Why Aren?t More Americans Self-Employed?

Despite the lack of job security, and the increase in workload and stress, the vast majority of American workers continue on someone else’s payroll. In fact, depending on who’s statistics you’re looking at, the percentage of Americans who are self-employed runs somewhere between 6% and 10% of the total workforce. That means between 90% and 94% work for someone else. That begs the question, why aren’t more Americans self-employed?

After all, at one time, America was considered the entrepreneurial epicenter of world. It was a nation of shopkeepers, farmers, tradesmen, and a whole host of other home grown occupations. Work was typically performed out of the family homestead, and businesses were often passed down from one generation to another.


But in recent decades, the trend has gone in the opposite direction. It’s an interesting development, because the explosion of technology and the Internet in the same space of time would suggest more people becoming self-employed, not less. But that?s not how things are playing out.

How Weak is Self-Employment in the US?

The only way to gauge whether the rate of self-employment is either high or low is to compare the US with other countries. Unfortunately, that effort confirms the reality that we are no longer a nation of entrepreneurs. And that’s not good for either the economy, or for the workforce.

According to OECD Data (the Organization of Economic Cooperation and Development), the US ranks dead last in the rate of self-employment among more than 30 large, generally rich countries.

The chart doesn?t show specific rates of self-employment (without clicking on the original graph), but below are the rates of countries most comparable to the US:

  • US, 6.3%
  • Canada, 8.3%
  • Sweden, 9.9% (and isn?t that supposed to be a socialist country)
  • Australia, 10.1%
  • Germany, 10.2%
  • Japan, 10.4%
  • France, 11.6%
  • Israel, 12.4%
  • Switzerland, 14.9%
  • UK, 15.4%
  • Spain, 16.5%
  • Netherlands, 16.7%
  • Poland, 20.4%
  • Italy, 23.2%
  • Korea, 25.4%
  • Mexico, 31.5%
  • Greece, 34.1%

We shouldn’t necessarily expect the US to lead the world in self-employment. But as the world?s largest economy, we should reasonably expect to be somewhere in the middle of the pack. Yet here we are at the very bottom.

And no one asks why.

The Reasons Why So Few Americans Are Self-Employed

I?m going to speculate on three reasons:

Health insurance. The lack of a comprehensive and affordable health insurance system has people living in fear of being uninsured. The cost for private coverage on the health care exchanges is prohibitively high. That forces tens of millions of people to find jobs with health insurance.

Obsession with retirement. This is a topic I?ve covered in the past. Americans have become obsessed with retirement planning, which I believe is in large part due precisely to the instability of the job market. Retirement planning requires stable employment over many decades. The advent of the 401(k) and other employer sponsored plans is probably contributing significantly toward keeping people in traditional employment. We can think of them as the proverbial ?golden handcuffs?.

America is no longer a country of risk takers. In fact our entire economy and national psyche seems to be oriented toward risk reduction, if not elimination. We pretend that risk can be eradicated, and that life affords us some sort of imaginary guarantees.

That risk avoidance seems to be in vain. Most jobs today or temporary, even if they?re considered permanent. This is to say nothing of the many millions of workers who are employed on a contract basis, without either job security or employer benefits.

Against that backdrop, self-employment is a reasonable option – and perhaps the only option. But fear drives people away.

The Very Different Self-Employment Picture in the UK ? And the Promise it Holds for the US

This article was inspired by one I read on Linked In, Want to start your own business? Then what?s holding you back?

A title like that is bound to draw my interest. But what really got the brain waves flowing were the statistics the article presented. It indicated 589,000 new businesses were launched in the UK in 2017. That’s an increase of 22% over 2012. And over that five-year term, the UK experienced the creation of nearly 3.5 million startups.

Those numbers impressed me because I knew they were higher than those of the US. In fact, in September of 2017, an article in the New York Times reported there were 414,000 business starts in the US in 2015, well below 558,000 in 2006.

Put another way, the UK had more business startups in 2017, than the US had at it?s pre-Financial Meltdown peak in 2006.

Let’s put those numbers into perspective. In 2017, the US had about 326 million people. The UK, 66 million. The US has about five times the population of the UK.

If we take the number of new business startups in the UK in 2017, at nearly 600,000, and multiply that by five ? to equalize it relative to the US population ? the UK would have had nearly 3 million new business startups in 2017.

Compared to the 414,000 new startups in the US, it means the rate of new small business formations in America is running only about 13% of what it is in the UK.

That’s fairly consistent with the 15.4% rate of self-employment in the UK, versus the 6.3% rate in the US, according to OECD data presented above.

Why the US and the American Worker Needs a Much Higher Level of Self-Employment

I’m not sure most Americans grasp the significance of the low levels of self-employment we have. But rest assured, it’s much more important than anyone realizes.

Consider the following:

  • A person who is self-employed is not competing for a job. That?s good for everybody.
  • A new small business may employ others, creating new jobs.
  • Fewer people competing for jobs, in combination with the new jobs created by small businesses, gives more bargaining power to workers, especially with large employers.
  • Self-employment reduces the perceived necessity of retirement.
  • Self-employment often results in higher satisfaction levels. The Quartz at Work article cited in the next section reported 97% of independent workers have no desire to return to traditional work.
  • Being self-employed reduces much of the artificial stress that’s the result of working in a complex organization. Large employers tend to be heavy on deadlines, superfluous assignments, and enforced loyalty to often dysfunctional chains of command.

A significant increase in self-employment could eliminate or at least greatly reduce most of these problems.

Hope May Be on the Horizon

There?s a real possibility that self-employment in America will become more common in the near future. First, trends that hit the US often start in the UK. Examples include The Beatles (the so-called ?British Invasion? of the 1960s), and the rise of political conservatism, led by Margaret Thatcher in the late 1970s, that had its parallel in the ?Reagan Revolution? of 1980. We may think of ourselves as being cutting edge, but we often take more cues from our former colonial masters than we care to admit.

