A Deeper Dive into Businesses Without EmployeesDecember 17, 2018 The 21st century brought with it new additions to the common economic vocabulary. More than ever, people want to know about things like the growth of contingent work, “side gigs,” or “1099 workers” (for the name of the IRS form that independent contractors complete). These questions can be difficult to answer for a number of reasons, but one of the largest barriers is a lack of data, especially compared with the businesses that employ workers.
The foremost source of data on independent contractors, partnerships, and other businesses without employees is the Census Bureau’s Nonemployer Statistics program, which produces data down to the county level.
The most recent available data is from 2016, which our State Employment Economist Nick Beleiciks recently took a look at. Start there to learn more about who nonemployers are and who is included. Let’s take a step further to look at what geographic and industry breakdowns over the recovery can tell us.
Not All Starving Artists
Nonemployers are a diverse bunch. Questions about the self-employed or independent contractors sometimes assume that these independent businesses are people just barely getting by – a starving artist (or contractor) living off what might otherwise be a side job.
While a struggling solopreneur is one type of nonemployer, the category is quite broad. An Uber or Lyft driver, a mining partnership, a sole proprietor trucking company, a successful real estate broker, and an independent technical consultant are all likely to show up in the nonemployer data. We also don’t know directly from the data how many business owners or partners operate their nonemployer business as their main source of income.
With that in mind, what can we learn from broad sector trends in nonemployers?
As covered in Nick’s overview, the industries with increasing numbers of nonemployer establishments vary widely. Transportation and warehousing, which includes rideshare drivers, has had the largest percentage growth in the previous five years. Large gains in educational services and accommodation and food services round out the top three.
When compared with the average receipts by establishment (the right column in the table) there’s not much relationship between high-earning industries and establishment growth. Some high-earning sectors like real estate and transportation are growing faster than the 10 percent total for all sectors; others grew slowly, such as construction; and some, such as finance and mining, declined.
Rural and Urban – a Tale of Two Settings
Just as overall growth obscures differing trends by industry, individual regions diverge from the state as well. Almost all (97%) of the growth in nonemployer establishments took place in urban counties of Oregon. Here’s a map that shows the five-year growth trend by county.
The growth rate in nonemployer establishments in urban counties was 11 percent, and just 2 percent in rural counties. This somewhat matches the overall job growth gap – current and projected to continue in the future – between the urban and rural areas of Oregon.
Underlying demographic trends help contextualize the divide a bit. Nonemployer growth matches up fairly well with overall population growth, so the imbalance is somewhat accounted for by the fact that 95 percent of the population growth over the period was in urban counties as well.
Among urban counties, the fastest growth was in Bend and Portland metros, which also saw the fastest population increase. Smaller metros like Josephine (Grants Pass metro) and Linn County (Albany metro) saw slower but still positive population and nonemployer growth.
The highest performing rural areas were near fast-growing metros: Hood River and Jefferson Counties, which border Portland and Bend, respectively, were the only rural areas to grow faster than the state average of 10 percent. Many counties in Eastern and Southwestern Oregon had fewer nonemployer establishments in 2016 than they did in 2012.