Tuesday, March 22, 2016

Are you your own boss? You just might be a self-employed nonemployer!

The Census Bureau’s Nonemployer Statistics series provides insights on Utah’s self-employment 


By Lecia Parks Langston, Senior Economist 

“I love working for myself from home: I get along with everyone in the office; I can show up in pajamas, and I always win Employee of the Month.” Missy Mwac 

Do you run your own business? Do you provide consulting services in the evening hours after your nine-to-five job? Are you an independent contractor? Are you your own boss? If so, you just might be a self-employed nonemployer.

• In 2013, Utah’s nonemployer establishments totaled almost 202,000 with $8.9 billion in receipts.

• Over the past decade, the number of Utah nonemployers has trended upwards with only a decrease during the recessionary year of 2008.

• Real Estate/rentals/leasing and professional/scientific/technical services industries account for the largest shares of Utah nonemployers.

• Real estate/rentals/leasing also generates almost 30 percent of total nonemployer receipts.

• With $83,700 in average receipts in 2013, real estate/rentals and leasing also comes out on top for average receipts per establishment.

• Tourism-related accommodation/food services, arts/entertainment/recreation establishments and other services showed a strong increase in establishments during the recession although their receipts plummeted.

• Several less-populated counties show high nonemployer establishments/nonfarm job ratios. In 2013, Morgan County showed 49 nonemployer establishments per 100 nonfarm jobs.

• While most of the state lost nonemployers during the recession, Duchesne, Morgan and Sanpete counties maintained or expanded their nonemployer establishments.

• Many eastern and central Utah counties (Carbon, Emery, Kane, Millard, San Juan, Sanpete, Sevier and Wayne) displayed declines in nonemployer counts in 2013.

Unfortunately, when it comes to analyzing self-employment in Utah, the best source of jobs data, the Quarterly Census of Employment and Wages (QCEW) is notably lacking. QCEW provides the nonfarm jobs data watched so diligently by Utah Department of Workforce Services economists. (Want to track the business cycle? Just observe the changes in nonfarm employment.) However, the administrative laws that allow the collection of this data series don’t cover a substantial share of self-employment. Therefore, we’re often left with little information on this important labor market sector.



The Census Bureau’s American Community Survey (ACS) partially fills in the self-employment data gap. However, the survey only provides estimates based on a worker’s primary employment. In other words, if you spend most of your day working for the school district and run your own landscaping business in the summer, you are not included in ACS self-employed counts. Only the primary source of employment is tabulated. This source also includes the self-employed with workers in their employ.

But wait, there’s more. Enter the Census Bureau’s Nonemployer Statistics. Nonemployer Statistics originate from business income tax records submitted to the Internal Revenue Service (IRS). This series includes U.S. businesses with no paid employees and receipts of $1,000 or more ($1 or more for the construction industry).

So yes, Nonemployer Statistics capture a wider scope of the self-employed than ACS, although they do not include proprietors with employees. In 2013, the ACS estimate of self-employed in unincorporated businesses measured 62,300. Another 51,900 workers were tabulated in their own incorporated business. During the same year, Nonemployer Statistics establishments equaled more than 201,800.

Nonemployer Statistics are also available at the county and industry levels providing a wealth of information on nonemployers’ presence in the labor market. However, some industries are excluded from the figures such as animal and crop production, investment funds, trusts, and management of companies. In addition, because of the level of detail and the Census’ Bureau’s commitment to confidentiality, data at some levels are suppressed. More information on this data series is available here.

Economic insights 

What do the Nonemployer Statistics reveal about Utah’s self-employment in the recent past? In general, the number of nonemployers has trended upward over the past decade. Between 2004 and 2013, nonemployers increased by 24 percent for a gain of more than 38,000 establishments. Nonemployers contracted in only one year during that time frame. Yes, it was the recessionary year of 2008 when the number of establishments slipped by roughly 3 percent. Lagging behind the self-employed, Utah’s nonfarm jobs declined later in both 2009 and 2010. Nonfarm job loss in 2009 also proved somewhat more traumatic (5 percent in 2009) than the decline in nonemployers. Nonemployer receipts declined for two successive years taking a harder hit than did establishments.

What industry is number one? 

Where do nonemployer establishments gather? Real estate/rentals/leasing, professional/scientific/technical services and other services account for roughly 15 percent each of total establishments. In the second tier, nonemployers in construction and retail trade each contribute about 10 percent of the total. On the opposite side of the scale, mining, utilities, agriculture/forestry/fishing and accommodations/food services encompass relatively few nonemployers.

When it comes to receipts, real estate/rentals/leasing is the hands-down winner generating almost 30 percent of total nonemployer receipts. Other services show a much smaller receipt share than its establishment share. Nonemployers in this industry include personal care (such as hairstylist), laundry, repair services, etc.

With $83,700 in average receipts in 2013, real estate/rentals and leasing also comes out on top for average receipts per establishment. Other industries with high average receipts include the low-establishment mining industry, transportation/warehousing and finance/insurance. Educational services, arts/entertainment/recreation, administrative/support and other services are on the low end of the receipt scale with less than $26,000 in receipts annually.

Industries and the business cycle 

While the recession took a toll on both the number of nonemployer establishments and their receipts, not all industries joined in. For example, tourism-related accommodation/food services, arts/entertainment/recreation establishments and other services showed a strong increase during the recession despite a tumble in receipts. Other industries, such as information and retail trade showed multiple years of decline. At the heart of the boom-to-bust cycle, construction establishments have trended downward since 2007.

The county approach 

Not surprisingly, the number of nonemployer establishments in a county generally corresponds to its population and labor force. More densely populated counties show higher numbers of nonemployer establishments. However, that relationship is not entirely straightforward. Analyzing the ratio of nonemployer establishments to nonfarm employment yields some interesting insights. For example, several less-populated counties show notably high nonemployer establishments/nonfarm job ratios. In 2013, Morgan County showed 49 nonemployer establishments per 100 nonfarm jobs compared to a statewide average of fewer than 16 establishments per 100 jobs. Piute, Wasatch, Rich and Wayne counties also showed relatively high nonemployer/job ratios. The nature of rural economies where smaller businesses predominate gives rise to this relationship.

On the other hand, several less-populated counties maintained low ratios. Uintah and Carbon counties tied Salt Lake County for the lowest nonemployer/jobs ratios in the state (12 establishments per 100 jobs). The predominance of the mining industry in these two smaller counties undoubtedly has some bearing on their standings. Since recession, this nonemployer-to-jobs ratio has increased slightly statewide.

Several counties also bucked the statewide trend of increasing nonemployer counts with a recessionary dip. Less-populated counties typically displayed notable vacillation in establishments in the 2004 to 2013 time period. While most counties lost nonemployers during the recession, Duchesne, Morgan and Sanpete maintained or expanded their nonemployer counts. And, not all counties are experiencing nonemployer expansion. Many eastern and central Utah counties (Carbon, Emery, Kane, Millard, San Juan, Sanpete, Sevier and Wayne) experienced contraction in nonemployer counts during 2013.

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