According to Gallup, the world’s leading source of population polls, eighteen percent of all adults worldwide — or 29% of the global workforce — reported being self-employed in 2013. But rather than a positive sign of proactive entrepreneurial energy, high rates of self-employment can often signal poor economic performance. The worldwide self-employed are three times as likely as those who are employed full time for an employer to be living on less than $2 per day.
The 2014 Gallup study finds that most self-employed live in some of the poorest places in the world, where self-employment may be born more out of necessity than opportunity. One in four or more adults in Southeast Asia (28%), East Asia (28%), and sub-Saharan Africa (25%) are self-employed and make up large segments of the region’s workforce. The self-employed account for much smaller percentages of the population and workforces in the former Soviet Union (7%), European Union (6%), and Northern America (5%).
This is interesting. Although the common perception is that self-employment in the U.S. is concentrated in a few service sector industries, like real estate sales people and insurance agents, research by the Small Business Administration has shown that self-employment occurs across a wide segment of the U.S. economy. Furthermore, industries that are not commonly associated as a natural fit for self-employment, such as manufacturing, have in fact been shown to have a large proportion of self-employed individuals and home-based businesses. And an increasing number of Americans belong to what is called the contingent workforce, where they work for personnel supply or temporary employment agencies. In the United States, any person is considered self-employed for tax purposes if that person is running a business as a sole proprietorship, independent contractor, as a member of a partnership, or as a member of a limited liability company that does not elect to be treated as a corporation.
The work of self-employed workers has changed over time, as this Harvard Business Review article points out: “For the first century of its existence, the United States economy was dominated by independent workers. Most of them were farmers. Others were tradespeople, professionals, hands-on service providers, and such. Other long-established varieties of independent work have been declining, or at least not growing much. Mom & pop stores, definitely, but also some other very large categories that may not immediately spring to mind. Doctors, for example, who have been reacting to the increasing complexity of their business by grouping together or joining hospital staffs. Sole-practitioner lawyers who are getting out of a field that seems to be in long-term decline. And real estate agents, contractors, and others who are dependent on a boom-bust housing sector which has been mostly a bust in recent years. Today we see a jump in the number of musicians, management analysts, landscapers, financial advisors, fitness trainers, and maids and housekeepers.”
According to the AFL-CIO, which tracks the “contingent workforce” on a regular basis, in September 2013, there were just over 15.5 million workers in the U.S. who reported being self-employed in their main job; 46 percent of them worked in management, professional, and related occupations (7.2 million self-employed professional workers). Overall, 12 percent of the management, professional, and related U.S. workforce was self-employed in September 2013.
Self-employment has its pluses and minuses, and it continues to take new forms both in the U.S. and other nations. These self-employment developments, coupled with changes in the employed working for others’ world, point to the ever-changing face of work in America and elsewhere across the world. Self-employment is a complex issue as it morphs daily into new occupations and industries.
These are important issues for Ashtabula County as all of us work to position the county for greater economic prosperity in the future. The key is securing future employment and self-employment opportunities for our residents that provide greater earnings and improved benefits. This is no easy task since competition for these opportunities is fierce. Workers seeking these opportunities must possess the education, work experience and skills required to compete for these job and self-employment opportunities. We must work constantly at honing the quality and competitiveness of our workforce supply to attract and create these opportunities in Ashtabula County.