Thursday, January 24, 2013

The Joke of Self-Employment

Self-employment does not work in the United States. Thanks to our employment-based health insurance system and the difficulty and cost of obtaining health insurance as an individual, few Americans want to work for themselves. That's why self-employment rises during recessions (when there are no other options) and falls as the economy recovers.

The Census Bureau's report on trends in self-employment between 2010 and 2011 finds exactly this pattern. The percentage of American workers who are self-employed fell between 2010 and 2011 as the economy recovered from the Great Recession. Both the incorporated and the non-incorporated self-employed declined as a share of the nation's employed. In 2011, 3.4 percent of workers were incorporated self-employed and another 6.2 percent were non-incorporated self-employed. Both figures were lower in 2011 than in 2010, which, according to the Census Bureau is "consistent with research finding that an expanding economy encourages exits from self-employment by increasing opportunities in the wage-work sector of the labor market."

Source: Census Bureau, Changes in Self-Employment: 2010 to 2011

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