The Rise of Self Employment in America

November 9th, 2019

The American self-employment landscape is undergoing a significant shift, with the motivations, permutations, incentives and opportunities for going it alone boosted by changes in technology, business priorities and the broader availability of services traditionally cast as employee benefits.

In 2016, there were about 9.6 million self-employed workers in the US, according to the Bureau of Labor Statistics, which expects the number to increase to 10.3 million by 2026 for an 8% hop. So what’s behind this rise in the number of workers willing to forego traditional employment for an apparently more hardscrabble existence?

Flexibility on both sides

For one thing, more workers want more direct input in shaping their careers. Some want to work as contractors or part-timers for several employers at once to sample a variety of workplace opportunities and experiences, or simply to maximize their earnings potential. In fact, these aspects of self employment appeal to workers at all stages of career development. It’s primarily younger workers who use self employment to explore different career paths at the same time. Mid-careerists, meanwhile, may view side-gigging as a way to help pay their kids through college or, more strategically, to scope out avenues for second careers. And older workers, perhaps past their earnings prime in nine-to-five positions, willingly leverage their expertise as “consultants” to several employers simultaneously as a chance to earn as much as ever, if not more.

For others still, self employment through contracted work meshes better than traditional employment with the “work anywhere” trend popular with young parents and caregivers — as well as a growing cadre of workers who wish to work remotely while seeing the world.

Meanwhile US businesses seeking to trim overhead — especially those up against rivals in places with lower operational costs — are eager for workers who don’t draw benefits, and can be added or let go quickly. Increasingly, these businesses look to part-timers, contractors, and outsourcing firms to make them more competitive.

The self-employment trend is further enabled by technology, and changing attitudes about employers — especially when the employer is a big company.

New tech, new attitudes

On the tech front, the main enabler is the internet, which connects laptops and smartphones the world over, making remote work possible for people in many white-collar professions and trades — especially those touching on information technology, operations and marketing. Also of note is the rise of web-based providers that rely on independent owner-operators to deliver services such as Uber and Airbnb, as well as online hubs like Fiverr and Guru and that connect workers and employers for specific projects.

Meanwhile, new attitudes are feeding into the rise of the self-employed worker. To be blunt, the demise of the defined-benefit pension and a broad-based move away from health insurance tied to specific employers are making many workers question the wisdom of hitching their financial wagons to a single company. Meanwhile, the view — already in place now for decades and bolstered by the cruel sting of periodic layoffs — that US workers can expect to work for multiple employers further erodes incentives to bother trying to climb corporate ladders against a backdrop of cutthroat office politics, inadequate air circulation, and upholstered cubicles.

Together these trends have converged in a movement attuned to an emergent “gig” or “sharing” economy that is in turn based on willing workers seeking to match their services with employers in economically efficient ways. And it seems likely that evolving technologies, and more flexible health-insurance options will contribute to attitudes that accelerate the move toward self employment — perhaps at a pace the Bureau of Labor Statistics couldn’t fully appreciate in 2016.

An original crowd

But can every self-employed worker or independent professional claim kinship with a hardcore entrepreneur? Some would say no, holding that entrepreneurs earn that title by wresting money from a grudging economy through innovation and, consciously or not, thought leadership. In this view, an entrepreneur builds something that functions as its own money-making system while an independent professional still relies on companies as buyers of the service on offer. But the line here is superfine. Many independent professionals display thought leadership and innovation just by bucking the status quo — to say nothing of the fact B2B enterprises are similarly reliant on companies to buy their goods and services.

Really though, how someone who is self employed chooses to draw that line isn’t really the point. Whether your business is home-based, online, or in a breeze-tickled hammock under gently swaying palm fronds, you ARE the business, just as much as any serial entrepreneur. Whether your commitment to entrepreneurship is born of a need to express yourself by creating enterprises or a desire to meet long-cherished lifestyle goals, you’re firmly in the tribe of business owners. After all, the highest flying business founders out there started their climb from the very bottom.

Opting to be self employed is a brave choice. It’s also a choice that is contributing to a paradigm shift in how labor is bought and sold, and how top workers are regarded and compensated by companies in need of their services.