US self-employment rate falls to 10% of workforce

The proportion of self-employed workers in the US is at its lowest point in 20 years, according to analysis from Pew Research Center.

The study, based on US census data, shows that the self-employment rate in 2014 was 10%, or 14.6 million workers. A further 20% (29.4 million workers) were hired by a self-employed person, with around a quarter of self-employed workers having at least one employee.

The Pew report shows that US self-employment has gradually fallen since 1994, when it stood at 12.2%. This is despite recent reports of increasing numbers of Americans working freelance, which has been referred to as the “gig economy”.

Separate World Bank data shows the US as having one of the lowest self-employment rates in the world: just 6.8% in 2011, compared to 14.2% in the UK, 11.7% in Germany, and 9% in Canada.

IZA World of Labor author Alexander S. Kritikos has written about the positive impact of entrepreneurs on jobs and growth, arguing that: “To attract productive entrepreneurs, governments need to cut red tape, streamline regulations, and prepare for the negative effects of layoffs in incumbent firms that fail because of the new competition.”

Meanwhile, Roy Thurik writes that entrepreneurial activity can create upswings in market performance, and that economists can predict boosts in the business cycle using data on nascent self-employment. However, this trend only applies to opportunity entrepreneurship, as opposed to necessity entrepreneurship which is driven by economic downturns.

Read the Pew Research Center report here.

Related articles:
Entrepreneurs and their impact on jobs and economic growth by Alexander S. Kritikos
Entrepreneurship and the business cycle by Roy Thurik