Is there evidence that wage and
salary workers turned to selfemployment in the Great Recession?
William B. Beyers
Department of Geography
University of Washington
Seattle, WA 98195
beyers@uw.edu
Pacific Northwest Regional Economic
Conference, Portland OR., May 2014
Outline of Presentation
•
•
•
•
Introduction
Background Literature
Data Sources
Results
– U.S. Total change, state patterns of self-employment,
state change in wage & salary employment, joint
patterns of change in wage & salary employment &
self-employment
• Concluding Comments
(There is a written version of this paper if
anyone wants it)
Introduction
• Job growth globally has been slow in the wake
of the Great Recession
• In the U.S. wage and salary employment is
finally back to the level in 2007
• In contrast, self-employment has continued to
grow, and has dramatically outpaced the
growth of wage and salary employment since
1990.
Background Literature
• Marshall & Wood lean on Christopherson’s work,
viewing self-employment as an aspect of flexibility in
the labor force.
• Rubalcaba viewed it as an employment opportunity,
especially for women
• Dickson argues “Lone Rangers” are related to
declining sectors, but questions if there are bases to
reverse these declines
• Beyers & Lindahl’s “Lone Eagles”
• Various case studies
• BLS work based on the Current Population Survey; the
U.S. Census nonemployer program; BEA
proprietors/self employment estimates
Dawson, Henley & Latreille’s UK survey
of motivations for self-employment
Reason (Percentage)
To be independent / a change
Wanted more money
For better conditions of working
Family commitments / wanted to work
at home
Opportunity arose-capital, space,
equipment available
Saw the demand / market
Joined the family business
Nature of the occupation
No jobs available (locally)
Made redundant
Other reasons
No reason given
N
All
22.2%
9.3%
4.0%
5.6%
Men
23.6%
10.6%
4.4%
1.6%
Women
18.5%
6.0%
3.0%
16.0^
9.2%
9.3%
9.0%
6.4%
5.0%
15.8%
2.5%
6.8%
10.7%
2.5%
23851
6.4%
4.8%
15.4%
2.7%
8.4%
10.1%
2.7%
17227
6.4%
5.6%
16.8%
1.8%
2.7%
12.3%
1.9%
6624
Data Source
• BEA data online
• Series SA- 25 – Full & part-time employment by
industry
• Series SA – 27 – full & part-time wage and salary
employment by industry
• The difference between these two series is the level
of self-employment by industry
• Data were developed for states in 1990, 2007, and
2011
Results
• First a national perspective
• Then state level analysis
1990
2007
2011
Wage and Salary 116,544,000 143,526,000 137,715,000
Self-Employed 21,786,900 36,373,700 38,119,700
Total
138,330,900 179,899,700 175,834,700
%
%
change Change
1990- 2007- % Change 19902007
2011
2007
23.2% -4.0%
18.2%
67.0%
4.8%
75.0%
30.1% -2.3%
27.1%
National Industry Trends
• Table 2 in paper has three broad sets of data:
• Documents trends of self employment by
industry – most services have fast growth
• Reports the share of self-employed by industry
– highly variable in services
• Coefficients of industry concentration report on
the spatial distribution – most services have
low coefficients, suggesting relatively even
spatial distribution
Location Quotients – All selfemployment 2011
Alaska– 0.96
Hawaii – 0.93
Location Quotients – Services Self
Employment 2011
Alaska – 0.89
Hawaii – 1.04
Location Quotients Producer Services
2011
Alaska – 0.73
Hawaii – 0.99
Location Quotients – Arts, Entertainment and
Recreational Services 2011
Alaska – 1.23
Shift-Share Analysis
• A technique that allows focus on changes in
regions compared to national change
• Three models – 1990-2007; 2007-2011;
1990-2011
1990-2007
2007-2011 1990-2011 Industry
Change Self Change Self Change Self Mix Shift
Employment Employment Employment 1990-2007
16,332,800 +/-740,085
Competitive Industry Competitive
