Understanding the Self-Employed in the United States

Ensuring appropriate tools and protections for the self-employed requires understanding who the self-employed are in the United States. This fact sheet explores the full picture of the self-employed population: the number of people who are self-employed, the demographic diversity of this population, and the key groups for whom self-employment plays an outsize role.

How many people are self-employed?

Data sources differ on how many people are self-employed in the United States. On the lower end, the Current Population Survey reports that there are about 16.5 million self-employed people in the country, making up about 10.4 percent of the total working population.1 However, other sources suggest that the true number may be higher. For the most recent tax year for which data are available, more than 27 million Americans filed Schedule C tax documents, which cover net income or loss from a business.2 This is similar to reports from the Small Business Administration, which reported 27.1 million nonemployer small businesses—those without any employees—nationwide in the most recent data.3

Some of the gap in counting the self-employed population may result from differences in how those who combine traditional employment and self-employment are counted. For example, a Gallup survey found that 53 percent of the self-employed also reported having been employed by an employer in the previous week.4 Nearly twice as many workers—and 28 percent of all workers—reported having any self-employment work in the past week as those who reported independent contracting as their primary job—just 14.4 percent of all workers. This has contributed to ambiguity regarding size of the self-employed population.5 It also may explain why some private surveys find much higher numbers of self-employed workers, such as a 2022 survey by MBO Partners, which found that there were 64.6 million independent workers in the United States, most of whom engaged in self-employment either irregularly or part time, often in combination with traditional employment.6

What about gig workers?

In recent years, considerable attention has been devoted to the concept of gig work, gig workers, and the gig economy overall.7 These terms have no precise, universal meaning, and they are sometimes used synonymously with self-employment or the broader range of contingent work.8

In particular, the term “gig workers” commonly refers to those who get work through app-based digital platforms such as Uber, DoorDash, or TaskRabbit.9 A Pew Research Center survey found that 16 percent of adults had engaged in “gig platform work” at some point.10 However, only 4 percent of adults reported that they were currently engaging in gig work, and even among those who had engaged in gig platform work in the previous 12 months, nearly one-quarter reported that they “don’t do these jobs most weeks.”11 As these numbers continue to grow, platform-based work raises profound concerns regarding working conditions,12 particularly from an equity perspective, given that people of color are more likely to engage in platform-based work than white people.13

Platform companies typically refer to their workers as independent contractors, even when those workers are legally entitled to employee status under existing law.14 These companies have invested considerable resources in both legal and legislative efforts to mark their workers as nonemployees, with varying success.15 Therefore, in practice, platform-based workers likely experience the effects of policies for the self-employed, including around paid leave, even where those workers ought to be considered employees.

Who are the self-employed?

Historically, official counts have suggested that self-employed workers were more likely to be male, white, and non-Hispanic than wage workers, and that the self-employed were comparatively highly educated. Those who have been in some forms of self-employment—particularly incorporated self-employment and independent contracting—have historically earned comparatively higher incomes.16 However, these counts may miss lower-income self-employed workers and those who are misclassified, suggesting that the overall self-employed population—or the population of those treated as self-employed—may have lower incomes and be less white than some statistics suggest.17 Informal work is also particularly likely to be left out,18 which is important given that informal work is more common among low-income workers, workers with less education, and workers of color.19

Moreover, these factors have changed over time, especially during the COVID-19 pandemic, which brought economic changes that led to a rise in self-employment. Comparing 2022 data with pre-pandemic numbers (2017 through 2019), the proportions of Black and Hispanic workers who are self-employed grew notably faster than the relatively slight growth in the self-employment rate among white workers.20 In the same study, self-employment decreased among those with at least a bachelor’s degree, while rising among those with no high school diploma, a high school diploma, or some college.21 Other reports note that while those with independent contracting incomes are more likely to be high earners, growth in independent contracting income has been concentrated among low-income workers.22

Similarly, growth in independent contracting income was faster among women than men, particularly among breadwinning women, even before the pandemic.23 The Affordable Care Act likely played a substantial role in opening up opportunities to self-employment for women—particularly for unmarried women—by providing an affordable way for workers without job-based health coverage to buy it on their own.24 The rise in self-employment during the pandemic was disproportionately driven by women, particularly women of color and women with young children, likely due at least in part to pandemic-related child care and caregiving impacts. The proportion of women who reported being self-employed increased by more than twice as much as the increase among men.25

The self-employed include those from virtually all industries.26 Among nonagricultural, unincorporated self-employed workers, the three most common industries are professional and business services (22.37 percent), construction (18.46 percent), and education and health services (11.45 percent).27 Agricultural work remains a major source of self-employment, with self-employed people in agricultural work and related industries making up 7.55 percent of unincorporated self-employed workers.28

Misclassification and understanding the self-employed

The rise of app-based work has led to a renewed emphasis on misclassification—the practice of businesses wrongfully claiming workers are independent contractors when those workers are legally entitled to the rights and protections of employee status. Yet misclassification is not a new problem, nor is it limited to app-based work.

