Research 1: Counting Self-Employment

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One of the best sources of data on gig work and self-employment is the U.S. Census Bureau’s Nonemployer Statistics program. A nonemployer business is one that has no paid employees, has annual business receipts of $1,000 or more ($1 or more in the construction industry), and is subject to federal income taxes. These include partnerships, sole proprietorships, and limited liability corporations (LLCs), although one-person LLCs are classified as sole proprietorships and two-person LLCs are classified as partnerships. In short, these data include people who are self-employed either on a full-time or part-time basis. The source of these data are form 1040 (Schedule C, E, or F) and form 1065 where 1099 income is reported.

According to the U.S. Census Bureau, “most nonemployers are self-employed individuals operating very small unincorporated businesses, which may or may not be the owner’s principal source of income.” Note that one non-employer business may report more than one 1099 form if income is from more than one source. Thus, the number of non-employer businesses will be less than the number of 1099 forms filed in any one year.

National trends in non-employer businesses: sole proprietorships dominate.

  • Sole proprietorships dominate non-employer businesses: the makeup of non-employer businesses, nationally and within states, was roughly about the same in 2005 and 2013 –85% were sole proprietorships. Measured by revenue, the proportions are much the same.
  • From 2005 to 2013, the total number of non-employer business establishments in the United States grew by about 2.6 million to 23 million.
  • Non-employer establishments dwarf employer establishments: 23,005,620 vs. 7,488,353.

National growth in new business formation comes entirely from the gig economy (non-employers).

  • Growth in new businesses in the period 2008-2013 came entirely from non-employer businesses. That is, entirely from gig economy work.
  • The US added about 2.6 million businesses without payroll and lost 11,000 businesses with payroll from 2005-2013 (latest year for which data are available).

For states,

  • Wisconsin experienced the same pattern. The 6,000 net new businesses that sprang up in the state between 2005 and 2013 (from roughly 467,000 to 473,000) were entirely from non-employer businesses. The 13,000 non-employer establishments that WI gained were offset by 7,000 net closures of businesses with employers. That represented a 4% gain for non-employer establishments.
  • North Carolina held steady in employer-businesses (roughly 218,000), and grew by 16% to 679,500 non-employer businesses.
  • Florida gained a little over 1% employer businesses but saw a 24.8% increase in non-employer businesses to 1,838,864.

Where is the growth?

Several five-digit industries led the growth in non-employer business establishments in each of our three states (ranked by total number of new establishments). Hair, nail, and skin care services led growth in the US and in two of our three states; janitorial, home health and other personal services (i.e., tattoo, massage, tanning, ear piercing, weight loss, etc.) also posted large gains (table 1).

From this, we might speculate that most growth in the gig economy work has come from relatively low-paid jobs in service industries. The only category of higher-paid occupational growth was in independent artists and writers (actors, artists, dancers, writers, etc.).

Table 1. Rank by total number of new establishments, by US and selected states and North American Industrial Classification System code

Industry NAICS US FL NC WI
Increase in non-employer businesses 12.8% 24.8% 16.5% 4.0%
Hair, nail, skin care services 81211 1 2 1 1
Janitorial services 56172 2 1 2 4
Home health care services 62161 3 4 5 3
Independent artists and writers 71151 4 3 5
Landscaping services 56173 5 5 4
Other personal care services 81219 2
All other personal services 81299 3

Metro Areas

Metro areas gained non-employer establishments faster than their respective states. Miami experienced 33% growth, Charlotte 61%, and Milwaukee 10% (table 2). New five-digit categories appeared for the Miami metro area, however. Professional services and services to buildings made it into top growth categories. Whether these represent higher-wage occupations warrants further exploration.

Table 2. Rank by total number of new establishments, for selected metro areas and North American Industrial Classification System code

Industry NAICS Miami Charlotte Milwaukee
Increase in non-employer businesses 33.1% 61.2% 9.9%
Hair, nail, skin care services 81211 1 1
Janitorial services 56172 1 2 4
Home health care services 62161 2 2
Independent artists and writers 71151 4 5
Landscaping services 56173 5
Other personal care services 81219 3
All other personal services 81299 3
All other professional services 54199 3
Office administration services 56111 4
Other services to buildings 56179 5