The change may already be taking place. An article in Quartz at Work, The number of Americans working for themselves could triple by 2020, suggests the number of self-employed Americans could explode to 42 million by 2020.

The projection is based on a survey taken by FreshBooks, a cloud-based accounting company, of more than 2,700 full-time US workers in traditional, independent, and small business roles about their career plans.

The change is being driven by a ?rising sense of disillusionment with the notion that a successful career means climbing the corporate ladder?. They also cited the breakdown of traditional employment, as jobs increasingly morph into freelance work and temporary assignments.

Due to the three factors I listed earlier scaring people out of self-employment ? health insurance, retirement obsession, and risk avoidance ? I personally doubt that projection. However, things could change radically in the next economic downturn.

Nothing has been fixed since the last recession. The loss of jobs in the next one could be staggering. This will force more people into self-employment, due to a lack of traditional jobs. The current nervous complacency over the economy and jobs will likely fall apart quickly. Meanwhile, the current trend toward off-loading of jobs is likely to only accelerate.

How to Get in on the Self-Employment Action

Due to the triple fears over self-employment, which are completely legitimate, it’s probably best to enter self-employment on a part time basis. That will give you an opportunity to build up a business cash flow while you’re still on your employer?s payroll.

This is a lot more important than you may think. If I’m correct, that the next recession will see a rapid loss of traditional jobs, you?ll want to be in ahead of the curve. Having a side business up and running could be either the foundation of a full-time operation, or a continuing part-time venture that could be supplemented by other work.

The TV version of self-employment, where a person starts a business and hits pay dirt immediately is a complete fantasy. It usually takes several years to go from start-up to earning a steady income. That income will build over time.

Take a look around and see what other people are doing to make a living through self-employment. If you have similar skills, you could do the same thing. Rest assured, if other people are doing it, you can too.

The Self-Employment Payoff

One of the under-appreciated aspects of self-employment is that we can each bring something unique to the business world. That may not seem possible when you’re sitting in a traditional job, and often being devalued by your employer. But when you get out into the world, and begin to find your economic ?sweet spot?, you begin to grasp an alternative and completely valid reality to the one you’ve been living up to this point.

It took me several years before I was able to earn a living wage from freelance blog writing. But it’s evolved to the point where I’m now turning away business. That’s something I could never imagine back in my office-and-cubicle days. After all, I came into blogging and freelance blog writing with no prior experience and no IT background whatsoever.

There?s something miraculous and liberating about making that transition that I?d love for others to experience. You might want to take a stab at doing it now. When the next recession hits ? and it will ? layoffs may be swift. It?s always best to make major transitions on your own terms, and in your own time. You have time to do that now, by starting a side business.

Longer term, I?m of the opinion that traditional employment will continue to erode going forward. I don?t even think that?s a stretch. The same internet that creates so many opportunities to start a business, also makes it easier for employers to sub-out work to outside providers, reducing the need for traditional employees. Put another way, the long-term trend is not your friend if you hope to remain in a traditional job.

Have you at least considered becoming self-employed, if only on a part-time basis? What keeps you from going forward?

( Photo by yisris )

42 Responses to Why Aren?t More Americans Self-Employed?

  1. Hi Kevin. We’ve discussed self-employment many times since I’ve been reading your blog, and as someone who worked 25 years for a large corporation, and now self-employed for many more years, I think one of the answers to your question is conditioning. When I was a young adult in the 60’s and 70’s, full-time jobs were plentiful, especially in the steel mills, coal mines, etc., where you didn’t need a formal education. These were certainly hard jobs and not necessarily safe, but they at least were there and you could get a decent salary and benefits. That all started to change in the 80’s or so. People just did for a living what their families/parents did, at least where I came from. No one was ever encouraged to start their own business. Sometimes it seems easier to remember the “good old days” so to speak, and believe it will be that way again. It’s not. I also believe self-employment is an answer to many job problems right now. However, I think people are afraid to take that leap. Thus, you need the side hustle, started several years before you jump. People also need to understand that self-employment involves a lot of long hours at building your business. It’s not 40 hours a week, not in the beginning for most anyway. I think that frightens people. But, as I’ve always said, I work harder and longer now than I ever did, but I never mind coming to work anymore. I’m in my jeans, little heater under my desk (which I never could do in a big company…I always froze), I eat lunch when I want, take a break when I want, I could go on and on, but you get the idea. BUT, like many, it took years to get to a point where we could make a comfortable living from it. We scrimped for a long time. We pay our own healthcare…that alone scares people, but it’s out there to purchase. I’m being verbose again, but I would highly recommend the side hustle and then see how it goes. My nephew did that, and he’s now running his own business full-time, while they depended on his wife’s salary. She’s going full-time with him Jan. 1st to do all the accounting. They’re scared, but they’re taking the leap. People have to be willing to make the necessary sacrifices in the building phase. I’m done now.

  2. Hi Bev – I agree about conditioning, and confess I didn’t think of that one. Obviously, not everyone can or will become self-employed. But if more did, the job market would become more competitive, with higher salaries, and probably more generous benefits, particularly flex time and time off. It would stem from a workforce that’ll be less dependent on jobs for a living. Right now, employers are taking advantage of the salary addiction. That won’t change until enough people say “enough” and pursue an independent course. The side business idea is perfect because it gives you a chance to build it slowly, at much less risk, and with increasing options as the business expands. But as you say, much of the problem is that most people don’t even think about self-employment, but obsess on getting a (better) job.