Misclassification deprives workers of protections such as a minimum wage, workers’ compensation, and unemployment benefits, while forcing workers to double-pay federal payroll taxes for Social Security and Medicare.29 When emerging protections such as paid leave are limited to those with employee status, misclassification can exclude workers from those much-needed rights as well.

All workers deserve the protections they need—including paid leave—regardless of how they are labeled or classified. This series primarily focuses on the needs of the truly self-employed, while recognizing that policy choices focused on this population will also affect the misclassified or potentially misclassified.

Why—and to whom—self-employment matters

Self-employment is by far the most common form of entrepreneurship in the United States, particularly for women and people of color. According to Small Business Administration data, nearly 82 percent of small businesses have no employees.30 Among women-owned businesses, 90 percent have no employees—10 percentage points higher than the comparable percentage of businesses owned by men.31 Similarly, 96 percent of Black-owned businesses have no employees—15 percentage points higher than white-owned businesses.32

Certain population groups are overrepresented among the self-employed. These trends should shape the understanding of what is at stake in protecting the self-employed, as well as what responses will be most helpful.

Self-employment is an essential part of the economic stability of mothers. Motherhood influences the decision of some women to become self-employed, as they are more likely than men to become self-employed in pursuit of a better work-life balance or after having children.33 And women with children—especially young children—are more likely to be self-employed than women without children.34 Moreover, women’s self-employment rates remain steady in the years following having a child, even as women’s employment rates overall drop during the same period.35 Over the pandemic period, the increase in self-employment was notably larger among workers with children under age 6 than among those without young children, suggesting that child care pressures—which weigh disproportionately on mothers—contributed to the shift.36

Immigrants are also disproportionately represented among the self-employed. In 2019, nearly one-quarter—22 percent—of self-employed U.S. residents were immigrants, although immigrants make up only about 14 percent of the U.S. population.37 Immigrants are nearly twice as likely as those born in the United States to start businesses, with refugees being especially likely to pursue entrepreneurship.38 For undocumented immigrants, self-employment is an opportunity to earn income that does not require work authorization.39 This may make self-employment particularly vital and appealing to undocumented immigrants.40 One study estimated that as of 2018, there were more than 800,000 undocumented entrepreneurs in the United States.41

Self-employment is particularly salient for those with criminal records. Nationwide, 28 percent of people with criminal records are self-employed. Women of color with justice involvement are particularly likely to report self-employment income: 32 percent of Hispanic women and 42 percent of Black women with criminal records report self-employment income.42 Moreover, people with criminal records are 22 percent more likely to rely on self-employment as their sole source of income than those without.43 Labor market discrimination is a major driver of this push toward entrepreneurship.44 Self-employment may significantly mitigate the income penalty faced by formerly incarcerated people. Moreover, entrepreneurship may have an even stronger beneficial effect on the likelihood of re-incarceration than paid employment. Therefore, self-employment may be a preferable alternative to traditional employment for formerly incarcerated individuals.45

Self-employment is also critical for older adults.46 Self-employed workers skew notably older than wage workers: Nearly 1 in 4 self-employed workers are 60 years old or older, compared with 11.3 percent of wage workers.47 Self-employment rates as a percentage of those working also rise as workers age, jumping dramatically at the traditional retirement age of 65.48 While less than one-quarter of each age group of prime working-age adults report self-employment as their main job, nearly half of those ages 65 to 69 who are working are self-employed, along with a majority of those working in the 70 to 79 age range.49

Finally, self-employment is especially important for people with disabilities. Among those who are employed, the proportion of people with disabilities who are self-employed (unincorporated) is more than 50 percent higher than the comparable portion of people without disabilities.50 This is due at least in part to barriers faced by people with disabilities in pursuing traditional employment, including due to discrimination.51

Conclusion

The self-employed represent a growing share of the United States’ working population and a powerful part of the country’s economy. Understanding who the self-employed are is a crucial part of shaping the policy investments that can support and empower this diverse population—and with it, ensuring a fairer and more equitable economy for the future.

