Oregon Businesses With No Employees in 2016

by Nick Beleiciks

November 21, 2018

A lot of what is known about Oregon’s economy is based on the standard employee-employer relationship, the job. But there is a lot of work being done by Oregon businesses without any employees. This includes self-employed individuals and partners, or corporations being run by their members. Their activities are not always counted in the job numbers. Fortunately, the U.S. Census Bureau’s nonemployer statistics provides a way to look at the economic contribution of these businesses.

In 2016, the most recent year of data available, there were 286,538 businesses in Oregon that had no employees. Those businesses brought in receipts totaling $13.6 billion, with average receipts of $47,576 per firm.

The number of nonemployers in Oregon increased rapidly since 2013. Recent growth includes Uber and Lyft drivers, which started in Oregon in 2014 and are the biggest source of growth since 2013, accounting for 25 percent of the overall increase in nonemployers.

Nearly All Nonemployers Are Sole Proprietors or Partnerships

The vast majority, 87 percent, of nonemployers are self-employed individuals legally organized as individual proprietorships or partnerships.
Individual proprietorship: Also referred to as a "sole proprietor." This is an unincorporated business with one owner. The category also includes self-employed persons. A typical independent contractor who receives a 1099 IRS tax form at the end of the year would be counted here.

Partnership: An unincorporated business where two or more persons join to carry on a trade or business with each having a shared financial interest in the business.

Corporations and other corporate legal forms of organization: An incorporated business that is granted a charter recognizing it as a separate legal entity having its own privileges and liabilities distinct from those of its members.  

S-Corporations: A form of corporation where the entity does not pay any federal income taxes. The corporation's income or losses are divided among and passed to its shareholders. The shareholders must then report the income or loss on their own individual income tax returns.  

The measure of receipts includes gross receipts, sales, commissions, and income from trades and businesses, as reported on annual business income tax returns. This does not include the costs of operating the business.

Nonemployer statistics only count for-profit businesses. Nonprofit organizations without employees are not included.

The Rapid Growth of Nonemployers Since 2013

There wasn’t much growth in the number of nonemployer business in Oregon in the years following the Great Recession. Between 2009 and 2013, there was a net gain of just 2,610 nonemployer firms. New businesses were certainly being started, but the growth in some industries was largely offset by continuing declines in the number of nonemployer firms in construction and health care.
Growth exploded in 2014 through 2016, adding 26,100 nonemployer firms in just three years.

Leading the growth since 2013 were nonemployer firms in transportation and warehousing, which gained 6,548 firms for an increase of 72 percent. This includes Uber and Lyft drivers. These ridesharing companies got their start in Oregon around 2014. This sector accounted for 25 percent of the growth in nonemployer establishments. Not too far behind was professional, scientific, and technical services, which added 4,818 firms. Other areas of nonemployer growth include real estate, which added 3,318 firms; and arts, entertainment, and recreation, which added 2,798.

Historical nonemployer statistics go back to 1997. In 2009, the Census Bureau changed the receipts cutoffs in order to exclude more firms that are not likely to be nonemployers. The change was made to more closely depict nonemployer businesses and improve the accuracy of the list of firms for sole proprietorships. For this reason, the counts of nonemployer firms starting in 2009 are not strictly comparable with earlier data. That’s why the graph starts in 2009.

Nonemployer statistics are based on tax returns filed with the Internal Revenue Service (IRS). The tax returns are matched with other business data collected by the Census Bureau to remove businesses with employees. That’s not always easy, so the Census Bureau creates cutoffs to remove tax returns that probably are not true nonemployers.

The minimum receipts cutoff is $1,000 in all industries except for construction. Non-construction firms with few receipts are excluded because they may represent hobbies, not normal business activities.

The maximum cutoff for corporations and partnerships is $1 million in receipts, except for service-type industries, where the cutoff is $2 million. For sole proprietorships, the cutoffs are specific to the industry. For example, sole proprietors may have more than $1 million in receipts in investment or entertainment industries and still have no employees. However, it’s unlikely that a sole proprietor running a restaurant could have $1 million in receipts without the help of employees.

Nonemployers More Likely Found in Certain Industries

Nonemployer statistics include industry information that tells us which business activity they are involved in. The industries with a lot of nonemployers include the type of work that is often done by independent contractors rather than employees.

Occupational information isn’t directly available from nonemployer statistics, but we can make a good guess about the occupational activity based on the industry.
The largest share of nonemployers is involved in professional, scientific, and technical services. This is a broad industry that includes jobs where it’s not unusual to be self-employed or work on contract. Examples include business consultants, computer programmers, bookkeepers, lawyers, and photographers.

It’s not unusual to see a lot of self-employed and independent contractors in the “other services” sector, which includes businesses involved in repair and maintenance; personal and laundry services; and religious, grantmaking, civic, professional, and similar organizations. Examples include hairdressers, barbers, nail technicians, tattoo artists, dog walkers, wedding planners, and repairers of various items such as appliances, furniture, boots, or bicycles.

Real estate is another industry with a lot of nonemployers because real estate sales agents and brokers typically operate as independent contractors.

One-third of the nonemployers in health care and social assistance provide child day care services. The next largest group consists of “offices of other health practitioners” such as massage therapists. Some home health care service providers are considered to be nonemployer businesses and included in this category.

Geographic Distribution of Nonemployers Similar to Employment

Combining Oregon’s counties into groups of 13 urban counties and 23 rural counties reveals that rural Oregon’s share of nonemployers is similar to its share of employment.
There were 39,524 nonemployers in rural counties with total receipts of almost $1.8 billion. That’s 14 percent of all nonemployers and 13 percent of total receipts. Average receipts were $45,025 in rural counties, with a range from $31,383 in Harney County to $57,872 in Lincoln County.

Oregon’s urban counties had 247,014 nonemployers and total receipts of nearly $11.9 billion. Average receipts were $47,984 in urban counties, with a range from $39,787 in Columbia County to $54,340 in Clackamas County.

More Information About Nonemployers

Businesses without employees are an important part of Oregon’s economy that is often missing from employment-based economic statistics. The U.S. Census Bureau’s nonemployer statistics provide details about how these businesses contribute.

More information about nonemployer statistics is available from the U.S. Census Bureau’s Nonemployer Statistics webpage.

Resources to help you start or grow your own business are available through the Oregon Small Business Development Center Network.


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