    Where I live I see the outcome of that thinking. This city is a post-industrial city. Some people have retooled and moved on, whether that’s into self-employment or into white collar jobs. But there are still thousands clinging to an economy that no longer exists. Some seem to be permanently disenfranchised. I can see that becoming an even bigger problem in the next recession. Every recession leaves a new army of the disenfranchised in its wake, but the problem going forward is where will all those people go after their jobs have been either eliminated by economic conditions, or by off-shoring or technology? We all owe it to ourselves to investigate and pursue options before it reaches that point. In a way I think I’m sounding an alarm.

  3. I do have some opinions on the matter being self employed. First, I think traditional employment has a way of shutting off your brain. When you do the same thing day after day without much thought to it, it can take it’s toll on your ability to think for yourself.
    Also many people who are older and I mean 30 or older have already painted themselves into a corner. They might have a home, car payments, kids by this point and it becomes harder and harder to take a risky route and put feeding your kids or paying your bills on the line.
    You also need capital. Especially at the start. I didn’t make money the first four years. I was lucky that I had a state pension and health care. Otherwise I would have not survived.
    I agree that trying out something while your still employed is a good way to try it out. However, if you work some 9-5 job and have kids or you come home tired and want to eat dinner and see your family not alot of people have enough energy to pour into a business. It took full time effort and hours just to get this thing going in the right direction.

    Especially depending on the state your in it can be draining in the form of taxes, insurance. We carry no employees because of the insurance in NY that you are required to have for employees. We loose 30 percent just in taxes a year. 15 percent self employment tax and we pay an additional 15 percent on our profit.

    I’m not against it but I don’t want to sugar coat the fact that it is not easy to do. Yes it can work out and it does but you need some luck and a few breaks along the way.

    I do believe you are right that it is probably the way to go in the future but you also need people as customers. If nobody has money then it doesn’t matter how good your model is.

    So either way it is a risk. That’s what life is anyway. The rest is just filler.

  4. “…traditional employment has a way of shutting off your brain. When you do the same thing day after day without much thought to it, it can take it?s toll on your ability to think for yourself.” – That’s brilliant Tim! I think it gets to the conditioning Bev talked about. You become so mechanical in your behavior that you can’t think outside the box you’re trapped in.

    But the way the economy is going, I think people will increasingly have no choice but to strike out on their own. Many will have it forced on them by layoffs and a lack of replacement jobs. And yes, starting a business isn’t easy to do (it certainly wasn’t for me), but holding a job today is no longer easy either. I see so many people with jobs who look and function like zombies (the shutting off your brain factor).

    And let’s not get into the insecurity factor. Last week at the gym, I heard two guys talking about retirement. One was in his early 50s, and made a comment, “If I can hang onto my job for the next 15 to 20 years, I should be fine.” I was struck by the obvious doubt in his voice as he said it, as well as the fact that 15-20 years is a LONG time in today’s economy and job market. You have to hope he has a Plan B. Being over 50 means he already has one strike against him.

    There’s also a major risk to self-employment that few ever discuss. I’ve read that once you’re self-employed for a while, employers no longer want to hire you. I think that also speaks volumes about employers too. They probably don’t want you any more because you’re an independent thinker/worker, and there’s no room for that in tight organizations. As much as employers say they want creativity and self-starters, what they really want it quiet conformity. Having been on the inside I saw that a lot. Try doing something a bit different to improve things, and you’re held in contempt.

  5. Good points, Tim. I didn’t even get into taxes and the taxes on top of profit. We live in a high-tax state, also. And there are laws with having employees, OSHA, HR and hiring issues, etc. You need to know these things or at least be aware of them. When you’re not used to paying your own taxes (as opposed to having your employer pay them), it’s sticker shock. And you don’t want to be late on paying them. Again, I’m not trying to sound negative, it’s just that there is a learning curve. As you said, that’s what life is about anyway. I enjoy being self-employed and I recommend it to anyone, so long as they go in with eyes open.

  6. Bev, in a lot of businesses it’s also possible to get around the employee problem by hiring sub-contractors, or even partnering with other businesses. But it also depends on the business. Obviously, if you have a shop or you make a product, you have to have employees. But for a lot of businesses, the subbing out route is common. We’re also seeing the rise of the solopreneur, self-employed with no employees. I’ve reached a point where I need an employee to help with the writing, but it isn’t practical (it’s a personal service business) so I have to limit the assignments I take on.

    There’s no perfect situation, but some situations are better than others. For me, I have a feeling of freedom and security that I’ve never known before. I’m guessing you and other self-employed people do as well.

  7. Yes, like I said I was lucky. I really didn’t understand all that was involved. Sticker shock is correct. I never paid my own taxes until five years ago.
    I risked my own cash. I never had a business loan. That’s another factor.
    I would say I’m at a crossroads. I have grown almost as big as I’m going to on my own. I got some more but some investment is going to have to happen for me to continue going upwards.
    Anyway, I love being self employed also. If you can do it I recommend it. However, I try to be realistic in the hopes people thinking about it can get an idea of what to expect. I started in my basement of my house. Start small and build on it. Don’t make this your only source in the beginning. It puts to much pressure on you and the business and can force bad decisions.

  8. All good advice Tim. But obstacles aside, more people are going to be forced to make this decision at some point. It’s just the way things are heading. Employers are working on staying in business and even expanding with fewer employees. We were in a McDonalds on Monday that had one of those order kiosks in the middle of the store. That’s just one example of how people are being phased out. And it’s happening for all the reasons you and Bev cite about employee costs.

    The big employers have the same problems, but they have the capital to buy the technology to eliminate staff. That’s only likely to expand, especially with these rising minimum wage laws. You can raise wages through the political system all you want, but that doesn’t mean employers will pay them. They’ll reduce staff down to a level that will keep payroll costs constant even in the face of rising hourly wages.