Endnotes

 

1. Author’s calculations based on U.S. Bureau of Labor Statistics, “Labor Force Statistics (CPS): Table A-9. Selected Employment Indicators,” available at https://www.bls.gov/webapps/legacy/cpsatab9.htm (last accessed September 2023).


2. IRS, “SOI Tax Stats – Filing Season Statistics: Mid-November Filing Season Statistics by AGI,” available at https://www.irs.gov/statistics/filing-season-statistics (last accessed June 2023).


3. U.S. Small Business Administration, “2022 Small Business Profile: United States,” available at https://advocacy.sba.gov/wp-content/uploads/2022/08/Small-Business-Economic-Profile-US.pdf (last accessed June 2023).


4. Quickbooks and Gallup, “Gig Economy and Self-Employment Report” (Washington: 2019), p. 23, available at https://quickbooks.intuit.com/content/dam/intuit/quickbooks/Gig-Economy-Self-Employment-Report-2019.pdf.


5. Ibid., p. 25.


6. MBO Partners, “Happier, Healthier & Wealthier: State of Independence in America” (Bee Cave, TX: 2022), p. 4, 20, available at https://info.mbopartners.com/rs/mbo/images/MBO_2022_State_of_Independence_Research_Report.pdf.


7. Kellen Browning, “Has ‘Gig Work’ Become a Dirty Word?”, The New York Times, May 27, 2023, available at https://www.nytimes.com/2023/05/27/business/gig-work-uber-lyft-writers-strike.html; Monica Anderson and others, “The State of Gig Work in 2021” (Washington: Pew Research Center, 2021), available at https://www.pewresearch.org/internet/2021/12/08/the-state-of-gig-work-in-2021/; Ben Zipperer and others, “National survey of gig workers paints a picture of poor working conditions, low pay” (Washington: Economic Policy Institute, 2022), available at https://www.epi.org/publication/gig-worker-survey/.


8. David Weil, “What’s a ‘gig’ job? How it’s legally defined affects workers’ rights and protections,” BrandeisNOW, January 9, 2023, available at https://www.brandeis.edu/now/2023/january/gig-economy-explained.html;
   
   Gig Economy Data Hub, “What is a gig worker?”, available at  https://www.gigeconomydata.org/basics/what-gig-worker (last accessed June 2023); Lauren Wingo, “What Is a Gig Worker?”, U.S. Chamber of Commerce, March 16, 2021, available at https://www.uschamber.com/co/run/human-resources/what-is-a-gig-worker.


9. Zipperer and others, “National survey of gig workers paints a picture of poor working conditions, low pay”; New America, “Background,” available at https://www.newamerica.org/education-policy/reports/the-public-workforce-development-system-and-gig-workers/background (last accessed June 2023).


10. Anderson and others, “The State of Gig Work in 2021.”


11. Ibid., p. 6, 16.


12. Zipperer and others, “National survey of gig workers paints a picture of poor working conditions, low pay.”


13. Risa Gelles-Watnick and Monica Anderson, “Racial and ethnic differences stand out in the U.S. gig workforce,” Pew Research Center, December 15, 2021, available at https://www.pewresearch.org/short-reads/2021/12/15/racial-and-ethnic-differences-stand-out-in-the-u-s-gig-workforce/.


14. Karla Walter and Kate Bahn, “Raising Pay and Providing Benefits for Workers in a Disruptive Economy” (Washington: Center for American Progress, 2017), available at https://www.americanprogress.org/article/raising-pay-providing-benefits-workers-disruptive-economy/.


15. Nate Raymond, “Dueling Massachusetts gig worker ballot measures clear key hurdle,” Reuters, September 6, 2023, available at https://www.reuters.com/legal/government/dueling-massachusetts-gig-worker-ballot-measures-clear-key-hurdle-2023-09-06/; Kellen Browning, “California Court Mostly Upholds Prop. 22 in Win for Uber and Other Gig Companies,” The New York Times, March 13, 2023, available at https://www.nytimes.com/2023/03/13/business/prop-22-upheld-california.html; Jennifer Sherer and Margaret Poydock, “Flexible work without exploitation,” Economic Policy Institute, February 24, 2023, available at https://www.epi.org/publication/state-misclassification-of-workers/; Maya Pinto, Irene Tung, and Rebecca Smith, “Rights at Risk: Gig Companies’ Campaign To Upend Employment as We Know it” (New York: National Employment Law Project, 2019), available at https://www.nelp.org/publication/rights-at-risk-gig-companies-campaign-to-upend-employment-as-we-know-it/.


