salary counterparts 

increased by 30 percent. 

Not only are there proportionately fewer black self-employed workers, but those who did operate their own businesses in 1983 were quite likely to be in sales, service, 

farming, and operator, fabricator and laborer occupations. 

White self-employed workers, in contrast, were more likely 

to be in managerial and professional and technical occupations . 

In addition to being disproportionately older and white, 

71 percent of the self-employed in 1983 were men, compared with 55 percent of wage and salary workers. But the 

number of self-employed women has increased five times 

faster than the number of self-employed men, and more than 

three times as fast as wage and salary women. To the extent 

that the total female labor force is growing more rapidly 

than the male labor force, the increase in self-employed 

women is to be expected . Nevertheless, the continued increase in the number of self-employed women may also 

Table 2. Occupational distribution by class of worker, 

1983 

[In percent] 

Occupation Self-employed Wag and 

salary family workers Uy workers workers 

Total . . . . . . . . . . . . . . . . . 106.0 100.0 100.0 

Managerial and professional 

speciality . . . . . . . . . . . . . . . . 26 .7 23 .2 4 .7 

Technical, sales, and administrative 

support . . . . . . . . . . . . . . . . 23 .1 31 .7 43 .8 Service . . . . . . . . . . . . . . . . 9.7 14 .2 6 .5 

Precision production, craft, and 

repair . . . . . 16 .7 11 .8 3.1 Operator, fabricator, and laborer . 6.6 17 .0 6.3 Farming, forestry, and fishing . 17 .3 2.1 35 .7 

NOTE : Columns may not equal total because of rounding . 

16 
indicate an expansion in the employment opportunities women 

are creating for themselves . 

Occupational and industry distribution 

As with wage and salary workers, the self-employed are 

widely distributed across occupations and, with two major 

exceptions, their distribution patterns are similar. (See table 

2.) A much larger share of self-employed than wage and 

salary workers are in agriculture. This phenomenon traces 

its roots to the family farm. However, with the advent of 

large-scale corporate farming, the family farm and, with it, 

agricultural self-employment, began to decline. From 4 .8 

million workers in the fourth quarter of 1948, agricultural 

self-employment declined to 1 .6 million in the fourth quarter 

of 1983. Nevertheless, agriculture accounted for more than 

17 percent of all self-employed workers in 1983, compared 

with a little more than 2 percent of wage and salary employment . The managerial and professional specialty occupations accounted for more than a quarter of all selfemployed workers and was the largest single group among 

the major occupations. Physicians, dentists, chiropractors, 

lawyers, and accountants are included in this group. 

Technical, sales, and administrative support jobs were 

only a slightly smaller proportion of self-employment than 

the managerial and professional specialty occupations, but 

this proportion was substantially smaller than that of wage 

and salary workers in the same occupational group . Included 

in this group are many jobs not readily suited to self-employment, such as cashiers, receptionists, and bank tellers. 

Self-employment does constitute a lion's share of several 

occupations. More than half of all dentists, veterinarians, 

optometrists, podiatrists, and other health diagnosing technicians, authors, painters and sculptors, auctioneers, street 

and door-to-door sales workers, barbers, child-care workers, 

and farm operators and managers were self-employed in 

1983 . 

Just as certain occupations lend themselves to self-employment, so do certain industries . More than half of the 

workers in dressmaking shops, shoe repair shops, barber 

shops, and lodging places other than hotels or motels were 

self-employed. Other industries, with more than a quarter of 

their work force self-employed included : taxicab service, 

business management and consulting services, auto repair 

shops, and beauty shops. 

Clearly, the service-producing sector provides the bulk 

of the opportunities for self-employment outside of agriculture . Eighty percent of the self-employed had serviceproducing jobs, compared with 70 percent of wage-andsalary workers. While most of the self-employed in this 

sector had jobs in retail trade or services, this was due to 

the dominance of these two industries in terms of total 

employment . Only about 10 percent of the work force in 

both retail trade and services were self-employed, not much 

higher than the percent of total nonagricultural employment. 