    People are wasting their time voting for and waiting on political solutions. The employers, like the criminal element, are always a step ahead and will adjust to any legal manipulations. That’s how they’re able to stay in business for decades and even generations. The only reasonable course for us as individuals is to pursue individual strategies. That may sound radical, but it’s really been part of human existence since the very beginning.

  9. Yes, absolutely. The corporation is in control, no matter how much we want to believe otherwise. Monopsony is another $20 word to describe it. It happens in wages when a relatively small number of employers collude to suppress payrolls. With all the mergers and acquisitions, there are fewer employers than there have been in a couple of generations. See this post for more details.

  10. You wanna speak of corporate zombies. I just came back from a four day trip to Charleston SC. I spent quite a few hours in various airports and boy it is like night of the living dead. Just watching these guys or gals traveling for business with these blank stares on their faces. I see it but I know they don’t.
    Yes, 15 to 20 years is a long time, especially when your already 50. We still have people here waiting for manufacturing to come back. Sitting around blaming the president or whomever.
    Your always going to have this group of people no matter what generation.

    One of my best friends is a high level guy for google and all day on Friday he spend answering emails and texts while we tried to play golf. He makes a very good living but they own him.

    Yes, I also love the freedom of being self employed. I take four or five trips a year down there because I can. If I had a job again like that I wouldn’t be doing that.

  11. Yes, Tim, I’ve seen that traveling corporate type in the past, and witnessed the same blank expressions. When I was younger I actually aspired to it. Now I look on those people with serious pity. I like being home with my family, and having control of my time. I couldn’t imagine living that life. There were some business trips in my past, some better than others, but I could never wait for them to be over. I remember one trip where I missed Halloween with my kids. That really upset me. It’s one thing to be away by your own choice, but quite another when it’s decided by the higher-ups. Talk about control over your life! Whenever I’m traveling with my wife or family and we run into corporate travelers I say a prayer of thanks for the life I’m blessed with. I get to spend quality time with my family on the road, while these poor guys and ladies are off to meet with a bunch of strangers over who knows what, then pretend they enjoy their company.

    Guess I’m just a homebody, which is another reason why I don’t fit in with organizations.

  12. Funny also. On the way from DC I sat next to a guy who worked for a major bank. He was reading a report and without being intrusive I read it also. It was 15 pages and it all basically pointed to how they are protecting themselves from the next huge crash which they see the trend as happening in the next five years.
    So all these major institutions already know it is coming. The general sheep or public has no clue or doesn’t want to know.
    If they are preparing now then we should be doing the same.

  13. Yeah, I’ve been reading some stories about what’s coming down the pike, and from mainstream sources at that. One telling piece of news is the decline in housing over the past few months. Mortgage rates have risen by about one point in the past year, and it’s already taking a toll on the housing market. It goes to show how tightly stretched this economy is. If mortgage rates go up another point, the housing market might start looking eerily similar to 2008. I don’t think it will be that bad next time around, but it will hurt an already delicate economy. I’m much more concerned about the stock market, particularly the effect a decline will have on pensions. Yet another compelling reason to start a side business, even if you’re retired or about to be. That, plus saving more money, getting out of debt, and reconsidering plans for a golden retirement.

  14. Love it! So true. As a recent self-employed person, I’m super proud and happy to be doing this (and supporting myself!) but I 10000% agree with you that health insurance is why many people won’t make the leap. And I don’t blame them. It’s sad and shocking what we are forced to put up with in our country. I just watched a video about the cost of pregnancy for women. Apparently there is no way for a woman to know how much having her baby at XYZ hospital will cost. Could be $15k, could be $35k! The hospital wont tell them so they cant shop around, she just has to wait for the bill. To me, this health insurance problem is immoral. The government and health care providers are literally depriving some folks from living up to their personal potential in life. I know we all have choices, but on a cultural level it doesn’t seem like the powers that be are in any hurry to give Americans much freedom. Our health insurance issue keeps people jailed for decades on end, it’s sneaky.

  15. Hi Liz, glad you stopped by! I completely agree on healthcare, and believe it’s turned into a runaway train no one in Washington, DC, will move to fix because they’re afraid it will topple the economy. But it’s likely one of the reasons why we’re dead last in self-employment is because (I believe) we’re the only country on the OECD list that doesn’t have universal health insurance. A European can quit her job and start a business and not have to worry about losing her health insurance. It’s part of a national system that’s funded by tax revenue. But that’s something that has to be fixed for us to move forward, especially since the employment environment is changing so quickly. I have no idea what the millions of contractors and gig workers are doing for health insurance, but my suspicion is that they’re well represented among the 30 million+ who still don’t have coverage. It’s a dangerous game, but what do you do when there are no inexpensive options?

  16. You’re right about being able to hire subcontractors, Kevin. Or even temps. I had forgotten about that route, and it’s quite desirable by employers because they don’t have to pay benefits and can restrict hours if they choose. We don’t do it because there’s just too much of a learning curve for our business. I do have far more freedom now that in my previous life. It just doesn’t seem like it because we choose to be busy. “Choose” being the key word here. It’s our choice to work as much as we do, so we do have flexibility. No situation is perfect in life. I hope that as people read your work here they realize that self-employment is possible if that’s what they want. It is time for all of us to let go of the old conditioning that’s been pounded into our heads and try to forge new paths that perhaps we didn’t believe were ever possible. Where there’s a will, there’s a way.

  17. You’re hinting at the big picture here Bev, and that’s where I’m hoping to go with this. Employment is changing. Off-shoring, contractors & temps, gig work, and replacing people with technology are all pointing in the same direction, but most people are trying to ignore or minimize what’s happening right under their noses. I suspect far more people are under-employed than is reported. We’ve all got to adjust to the new reality, even though it isn’t pleasant.