16. Cheridan Christnacht, Adam Smith, and Rebecca Chenevert, “Measuring Entrepreneurship in the American Community Survey: A Demographic and Occupational Profile of Self-Employed Workers” (Washington: U.S. Census Bureau, 2018), p. 7, available at https://www.census.gov/content/dam/Census/library/working-papers/2018/demo/SEHSD-WP2018-28.pdf; Katharine G. Abraham and Susan N. Houseman, “Contingent and Alternative Employment: Lessons from the Contingent Worker Supplement, 1995–2017” (Washington: U.S. Department of Labor, 2020), p. 26, available at https://www.dol.gov/sites/dolgov/files/OASP/evaluation/pdf/WHD_Contingent_Worker_Supplement_Report_Feb2021.pdf; Katherine Lim and others, “Independent Contractors in the U.S.: New Trends from 15 years of Administrative Tax Data” (Washington: Internal Revenue Service, 2019), p. 3, available at https://www.irs.gov/pub/irs-soi/19rpindcontractorinus.pdf.


17. Jenny Yang and others, “Reimagining Workplace Protections” (Washington: Urban Institute, Aspen Institute, and A Better Balance, 2020), p. 4, available at https://www.urban.org/sites/default/files/publication/103331/reimagining-workplace-protections_0.pdf.


18. Katharine G. Abraham and Ashley Amaya, “Probing for Informal Work Activity” (Cambridge, MA: National Bureau of Economic Research, 2019), available at https://www.nber.org/system/files/working_papers/w24880/w24880.pdf.


19. Katharine G. Abraham and Susan N. Houseman, “Making Ends Meet: The Role of Informal Work in Supplementing Americans’ Income” (Cambridge, MA: National Bureau of Economic Research, 2018), available at https://www.aeaweb.org/conference/2019/preliminary/paper/QreAaS2h.


20. Anabel Utz, Julia Yixia Cai, and Dean Baker, “The Pandemic Rise in Self-Employment: Who Is Working for Themselves Now?” (Washington: Center for Economic and Policy Research, 2022), https://www.cepr.net/the-pandemic-rise-in-self-employment-who-is-working-for-themselves-now/.


21. Ibid.


22. Lim and others, “Independent Contractors in the U.S.: New Trends from 15 years of Administrative Tax Data.” 


23. Ibid.


24. Margaret E. Blume-Kuhout, “The Affordable Care Act and Women’s Self-Employment in the United States,” Feminist Economics 29 (1) (2022): 174–204, available at https://www.tandfonline.com/doi/full/10.1080/13545701.2022.2118342.


25. Utz, Cai, and Baker, “The Pandemic Rise in Self-Employment: Who is Working for Themselves Now?”


26. U.S. Bureau of Labor Statistics, “Household Data Annual Averages: 16. Employed persons in nonagricultural industries by sex and class of worker,” available at https://www.bls.gov/cps/cpsa2021.pdf (last accessed June 2023).


27. Ibid., author’s calculations.


28. Author’s calculations based on U.S. Bureau of Labor Statistics, “Household Data: Table A-8. Employed persons by class of worker and part-time status (2022 annual averages),” available at https://www.bls.gov/webapps/legacy/cpsatab8.htm (last accessed June 2023).


29. John Schmitt and others, “The economic costs of worker misclassification,” Economic Policy Institute, January 25, 2023, available at https://www.epi.org/publication/cost-of-misclassification/.


30. Author’s calculations based on U.S. Small Business Administration, “2022 Small Business Profile: United States.”


31. Ibid.


32. Ibid.


33. Adela Luque and Maggie R. Jones, “Gender Differences in Self-employment Duration: the Case of Opportunity and Necessity Entrepreneurs” (Washington: U.S. Census Bureau, 2019), pp. 4–5, available at https://www2.census.gov/ces/wp/2019/CES-WP-19-24.pdf.


34. Katherine Lim, “Self-Employment, Workplace Flexibility, and Maternal Labor Supply: A Life-Cycle Model” (SSRN, 2019), pp. 4–5, available at https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3382287.


35. Ibid., p. 1.


36. Utz, Cai, and Baker, “The Pandemic Rise in Self-Employment: Who is Working for Themselves Now?”


37. American Immigration Council, “Immigrants in the United States,” available at americanimmigrationcouncil.org/sites/default/files/research/immigrants_in_the_united_states_0.pdf (last accessed June 2023).


