Secondary Self-Employment in Decline

Scott Shane

Thursday, May 22nd, 2014

Fewer Americans are working for themselves than did at the turn of the 21st century. That’s true for both people’s primary and secondary jobs, Bureau of Labor Statistics (BLS) data indicate.

As I have discussed before, self-employment has been on a many-year decline in the United States – a trend that has continued over the past 14 years. BLS figures show that 10.9 percent of employed Americans worked for themselves in either incorporated or unincorporated self-employment in 1999. By 2013 that fraction had slid to 10.2 percent.

Previously I had not explained that this trend is also present in second jobs. As the figure below shows, the share of Americans who had a second job working for themselves declined from 1.6 percent of those employed in 1999 to 1.1 percent in 2013.

The drop in secondary self-employment was present for both men and women. The percentage of employed men who had a side business dropped from 1.8 percent in 1999 to 1.3 percent in 2013. The fraction of employed women in business for themselves as a second job dropped from 1.3 percent in 1999 to 0.9 percent in 2013.

The slide in secondary self-employment was present whether the primary employer was a private sector business; a part of the federal, state or local government; or the person himself. For those whose primary job was for someone else in the private sector, the fraction with secondary self-employment declined from 1.5 percent in 1999 to 1.1 percent in 2013. For those whose main employer was a government agency, the fraction engaged in secondary self-employment declined from 2.4 percent in 1999 to 1.5 percent in 2013. For those whose first job was incorporated self-employment, the portion with secondary self-employment decreased from 3.7 percent in 1999 to 2.6 percent in 2013.

The portion of working Americans with self-employment as a second job declined more than the fraction of employed Americans with a second job of any kind. As a result, the fraction of people with second jobs whose additional employment was for someone else increased from 71 percent in 1999 to 75 percent in 2013.

The trend in self-employment is very different than the trend in the number of businesses. Census data show that the number of U.S. businesses per capita rose from 7.8 per hundred in 1999 to 9.0 per hundred in 2011, the latest year data are available, largely because of a rise in the number of non-employer businesses. Internal Revenue Service data on the number of business entities (as measured by the sum of the number of partnerships, sole proprietorships and corporations) also increased on a per capita basis between 1999 and 2011.

If fewer Americans are self-employed now than in 1999, but the country has more businesses, then the smaller number of people in business for themselves must spreading their entrepreneurial activities across more companies.

Created from data from the IRS Statistics of Income

About Scott Shane

Scott Shane is A. Malachi Mixon III, Professor of Entrepreneurial Studies at Case Western Reserve University.