    And I’m with you on the hours. I work more than ever, but I have more control over when I work, and wouldn’t trade that for a nine-to-five job. And you know what else is weird – that most people in jobs can’t appreciate? Once you get rolling with your self-employment journey, a lot of the voids and dark spaces get filled in, often from unexpected sources. I’ve also found that we can all become more than we are, but we have to challenge ourselves to get there. Not to overstate the case, but there’s almost something spiritual or other-worldly about the transition.

  18. I wanted to start a business when I first got downsized, but after seeing the fees and rules and regulations required by the city, county and state, I gave it up. This doesn’t mean I’m not making money on th side. I do small home repairs for the neighbors, run errands and other odd jobs. All on a cash basis with no advertising.
    I don’t make as much as I could, but don”t have any overhead and still qualify for other brnefits.
    I wonder how much self employment is happening under the table.

  19. I completely agree with you Ric. An article I read and recently quoted in one of my own articles reported that 23 million people (mostly men) have fallen out of the labor market and no one knows exactly why or what they’re doing. My guess is the black market/underground economy. A lot of people are becoming solopreneurs, and just earning money where ever they can. Some might be thriving, but it doesn’t show up on paper. They can’t be doing nothing, otherwise they’d die, which apparently isn’t the case. In the end, people are far more resourceful than we assume. Take away a person’s job and they’ll find a way to survive, even if it’s unconventional.

    It sounds to me as if you’ve already got a side business going. A guy in a subdivision I lived in years ago got downsized out of an IT job, started doing home repairs around the neighborhood, then turned it into a full-time business. It was what he was good at, and like me, he wasn’t corporate. I think a lot of people could follow the same pattern into self-employment, and so many really should. Everybody’s good at something most others aren’t and that’s the angle they need to play. My wife got run out of banking, but found out she’s a superstar at selling jewelry, and she’s happier than ever. You never know until you try, and more people need to give themselves permission to try.

  20. Probably alot. That is why the government is so gung ho on getting rid of cash.
    There not getting there fair share
    Yep, same with this city. They wanted me to put a handicap bathroom in a closed to the public shop.
    We fought for a year to have my shop designated as a studio which doesn’t require a bathroom. It was so stupid. It’s a production shop with no employee’s. I live here so I just go upstairs for that.
    I don’t blame people for not wanting to deal with those morons.

  21. That’s true Tim, the local gestapo has a way of stopping people from ever getting out of the starting gate. I think that’s probably their true function, or certainly the main result of what they do. The problem with regulations is once they’re on the books you can’t get rid of them. Years ago in New Jersey a guy wrote a letter to the editor about regulations. He said it’s a good thing the Depression happened in the 30s because if it happened today everyone would just starve to death because everything you might do to earn a living on your own is illegal. He even gave the example of people selling apples on street corners in the 30s, illegal today so not an option. It’s another example of a risk-adverse society. We think we can pass laws that will squeeze risk out of existence, but people are still dying from one thing and another. Collectively, we need to get some serious perspective and relax a bit.

  22. Kevin. One obstacle to self-employment you didn’t mention is this:
    In order to be in business for oneself, one has to KNOW what business one wants to start and pursue.
    THAT is my problem: Aside from trying to market some of my digital art and photography, I do not have the faintest idea of what sort of business to start. I am retired and both me and my S.O. have social security and pensions and I own my house and get Medicare, so the benefits part of traditional employment is not an issue for me.
    I have a bunch of collectibles left in the estate I inherited (some somewhat valuable, some not at all) that I could sell by I haven’t the physical energy to sort through junk in a musty basement. look up its value and try to sell it online or at a local flea market. I really just want to dump all of the stuff off at the local Goodwill, even if I might lose possible profit from sales that way. I won’t lose a dime on the stuff itself because I didn’t buy it.
    Any ideas on my debacle?

  23. Hi Mary – You asked for ideas and I have some. Can you get someone to assist you going through all the stuff? Not to do a detailed inventory, but to identify anything that might have any value. You can go the goodwill route with the rest. Then begin selling the stuff on eBay, Amazon, or at flea markets or consignment shops. The big stuff can be sold on Craigslist.

    As that inventory begins to draw down, get a copy of the book Garage Sale Millionaire by Aaron LePedis. You can begin replenishing your “inventory” from garage sales and thrift shops. The book will tell you how to buy and sell. But it seems to me you have the beginnings of a business buying and selling used goods. My son and I did that for a while and you can make some real money doing it. It’s actually pretty easy, and you can do it at your own pace.

    Eventually you might specialize in certain items where you have above average knowledge or a passion, like artwork, lamps, furniture, quilts, whatever. And trust me, what ever skills or knowledge you lack, you can get them as you move forward.

    I’ve always found that it’s just a matter of getting yourself out of neutral and into action. Don’t ever underestimate yourself and what you can do. You may not have done anything like this in the past, but that doesn’t mean you can’t do it going forward. The fact that you have other income sources should make it even easier, since you won’t have “survival pressure”. I’d take a stab at it and see where you can make it go. There really are a lot of opportunities to get creative with that kind of venture. And if the economy sinks, you’ll probably see your business increase, as the number of people looking for gently used stuff on the cheap increases. You’ll also meet a lot of interesting people along the way.

  24. I was told once that if there is a need or service that can be filled by yourself then it usually turns out to be a decent business.
    Here’s an example that I know personally. I have very good friends in Charleston SC. It is a huge tourist destination. Her friend down the street knew a realtor who handled vacation rentals. There are hundreds of them down there but he could not find reliable people to clean them once a week. Also, there were many many wealthy people who had seasonal homes there and wanted people to come in once a week and water plants, dust and generally keep the place clean.
    Well, her neighbor and she started cleaning rentals for him and then got into the homes. They make a killing on this. They can’t keep up with the demand. I would say they make at least 1000 per week doing this. It’s just them two. They work on their own. No pressure or bosses and they are in some of the most stunning homes in the country.