Shift 1990- Mix Shift Shift 20072007 2007-2011
2011
Total
14,586,800
1,746,000
+/-1,989,215 +/-242,870 +/-451,238
% Change
67.0%
4.8%
75.0%
x
x
x
x
% of Change
x
x
x
5.1%
13.6%
13.9%
25.8%
Competitive Shift 1990-2007
Alaska –0.9%
Hawaii –0.6%
Percentages are of total positive or
negative shift values
Competitive Shift 2007-2011
Alaska -1.0%
Hawaii -1.2%
Percentages are of total positive or
negative shift values
Cluster Analysis
• Used Ward’s algorithm to define clusters of
6 industry groups for the year 2011
*
*
Cluster
1
2
3
4
5
6
Resources Construction
0.29
0.87
0.96
1.72
0.77
1.00
1.73
0.89
1.64
1.19
2.87
1.04
MfgUtilities
0.79
1.62
1.07
1.60
1.04
0.90
Trade
0.87
0.95
1.01
1.05
1.08
1.06
* Small clusters – only 3 states each
Arts,
Entertainment, &
Producer
Recreational Other
Services
Services Services
1.17
1.21
0.98
0.85
1.21
1.00
1.03
0.97
1.02
0.83
1.27
1.01
0.86
0.80
1.00
0.74
0.74
0.90
Cluster Classification of State SelfEmployment 2011
Correlations Location Quotients 2011- Wage
& Salary and self-employment
Industry
Resources
Construction
Manufacturing-Utilities
Trade/Transportation Services
Producer Services
Arts, Entertainment, and Recreation
Other Services
Correlation & significance
0.626 (.01**)
-.253 (NS - .073)
0.159 (NS - .266)
0.623 (.01**)
0.804 (.01**)
0.335 (.05)
-.018 (NS - .902)
Correlations - 2011
Resources Construction
MfgUtilities.
Trade & Producer
Transport Services
Arts
Other Over 65
Services
Age
Rural
%-1
Rural Bachelors
%-2
%
Resources
Construction
0.142
Mfg.-Utilities
TradeTransport
Producer
Services
Arts
0.002
.342*
.473**
0.243
.311*
-.857**
-.436**
-0.228
-.619**
-.615**
-0.265
.277*
-.453**
.561**
-0.236
0.055
-0.072
-0.037
-0.155
-0.047
0.12
0.266
-0.021
0.204
-0.242
-0.136
0.126
Rural % - 1
.788**
.379**
0.118
.360**
-.806** -.428**
-0.062
0.155
Rural % - 2
.741**
.439**
0.266
.383**
-.814** -.426**
-0.004
0.234
Bachelors %
-.526**
-0.236
0.085
-.662*
Other Services
Over 65 Age
.640**
.671** -0.0194
.874**
-0.206 -.408** -.470**
Red – positive sig. 01; yellow – positive sig. .05
Green – negative sig. 01, blue negative – sig. .05
Wage & Salary Employment Change
2007-2011 – competitive shift
U.S. Lost 4% of wage & salary employment over this time period
Change in Wage & Salary and SelfEmployment 2007-2011 (1)
Change in Wage & Salary and SelfEmployment 2007-2011 (2)
Change in Wage & Salary and SelfEmployment 2007-2011 (3)
Manufacturing
Finance
Real Estate
Administration
Arts
Accommodation
Other Services
Change
Wage &
Salary
Change Self
Employment
r-square
change
absolute
sig.
-2140000
-369000
-229000
-583000
-5000
-22000
-238000
11800
1077100
306600
395900
145600
92500
14800
-0.026
-0.495
-0.236
-0.752
0.358
0.533
-0.04
0.855
0
0.095
0
0.01
0
0.78
Evidence
none
Strong
weak
Strong
inverse
inverse
none
r- Sig.
square
percent
change
-.373
.153
.658
-.263
-.099
.244
-.204
.007
.285
.000
.062
.489
.084
.151
Financial Services Change 2007-2011
Texas
California
Administrative Services Change 2007-2011
Texas
California
Florida
Manufacturing Change WS & SE
Finance Change WS & SE
Real Estate Change WS & SE
Administrative Services Change WS & SE
Arts, Entertainment and Recreation
Industry Change W&S and SE
Accommodation and Food Services
Change – WS & SE
Other Services Change – WS & SE
Concluding Comments
• This paper used BEA self employment data; different
results are possible if BLS or Census data had been
used
• There are some industries where self-employment
gains occurred and wage & salary employment
declined, at the state level
• Micro-data would be needed to tease out the paths of
individual workers
• Given the long-run gains in self-employment in the
U.S., more research is needed to understand the
dynamics of wage & salary and self-employment at the
industry and occupational level