Austin Chamber

November 3, 2015 – Self-Employed Workers

Posted By Chris Ramser | Nov 03, 2015
Central Texas Economy in Perspective Print Article Austin Chamber
  • Self-employed workers make up 10.1% of Austin’s civilian employed population of nearly 1 million.

  • Among the major metros, Austin ranks 10th for the highest rate of self-employed.

  • Nearly a quarter of all self-employed work within the professional and business services industry.

  • Management, business, science, and arts occupations account for nearly half of self-employed workers.

Ten percent of workers in the United States are self-employed and nearly 30% of U.S. workers are either self-employed or are hired by the self-employed. These are some highlights from new research published by the Pew Research Center last week revealing the scale of self-employed workers throughout U.S., as well as demographic and industry characteristics of this type of worker.

Pew’s analysis relies on data from the Census Bureau’s Current Population Survey (CPS). This survey does not provide comparable data for U.S. metros, however, other data produced by the agency’s American Community Survey (ACS) does provide data on the self-employed for metropolitan areas.

The ACS reports the national rate of self-employed workers as 9.6% in 2014 and in the 5-county Austin metropolitan area, the rate is 10.1%. Total self-employed workers is made up of separately reported “self-employed in own incorporated business” and “self-employed in own not incorporated business workers and unpaid family workers.” Nationally, self-employed in incorporated businesses represented 3.4% of workers, versus 2.7% in Texas and 3.5% in Austin. Of Austin’s 2014 civilian employed population of nearly one million, 66.3% are wage and salary employees of private companies (excluding self-employed), 15.7% are employed by government, 7.9% work for not-for-profit organizations, 6.6% are self-employed in not incorporated businesses or unpaid family workers, and 3.5% are self-employed in an incorporated business.

Austin has a relatively high rate of self-employed workers compared to other major metros. Among the 50 largest metro areas, Austin ranks tenth for self-employed as a percent of employed workers—the only Texas metro ranked in the Top 10. Miami, with 13.7%, has the largest share of workers reporting to be self-employed. California has 5 metros making the Top 10 including: Los Angeles, San Diego, San Francisco, Riverside, and Sacramento.

Since 2005, the rate of self-employed in the U.S. and Texas appears to be dropping at a faster rate than in the Austin MSA. The graph below shows the estimated rate for each year since 2005 with the survey’s margin of error included as dashed lines. For Texas, the rate in 2005 was 10.9% with a 0.2% margin of error (meaning the actual value could be between 10.7% and 11.1%), while the estimate for 2014 was 9.5% with a margin of 0.1%. In the Austin MSA, the 2005 estimate of 11.5% self-employed included a margin of error of 0.7%, while the 2014 estimate of 10.1% had a margin of 0.5%. The difference between the margin of error’s lower bound in 2005 and the upper bound in 2014 for both Texas and the US was 1.1% versus a difference of just 0.2% in Austin.

Over 101,000 people in the Austin metro are self-employed, working within a variety of industries. Nearly a quarter (24.0%) of all self-employed work within the professional and business services industry (24,275); followed by construction, 14.7% (or 14,877); and education and health services, 12.5% (or 12,619).

Most (65.3%) self-employed workers are not in an incorporated business and this applies across each major industry sector, except wholesale trade, where 55.2% are self-employed in their own incorporated business.

Austin has a greater share (24.0%) of self-employed within the professional and business service industry, than seen nationally (21.2%). Leisure and hospitality, finance and real estate, education and healthcare, and information are other industries that account for larger portions of Austin’s self-employed than applies nationally.

The two most significant occupations for the self-employed in Austin are management (17,510 or 17.3%) and sales and related (13,989 or 13.8%). Arts, design, entertainment, sports and media, with 9,118 workers (9.0%), is the third most prevalent occupation for Austin’s self-employed. Nationally, only 5.7% of self-employed work in these creative occupations.

Included within the ACS data about the self-employed is limited demographic and socio-economic data including sex and income. Nationally, 63.1% of the self-employed are male and 36.9% are female in 2014. In Austin, the balance is slightly more equal with 61.9% male and 38.1% female.

Austin workers that are full-time self-employed in own incorporated business reported higher median earnings at $71,102 compared to all full-time civilian employees of $45,649, while full-time self-employed workers in own not incorporated business have lower median earnings at $40,764.

A focus of the Pew Research Center’s article was job creation by the self-employed. The CPS survey they relied on includes questions about workers hired by the self-employed. However, the ACS data available for metropolitan areas does not ask the same questions as the CPS and does not afford any means of estimating job creation by the self-employed.

Per the Pew analysis, nationwide, about one-in-four of the self-employed hired at least one paid employee. Self-employed workers with employees had a median of three paid employees in 2014 and an average of 8.6 employees. It is impossible to know if similar rates of hiring and job creation apply in Austin. However, if applied here, then nearly 25,100 of the over 101,000 self-employed in Austin are also employers and may account for about 217,530 of the region’s jobs.

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The Chamber’s Economic Indicators page provides up-to-date historical spreadsheet versions of Austin, Texas and U.S. data for both the Current Employment Statistics (CES) and Local Area Unemployment Statistics (LAUS) data addressed above.

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Chris Ramser

Director of Research, Chris Ramser, joined the Chamber’s Economic Development Department in 2011, after 6 years doing community & economic development, and GIS mapping with regional planning agencies. Chris earned a B.A. in Political Science & History at Southwestern University.