One Million New Non-Employer Businesses

Posted by: John Tozzi on June 25, 2009

Just out from the Census: The U.S. added a million new non-employer businesses in 2007, for a total of 21.7 million. Together these businesses had sales of nearly $1 trillion — that’s about 7% of US GDP in 2007. Most of these are self-employed individuals with sole proprietorships, though the Census recorded 1.4 million corporations with no employees and 1.2 million partnerships.

I think the long-term trend here is clear: More people working for themselves instead of (or in addition to) being employees. My gut sense is the recession is creating even more entrepreneurs as laid off workers go into business for themselves. Census data is always a couple years behind, and it will be interesting to see whether the numbers from 2008 and 2009 bear this out — and whether it’s a significant, permanent change or a temporary response to the job market.

Reader Comments

Bob Wray

June 26, 2009 11:50 AM

Another contributing factor may be that government regulation and employment law make it expensive to hire employees. Every time you hire an employee you increase your liability and costs. There should be an exclusion of micro businesses (employing fewer than 10 people) from most of the employment regulations. Doing that would encourage micro businesses to hire. I know it would for me.

Kelly Herstad

June 26, 2009 01:18 PM

I'm a small business owner and have been for 49 years. I currently employ 12 full time and 2 part time mployees.
When I started it was easy to hire and terminate employees. Not so today. If I were considering hiring my first employee today I'd use a temporary service to do so. They do everything for you including screening (drugs, legality to work, etc.)and testing. They pay the wages, taxes, unemployment FICA, and you pay a flat fee once a week. Don't like the employee, call the service and terminate the replationship. No liability for unemployment insurance, discrimination, or other issues which may occur with your own hire. Get bigger switch from the temporary agency to a full service employer service such as Administaff. They provide all the human resources one needs. Doing everything that needs to be done in house is "a hazard to ones health and sanity."

NickP

June 26, 2009 01:35 PM

While this is a good trend these new folks need to learn to stay out of walmart and fight their taxes being given to subsidize big boxes. They also need to fight Obama as it appears he is becoming the new enemy of small business with his costly tax plans.

jerry stoneburner

June 26, 2009 02:07 PM

I have been a small business owner for 45+ years. If I were to start up another business I would consider contracting with a "full service employer". The additional cost vs the unknown cost of all the new BS rules; union and regulations being kicked around by Obamba and his carzs scares the hell out of me.

Samual

July 1, 2009 08:35 AM

I agree with Kelly, I am a small business owner too with 5 staff. Operating buy webkinz has taken us to a new level with additional staff required for packaging and shipping products but what happens when sales die off, we have to think about additional staff that would not longer be required. How do we manage this additional staff? Maybe Non employer business is the way of the future.

Sam Thacker

July 10, 2009 02:47 PM

I am one of those 1 million self employed non-employer businesses. I was laid off from the banking industry after having a 15 year successful career. I will never go back to being an employee. Both my wife (boss) and myself enjoy the freedom and challenges of waking up "unemployed" every morning. Our only challenge so far is finding affordable health care for a group of 2.

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About

What's it like to run your own company today? Entrepreneurs face multiple hurdles new and old, from raising capital and managing employees to keeping up with technology and competing in a global marketplace. In this blog, the Small Business channel's John Tozzi and Nick Leiber discuss the news, trends, and ideas that matter to small business owners. Follow them on Twitter @newentrepreneur.

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