38. National Immigration Forum, “Immigrants as Economic Contributors: Immigrant Entrepreneurs,” pp. 1–2, available at https://immigrationforum.org/wp-content/uploads/2018/07/Immigrants-as-Economic-Contributors-Immigrant-Entrepreneurs.pdf (last accessed June 2023). 


39. Nina Roberts, “Undocumented immigrants quietly pay billions into Social Security and receive no benefits,” Marketplace, January 28, 2019, available at https://www.marketplace.org/2019/01/28/undocumented-immigrants-quietly-pay-billions-social-security-and-receive-no/; Kit Johnson, “Lawful Work While Undocumented: Business Entity Solutions,” Arizona Law Review Volume 64 (89) (2021): 90–134, available at https://arizonalawreview.org/pdf/64-1/64arizlrev89.pdf. For instance, the regulations for the Immigrant Reform and Control Act (IRCA), the federal law prohibiting employers from knowingly employing undocumented workers, explicitly excludes “independent contractors” from the definition of “employee,” meaning that hiring someone without work authorization as a legitimate (nonmisclassified) independent contractor does not violate the IRCA. Code of Federal Regulations, “8 CFR § 274a.1(f),” available at https://www.ecfr.gov/current/title-8/chapter-I/subchapter-B/part-274a/subpart-A/section-274a.1 (last accessed August 2023); Johnson, “Lawful Work While Undocumented,” pp. 100–102.


40. New American Economy, “Undocumented Immigrants,” available at https://www.newamericaneconomy.org/issues/undocumented-immigrants/#economic-contributors,-not-criminals (last accessed June 2023); Cindy Carcamo, “Immigrants lacking papers work legally – as their own bosses,” The Los Angeles Times, September 14, 2013, available at https://www.latimes.com/nation/la-xpm-2013-sep-14-la-na-ff-immigration-business-20130915-story.html.


41. American Immigration Council, “Immigrants in United States of America,” available at https://map.americanimmigrationcouncil.org/locations/national/#undocumented-immigrants (last accessed June 2023).      


42. Keith Finlay, Michael Mueller-Smith, and Brittany Street, “Criminal Justice Involvement, Self-employment, and Barriers in Recent Public Policy,” Journal of Policy Analysis and Management 24 (1) (2022): 11–34, available at https://onlinelibrary.wiley.com/doi/abs/10.1002/pam.22438.


43. Ibid.


44. Kylie Jiwon Hwang and Damon Jeremy Phillips, “Entrepreneurship as a Response to Labor Market Discrimination for Formerly Incarcerated People” (ResearchGate, 2020), p. 12, available at https://www.researchgate.net/publication/340270406_Entrepreneurship_as_a_Response_to_Labor_Market_Discrimination_for_Formerly_Incarcerated_People/link/5e81410ba6fdcc139c13d52c/download.


45. Ibid., pp. 32–33.


46. Katharine G. Abraham, Brad Hershbein, and Susan Houseman, “Contract Work at Older Ages” (Cambridge, MA: National Bureau of Economic Research, 2020), p. 27, available at https://www.nber.org/system/files/working_papers/w26612/w26612.pdf.


47. Cheridan Christnacht, Adam Smith, and Rebecca Chenevert, “Measuring Entrepreneurship in the American Community Survey: A Demographic and Occupational Profile of Self-Employed Workers” (Washington: U.S. Census Bureau, 2018), p. 16, available at https://www.census.gov/content/dam/Census/library/working-papers/2018/demo/SEHSD-WP2018-28.pdf.


48. Abraham, Hershbein, and Houseman, “Contract Work at Older Ages.”


49. Ibid. Self-employment was reported as the main job among those who are working by 18.8 percent of those aged 18 to 29, 19.6 percent of those aged 30 to 49, and 22.4 percent of those aged 50-54. Among those aged 55 to 59 and 60 to 64, the rates were 25.2 percent and 29.6 percent, respectively.


50. 9.5 percent of people with disabilities are self-employed and unincorporated, compared with 6.1 percent of people without disabilities. U.S. Bureau of Labor Statistics, “Persons with a Disability: Labor Force Characteristics – 2022: Table 4. Employed persons by disability status, industry, class of worker, and sex, 2022 annual averages,” Press release, February 23, 2023, available at https://www.bls.gov/news.release/pdf/disabl.pdf.


51. National Disability Institute, “Small Business Ownership by People with Disabilities: Challenges and Opportunities” (Washington: 2022), p. 1, available at https://www.nationaldisabilityinstitute.org/wp-content/uploads/2022/07/ndi-small-business-research-report.pdf.