    This was a prime example of just filling a local need. Not necessarily thinking up a business and starting from nothing. I’m not saying where you live you could do that or physically you might not want that but I learned a long time ago that just filling a need for people can end up being a very good business.

    That’s basically what we did. We saw a need and filled it. My business really wasn’t planned like that. We simply filled a need and it took off from there.

    My point is, it doesn’t have to be some type of planned business. It can be something simple that is lacking in your area that would be nice to have.
    Just a thought.

  25. You’re making excellent points (again) Tim. Part of the problem is that people sit around waiting for the light bulb to go on, and an idea to create the next hula-hoop or smartphone app. That’s not going to happen. Business and personal needs are a lot more basic, and that’s where the business ideas are really at. A girl my daughter works with likes to bake, and she’s good at it. She supplies baked goods to the restaurant she works at on a very part-time basis. So she has two incomes, the very part-time job and the baking business, while she mostly stays home and cares for her kids.

    That’s really the key – take what you’re good at, or a need you can fill, and find a way to make money on it. It’s often just a matter of getting around and asking questions, or going to likely customers and clients. My thinking is a lot of jobs you do at work can be converted to business ideas. For example, if you do administrative work in an office, you can probably sell your services to small businesses who can’t afford to pay a salary but need certain tasks done. A lot of people are doing this as virtual assistants for web based businesses. Some times you just have to throw your hat out there and see where it leads.

    As I said in an earlier comment, these ventures often take you in directions you never expected, then you find yourself earning money for something you never thought of, or thought you could do. It’s that power of forward motion thing. You don’t have to do anything radical, you just have to get out there and get things going.

    What a lot of people miss is that as businesses cut staff, they still have jobs that need to be done. Each situation is a business opportunity for the person willing to fill a need.

  26. My thoughts on why more aren’t self-employed . . .

    1. Though I didn’t come from a family where most members ran their own businesses, my uncle tried to do this in the late 80s and failed miserably. Looking back, there are some lessons that I’ve drawn from his bad experience:

    First, he tried to do a brick-and-mortar business, since this was in the days before the Net, sophisticated software, etc. Since he tried to do this, he had to raise a lot of capital up front, find a physical location, purchase equipment, etc. Now, I’d also say that, comparatively speaking, it was easier for him to do this, unlike today, because doing a brick-and-mortar business was more accepted back then and there probably were some business-friendly mechanisms in place, even for the small city where I came from.

    However, I’m sure that, were he to try that today, 30+ years later, he’d not only have the age-old problem of trying to raise capital through family members or the bank offering him loans, but he’d also face the headache of dealing with municipal regulations, disability accessibility, liability insurance, and anything having to do with offering health insurance, worker’s comp, and retirement to anyone he hired, as well as the minimum-wage laws. Increased costs, and increased headaches, for sure. He probably wouldn’t last two years with all of those costs, and trying to get customers.

    Secondly, he went into business with two partners, who were buddies and who were both reprobates, with alcohol and drug problems. Also, none of them were that willing to treat the thing as a business from day one, but as a hobby that would, at some point, make money down the road. That attitude, in my view, doomed them to fail. The broader lesson to draw from that, too, is that you really can’t trust most people unless they’re, first, competent and, second, that they have skin in the game, where they’ll take the hit, too, and suffer if the business fails.
    The older I get, the more I see this to be the case in communities that are full of strangers and/or communities where hard times have hit and the whole community is in a death spiral. When that happens, then it’s all about the very short-term and immediate survival, the up-front solution being welfare and other government social programs, rather than investing in the long term, which is what you need in a business. It’s no wonder that, in those communities, Wal-Mart and other big-box retailer can both survive and thrive. They have the money and the resource of the mothership, which is in a different community. And, they have the means to disengage easily and not suffer the consequences of pulling out.

    2. For me, the main thing is the HOW of the business and not so much the WHAT. With the WHAT, you might have competition, but then quality might win out in the end, depending on your customers. The HOW is in line with what I touched on above: i.e., you treat the thing as a business from day one, and are ruthlessly focused on maintaining positive cash flow. If you do a business that requires a lot up front, you open yourself up to a lot of risk, whereas if you go the service-based solopreneur route, you can do this with little up-front risk.

    The other risks, however, might come also with the no-skin-in-the-game attitude of potential clients. That is, you offer the service, the client is interested, you do the work, and the client refuses to pay you. How do you collect, and in such a way that doesn’t paint you as the asshole? Along those lines, is it then better to niche early and then focus on more localized markets? And, how do you protect yourself from false accusations because some client perceived you as a “Trump supporter,” “Nazi,” “fascist,” etc.? In my book, it’s just not worth the hassle.

    Also, in the wake of de-platforming on the major centralized platforms, how can you protect yourself against this? Or, more importantly, how can you adapt and then protect yourself against being hit with increased fees, mistakes that cause you to miss paying taxes, etc.?

    In summary, I believe one, relatively unspoken, reason is that many people might not think it’s worth the work or the hassle to strike out on one’s own, and so continue to work for an employer, because, though the job and the employer might suck, it’s better than dealing with the wide world of people out there, who might be out to see you fail.

  27. Hi Tim – You’ve covered a lot of ground! It’s too bad your uncle’s situation was your primary experience. I’m from a long line of self-employeds, and they all avoided that outcome. My personal feeling is solopreneur is now the way to go. Any business that requires a lot of capital upfront increases the risk of failure exponentially. It also makes it harder to stay in business, due to the higher carrying costs. Meanwhile, the big guys can always win, because they have a lot more capital.

