Oregon Ranks 7th in the Nation in Share of Self-Employed

Oregon Ranks 7th in the Nation in Share of Self-Employed

by Jessica Nelson

January 19, 2017

Self-employed workers who run unincorporated businesses are a larger slice of Oregon’s labor force than they are for most states and the nation as a whole. There were 159,000 self-employed Oregon workers in 2015. They accounted for 8.6 percent of workers in Oregon, compared with the national self-employed rate of 6.4 percent. That places Oregon among the “most self-employed” states, ranking 7th in the nation in 2015.

Oregon has had a greater share of its working population self-employed since these statistics have been tracked. It could be our frontier-loving nature – there is, after all, a self-selection process that has made many independent minded and entrepreneurial types choose Oregon to call home. It started with the Oregon Trail, but it didn’t end there. Oregon continues to draw residents from far outside its borders. Job growth has struggled to keep up with the talent streaming across our borders, and in some cases, these new residents choose to start businesses, joining yet another frontier landscape; that of the self-employed.

Most self-employed workers in Oregon, and nationwide, are engaged in non-agricultural activities. A smaller number of self-employed individuals are self-employed in agricultural work. About nine out of 10 self-employed workers are in non-agricultural industries.

There are also some individuals with incorporated self-employed businesses that are not counted here. Data is available for this group nationally, and shows an additional 5.5 million workers who are self-employed in incorporated businesses, which by definition result in these workers being counted as “wage and salary workers” right alongside those working for wages and salaries that come from somebody else.

Self-Employment Also Suffers in Recessions

While the share of the workforce that is self-employed doesn’t swing around wildly, instead staying within a couple of percentage points since the turn of the century, the rate of self-employment in Oregon is affected by recessions. In the last two recessions, the share of employment that is self-employed has dipped. Nationally, the self-employment rate is much more stable, although it has declined slightly during the past two decades.

From the limited data available, it is apparent that self-employment goes down during recessions, and that recovery in self-employment lags slightly behind the broader economic recovery.

In the first recession during this period in Oregon, both total employment and self-employment peaked in 2000, with total employment topping 1.7 million for the first time, and self-employment reaching 192,000. The share of self-employed was also at a peak at that point, at 11.2 percent. Total employment bottomed out the next year on an annual basis, sinking 2 percent in that short-lived recession. Self-employment took two years to reach bottom, settling at 153,000 in 2002, a decline of 20 percent over two years! The number of self-employed Oregon workers has not yet returned to the peak seen in 2000, though total employment had completely recovered, and then some, by 2005.

The Great Recession caused another dip in self-employment, but not to the degree seen in the earlier recession. From a new peak of 186,000 in 2007, self-employment took years to decline to a low of 161,000 in 2011. Its trend has been inconsistent since, but the level and share of self-employment reached a new low in 2015 at 159,000 self-employed, which accounted for 8.6 percent of the Oregon workforce.

Self-Employment Shares State by State

Around the nation, self-employment tends to be higher in the west. Breaking with that general trend, Vermont and Maine have the highest self-employment shares in the nation, with Vermont at 10.2 percent and Maine at 11.3 percent. Large East Coast states tend to have self-employment shares below the national average.

On the west coast, Oregon is in mixed company. California also has among the highest shares of self-employment in the country, ranking 6th in the nation with a self-employment share just slightly above Oregon’s. In Idaho, the self-employed make up 8.2 percent of workers. Washington State is just below the national share of self-employed, at 6.1 percent. Nevada is the outlier among Oregon neighbors, with a very low rate of self-employment at 4.7 percent.