Within the goods-producing sector, almost 20 percent of 

construction industry employment consisted of the self-emTable 3. Nonagricultural self-employment by Industry, 

selected years 

Number (in thousands) Percent 

Industry 

1972 1979 1983 1972 1979 1983 

Total . . . . . ., 5,365 6,791 7,578 100.0 100.0 100.0 

Goods-producing . 1,003 1,513 1,558 18 .7 22 .3 20 .6 

Mining 13 22 29 2 3 4 

Construction . 746 1,152 1,158 13 .9 17 .0 15 .3 

Manufacturing . . . 244 339 371 4 .5 5 .0 4.9 

Service-producing . . . 4,362 5.278 6,020 81 .3 77 .7 79 .4 

Transportation, 

communication, 

and public 

utilities . . . . . . 203 276 322 3.8 4.1 4 .2 

Wholesale trade . 213 277 316 4 .0 4 .1 4 .2 

Retail trade . . . . . 1,475 1,576 1,616 27 .5 23 .2 21 .3 

Finance, insurance, 

and real estate . . 262 445 532 4 .9 6.6 7.0 

Services . . . . . 2,209 2,704 3,233 41 .2 39 .8 42 .7 

ployed, compared with only 3 percent in mining and 2 

percent in manufacturing. The need for extensive capitalization is clearly a major deterrent for the latter two industries. 

Growth patterns in the two sectors were quite different 

over the 1979-83 period than in the prior 7 years, partly 

because of the impact of the 1980 and 1981-82 recessions 

on the goods sector . During the 1972-79 period, self-employment in the goods-producing sector grew twice as fast 

as in the service-producing sector, primarily because of 

rapid growth in the construction industry and slow growth 

among retailers. Over the 1979-83 period, employment 

growth continued to be slower than average among selfemployed retailers, but it picked up in the services industry . 

The latter industry alone provided two -thirds of the 1979-

83 increase in the self-employed . Thus, during that period, 

both self-employment and employment in general grew faster 

in the service sector than in the goods-producing sector . 

(See table 3 .) 

Hours and earnings 

Self-employment conjures up the image of an individual 

who works many hours each week to keep his or her business 

operating. And, indeed, almost a third of those working for 

themselves in nonagricultural jobs worked at least 49 hours 

a week in 1983 . The workweek of the self-employed averaged 40 hours, down nearly 2 hours from 1979 . During 

the same period, the average workweek of wage and salary 

workers declined by one-half hour, to 38 hours . (See table 

4.) Thus, there has been a narrowing in the gap in the 

workweek between the self-employed and other workers. 

Table 4. Weekly hours of work by major Industry group 

and class of worker, 1979-83 

Wool, 1979-03 

Indust ry group and class 1979 1980 1981 1982 1983 

Hours Percent 

Nonagricultural: 

Self-employed . . . . . . . . 41 .9 41 .2 40 .5 39 .8 40 .0 -1 .9 -4 .5 

Wage and salary . . . . . 38 .4 38 .1 37 .6 37 .6 37 .9 - .5 -1 .3 

Agricultural : 

Self-employed . . . 51 .4 49 .3 49 .5 48 .3 47 .4 -4 .0 -7 .8 

Wage and salary . 42 .1 41 .6 40 .9 40 .3 40 .3 -1 .8 -4 .3 

17 
MONTHLY LABOR REVIEW July 1984 9 Self-Employed Workers in 1983 

Self-employed farmers put in more than 47 hours a week 

in 1983, down from more than 51 hours in 1979. Although 

they still worked more hours than their nonagricultural counterparts, the same declining trend in hours is evident. 

Persons who work for themselves continue to earn less 

then their wage and salary counterparts . Despite a generally 

longer workweek, self-employed persons in 1982 earned, 

on average, only about 70 percent as much as wage and 

salary workers, that is $12,595 compared with $17,559.9 

Nevertheless, there were a number of occupations-mostly 

professional-where self-employment was more remunerative than wage and salary work. Included are managementrelated jobs such as accountants and auditors, records 

management analysts, buyers, and business promotion agents ; 

and professional specialty occupations such as natural scientists, health diagnosing, assessment, and treating, legal, 

and certain sales-related jobs . 

Partly because more than half of the women who work 

for themselves were in the relatively low-paying sales and 

service occupations, their median earnings of $6,644 in 

1982 were substantially below those of self-employed men, 

who earned $14,360. (See table 5 .) A sizable portion of 

self-employed men, about a third, were in the more lucrative 

management and professional specialty occupations or worked 

as finance and business sales representatives, also a highpaying occupation . 