    A better alternative may be to start out going the solo route, and if space is needed, sublet from another business, one that’s related but not identical. That could create synergy. You can also lease equipment, or buy used, and contract out work and even labor. The business, whatever it is, would also have to be marketed on the web to expand market reach. As you grow, you can upgrade physical requirements and labor. But the idea is to start small and slow and be in it for the long haul. The internet and computer technology make it easier than ever to become self-employed, so bricks-and-mortar become less important, if they matter at all. That lowers the risk tremendously right there. Also, there’s more information out there for the average person than ever before. You can learn anything you need to, either on the web or by partnering with others. I’ve learned more from blogging than I did in college, and it isn’t even close.

    As to not getting paid from clients, that’s always a risk. But I know several people who didn’t get paid or fully paid from employers too. We can’t eliminate risk, and risk avoidance has become a serious problem in this country. It’s turned us into trained ponies, afraid to make a mistake. I take a certain number of risks, but I carefully weigh them out, and always try to have a back-up plan. We can’t allow risk to paralyze us, otherwise we truly are beaten. Never underestimate the human ability to mitigate risk. Just by being good at what you do reduces risk substantially. Another is by being careful who you “get in bed with”, whether that’s clients or partners. If you get a bad feeling about someone, don’t get involved with them. And if you already are, cut your losses early before it gets worse. Life is never without risks, so sometimes you just have to jump in and trust your instincts.

    But I also want to touch on your point about communities that are in a death spiral. That’s an astute observation (or at least the label is). It describes hundreds, maybe thousands of communities across the country. But more important, I think it also describes individuals. I see a lot of that where I live. It’s a post-industrial city where some are moving forward, but others are stuck in the past.

    I think we always have a choice. We can retool, try new things, whether jobs or business ventures. We can align ourselves with new people. We can learn new skills. We can change how we manage our finances, as well as our lifestyles. But for some it’s easier to sit around feeling sorry for themselves. It’s an “option” many choose to take, but it’s not a strategy in any sense of the term. I think we owe it to ourselves, our families, and even to humanity to never give up, and to always move forward, if only incrementally.

    That said, I’ve always assumed that everyone wants to better themselves. But as I’ve gotten older, I’ve learned the fundamental difference between wanting better outcomes, and being willing to do what it takes to make them happen. It’s been a shock to me to learn that not everyone is serious about wanting better for themselves if it requires effort on their part.

    I’m still learning here, and it looks like that process never ends. My strategy is to roll with it, but to roll forward any way I can.

  28. Your right, my business has taken me in many directions that I didn’t see at the start.
    I just needed to get started.

    As far as Tim, I have many many lessons on family and friends and why you never borrow or go into business with them. I have stuck with that and it has always done me well. It’s to long to write it all here.

    As far as getting paid, yes it is always a risk. We take half upfront. Since we order product based on customer needs we cover the cost of the order. The rest is profit. If I don’t get the rest then at least my costs are covered.
    It has never happened in six years. Not saying it can’t but so far it’s been ok.

  29. I have to echo what you’re saying Tim. Getting paid is always risk, but I haven’t experienced non-payment in 9.5 on the web. Wait, it did happen once this past summer. A broker asked for an ad on the site, I put it up, but she never paid. I removed the ad after 30 days, and never heard from her again.

  30. Your employer OWNS you. Your HOA OWNS you. And anyone who resides in an HOA and tries to start a home-based business or get established in self-employment is smacked down by insane CC&Rs that prohibit parking of work vehicles in your own driveway, or storing work supplies in your own garage (because then there?s no room for two cars), etc. Sometimes, you cannot even share the rent in your own home with a roommate – because the homes are restricted to ?single family? use, whatever that means in the narrow minds of HOA overlords. Want to grow flowers or veggies in your yard to sell at the farm market? If it doesn?t fit with landscape standards, you cannot do that either. A family daycare? Forget about it. Teach people how to play a musical instrument? Nope. Have a home-based photography studio. No, No, NO. You can have a home office, but you better not have your clients come to your house to meet with you, because then your neighbors will complain that you?re running a commercial business out of your home. There?s just no peace.

    Why should a real estate developer, or a group of your snooty, judgmental neighbors be able to dictate how you live your life, including how you earn a living?

    See, now you have yet another reason why so few Americans are self-employed. Many of them would have to move to a home that would allow them to pursue opportunities without being harassed or fined by the HOA.

  31. I agree with you about HOAs Deborah, they’re just one more obstacle to forward progress. Part of becoming self-employed is about no longer being “owned”, and that means if you’re living in an HOA, you may need to consider moving, depending on the type of business you plan to operate. For the record, I do live in an HOA, but my blogging and freelance blog writing are determined to be “clean businesses”, so the HOA is OK with it (I had to get approval before moving in). But rest assured had said approval been withheld, we’d have moved to a non-HOA situation.

    My wife and I have over the years done our best to maintain maximum flexibility in all our dealings, which is one of our strengths. If I could impress one concept on anyone who is considering self-employment, it will be to be flexible across the board. The idea is to keep your options open and always be ready to think outside the box. You can’t do that if you’ve painted yourself into a corner. Unfortunately, a lot of people have done just that, which is a big part of the problem. As Eleanor Roosevelt famously said, No one can make you feel inferior without your consent. We try to retain control over that consent in all that we do. It was a strategy we developed years ago, as we began to see how the world really works.

    That’s another important point too. Always be ready to acknowledge and react to the way things really are, not the way you wish them to be. There’s too much “let’s pretend” going on in America these days, and it’s toxic to the people who want to move ahead.

    Of course, none of these suggestions are aimed at you personally Deborah, but bringing up HOAs reminded me of how important these attitudes are in the grand scheme of things. At least if any of us hope to break free of the many constraints being imposed on us these days. And that’s part and parcel of what self-employment is all about, breaking free.

  32. This is really more of a commentary than anything. Reading the post above it makes me realize that America really is not the land of the free. Yes, it appears to be free and on a daily basis, I’m sure most move around without too much hassle.
    We are a nation of laws and rules. Everywhere we look there are rules against things in just about every area of life.
    I know that anything I try and do nowadays involves mounds of paperwork or five different proofs of where I live. Are credit is checked when we get a cell phone. Why? If I don’t pay my bill then shut the phone off. We have clubs that pit neighbor against neighbor. Boards overseeing what you can and can’t do with your home. ( HOA)
    I just came back from traveling. You wanna talk about rules. They must play that recording 20 times an hour about suspicious people. They have everybody looking at everybody like criminals. People staring at a bag sitting on the floor like it contains a bomb.

    In my eyes, this country has come unraveled. People are pushed to high stress just navigating basic life without violating some stupid rule or law or hurting someone’s feelings or some ethnic group. As a man, I’m afraid to talk to any women I don’t know. I don’t want to risk being accused of something. I could type for hours about this.

    I agree with Kevin. Everything I do now is all about maintaining my freedom as much as possible. No debt no bosses or anything that would put me in position to answer to anybody.
    That to me is the biggest incentive for my own business. It’s not about money but freedom of choice.

  33. Tim, have you ever read And Atlas Shrugged? It was written in 1957, but it about describes where we’re at. We’ve reached full-fledged fascist status. Everything is monitored and controlled by “the authorities” and we’re surrounded by them at every turn. The best we can do is work to maintain what freedom we can by changing how we operate in life. Becoming self-employed is one way, so is having generous savings, and staying out of debt. So is staying mobile and flexible.

    I have to add a faith observation to this as well. The less we trust God, the more burden is put on us to worry about everything. Since WE (not God) are solely responsible for our survival, we (our society) must do everything possible to squeeze out risk and threat of harm everywhere and anywhere. So we live in a state of paranoia and strict control (as Ayn Rand predicted in the book). The Bible says it succinctly in Psalm 46:10 Be still and know that I am God. We’ve abandoned that notion, and in the process, we’re turning on each other. We’re told we can trust no one but the authorities (which is really just the moral justification and the cloak fascism hides behind).

    This is the world we live in, and we have to do our best to work around it.

  34. Kevin, Only one small problem with quoting Ayn Rand and Atlas Shrugged and then referring to turning control over to the Lord. Ayn Rand was an avowed atheist who hated God and religion almost as much as political authoritarianism. She regarded religion as fairy tales meant to control us with the rules and regulations of religion as opposed to governmental rules.
    Many of today’s fiscally conservative Libertarian oriented politicos quote her and then turn around and talk about Christian values as if the two were one and the same. Christ’s values were definitely not Objectivist; they were probably nearer to a form of liberal, non-authoritarian (God as our only true authority) Socialism.

  35. You’re totally correct Mary, it’s an apparent contradiction. But I use Ayn Rand to explain where we’re at, and Jesus to describe where we need to be. I’m aware she was a died-in-the-wool atheist, but her observations about where the world would go were spot on. It was based on her own experience in the USSR. She could see it happen in America, while most Americans cling to the misguided notion of “it can’t happen here, because we’re free”, as if freedom is some sort of American birthright. If only it were true. But I’ve noticed a trend that the more secular America and the western world become, the more authoritarian and desperate we become. That was the connection Ayn Rand didn’t make, and probably couldn’t precisely because she was an atheist.

    I’m certainly not implying “religion” is the answer. The marriage/alliance between church and state has been an historic disaster. But I refer instead to faith, which is fundamentally different from religion. Religion is a man-made corporate concept of worshiping God, itself full of rules and restrictions, most of them arbitrary and often capricious. Faith is your personal relationship with God. I wonder if Ayn Rand wasn’t actually opposed to religion, without having a concept of what faith even is. In my own experience, I think true faith is a miracle, a gift from God, because it takes divine intervention for any of us to look beyond distorted human interpretations to pursue a true relationship with God, absent all the man-made structure of religion. In fact, in religion, we see the same authoritarian structures that we see in secular government and even corporations.

    BTW, I completely disagree with the common assumption that the teachings of Christ in any way support socialism, though I do agree with your assessment of liberal, non-authoritarian, but even those are really our modern labels. He taught the responsibility of the individual toward the poor, not a system of collectivism. Forcible charity is an endeavor of the state, typically driven by those who believe it’s more important to endorse helping the poor (or getting their vote), than to actually do it on an individual level (a.k.a., “do-gooders”). In Jesus teachings, salvation comes on an individual basis, and cannot be attained by collective action. For that matter, the individual can’t even attain salvation based on his or her family’s faith.

    I’m getting far afield here, but you’ve tapped into my faith/philosophical orientation…

  36. I am a new reader of your blog and just wanted to tell you I love it!!!! I love ALL of your articles that I have read so far! You are a great writer and witty!

  37. Hello. I am a high school Junior, and the topic of self-employment is really interesting to me. I really enjoyed your blog and how informative it is. I just have a few questions:
    1. Can self-employment help me avoid college debt? If so, how?
    2. How do I get self-employed, if it is a good idea for me (after graduating high school?)

  38. Hi Tyler – those are a couple of complicated questions. As far as avoiding college debt, self-employment may accomplish that if the business or trade you plan to go into doesn’t require college. If it does, you may still have student loan debts.

    As to how to become self-employed, it’s a multi-step process. First, decide what it is you want to go into business for. At your age, you’ll probably need to work in that field, spending a time working for someone who’s already in that business. The most basic strategy is to decide on what you want to do, then to get any necessary skills and experience to allow you to “go it alone”. In the simplest of terms, it’s about finding ways to monetize your skills with either clients or customers, rather than a single employer.

    Simple in concept, but difficult in the execution. You’re young, so you have plenty of time to experiment, get the skills you need, and make adjustments along the way.

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