Table 5. Median earnings of year-round full-time workers 

In 1982, by occupation, class of worker, and sex 

Men women 

Occupation Self- Wage and Soft- Wage and 

employed salary employed salary 

Total . . . $14,360 $21,542 $6,644 $13,352 

Managerial and professional 

specialty . . . . . . . . . 24,720 28,637 10,366 17,955 Technical, sales, and 

administrative support . 15,841 21,694 7,468 12,897 

Service . . . . . . . . . . . . . . . . . 10,913 14,632 4,837 9,185 

Precision production, 

craft, and repair . . . . . . . . . . 13,890 21,432 7,557 14,024 Operator, fabricator, and 

laborer . . . . . . . . . . . . . . . . . . 12,015 17,167 5,918 11,047 Farming, forestry, and fishing . . . . . . 6;584 11,323 238 7,958 

The 1982 mean earnings of self-employed men were also 

below those of wage and salary workers, a reversal of the 

situation in 1978. At that time, earnings of self-employed 

men were "substantially skewed at the upper end of the 

earnings distribution," bringing their mean earnings to a 

fairly high level.'o In 1982, however, more than half of all 

self-employed men had earnings below $15,000 a year, 

compared with only a fourth of wage and salary workers . 

At the upper end of the scale, a fifth of self-employed men 

had earnings above $30,000 a year, compared with a fourth 

of wage and salary men. F~ 

FOOTNOTES 

'This report primarily covers trends since 1979 . as it updates T. Scott 

Fain, "Self-employed Americans: their number has increased." Monthlv 

Labor Review, November 1980, pp . 3-8. It is based on data from the 

Current Population Survey, a monthly sample survey of about 60,000 

households conducted for the Bureau of Labor Statistics by the Census 

Bureau . Self-employed persons are defined as those who work for profit 

or fees in their own business, profession, or trade. or operate a farm . 

'The size of the nonagricultural self-employed class corresponds closely 

to-but by no means totally explains-the difference between two independently derived estimates of nonagricultural employment . In 1983, the 

Current Population Survey (household survey) provided an estimate of 

97 .5 million nonagricultural workers, while the Current Employment Statistics (establishment survey) program produced an estimate of 90 .0 million . In addition to the coverage differences, the two surveys differ in terms 

of both concept and methodology. 

' In 1967, it became possible to identify workers who had reported 

themselves in the Current Population Survey as self-employed but who 

had incorporated their businesses . Practically all of these workers were in 

the nonagricultural sector and their reclassification out of self-employment 

in 1967 is quite apparent in the trend line on chart I . For a more complete 

discussion of the incorporated self-employed see Fain, "Self-employed 

Americans." Also see Robert L. Stein, "New Definitions for Employment 

and Unemployment," Employment and Earnings and Monthh. Report on 

the Labor Force, February 1967, pp . 3-27 . 

'For a report on unpaid family workers since 1950, see Patricia A Daly, 

"Unpaid family workers: long-term decline continues," Monthlv Labor 

Review, October 1982, pp . 3-5 . 

`For additional comments and tabulations on the May 1980 data, see 

Daniel E. Taylor and Edward S. Sekscenski, "Workers on long schedules, 

single and multiple jobholders," Monthlv Labor Review, May 1982, pp. 51-

52 . 

'For a quantification of the effect of moving the incorporated from the 

self-employment to the wage and salary classification see Stein, "New 

Definitions," page 34 . 

'See John E. Bregger, "Self-employment in the United States, 1948-

62," Monthlv Labor Review, January 1963, pp . 37-43 ; and Robert N. 

Ray, "A report on self-employed Americans in 1973," Monthly Labor 

Review, January 1975, pp . 49-54. 

'The comparison refers to the 13-month period from November 1982, 

the trough of the most recent recession, through December 1983 . Largely 

because of the unusually fast growth in self-employment, total employment 

grew faster than wage and salary employment (as measured by the survey 

of establishments) during the first year of recovery . 

'These data are from the March 1983 supplement to the Current Population Survey and refer to 1982 median earnings for year-round full-time 

workers. These median earnings do not include income implicit to the selfemployed worker (and generally not available to the wage and salary 

worker) such as use of the business car for personal travel or the home as 

the place of work, or feeding or clothing the family from a store owner's 

own stock or the farmer's own fields . 

"'See Fain, "Self-employed Americans." The situation is not exactly 

comparable, however, because Fain's analysis is based on private wage 

and salary workers, whereas the earnings data in this report are for all 

wage and salary workers, including government employees.