One Million Self Employed in New York City!

I have started doing a little research for a post I plan to write when rebenchmarked Current Employment Survey data for 2012 comes out in a couple of weeks.  While doing so, I came across a number that knocked my socks off.  According to the U.S. Department of Commerce, Bureau of Economic Analysis, the number of people working in New York City who were not employees, and thus not included in the Current Employment Survey, exceeded 1 million in 2011.  It had been just 554,200 in the year 2000:  it has nearly doubled.    It had been 402,000 in 1991.  It had been below 300,000 for several years in the 1970s.  This is stunning, shocking.  Self-employed “proprietors” as the BEA calls them are is approaching one in four of those who work in NYC’s private sector.  But what does this mean?

Perhaps it represents empowerment.  More people, with the use of the internet and other technology, are choosing to work as entrepreneurs, freelancers, or independent contractors.  Or perhaps it represents the opposite, as more and more employers are forcing those who are employees in all but name to work as contingent workers without benefits, including legally mandated benefits such as the employer’s share of the payroll tax, workers compensation, and unemployment insurance.  I can tell you what it doesn’t represent. These are not off the books workers in the “informal” economy, such illegal immigrant day laborers paid in cash.  The BEA gets its count from Schedule C of people’s income tax return.  These are people who reported self-employment income to the government, and paid taxes on it.  Those self employed in the so-called “informal economy” are on top of the one million officially working for themselves.

I wrote about the self-employment trend back when I was at NYC Planning, at a time when few people were noticing.  Since then the trend has been in the news from time to time.  But since I last looked at the numbers the trend seems to have accelerated.  The number of self employed “proprietors” soared by nearly a quarter million just from 2006 to 2011.  (They need not all be individuals.  One person can have more than one Schedule C for more than one source of self-employment income, just they can have more than one job.  But most are in fact individuals).

Per the BEA, in 2011 self employed proprietors numbered 2.3 million in New York State, or 24.1% of private sector workers.  The Bronx total was 108,600, or 32.1% of those who worked in that borough (regardless of where they lived).  There were 366,200 self-employed people working in Manhattan, but that was just 15.4% of those working in the private sector there.  So this isn’t all Manhattan hedge fund managers.  (Actually, hedge fund managers pretend all their income isn’t either wage or self employment income, it is investment gains, so they aren’t even counted here).  Among those working in the private sector in Queens, 222,000 were self employed, or 30.7% of the private sector total; on Staten Island there were 43,600 self employed, or 32.3% of private sector workers on the rock.

Since I’ve gone out of order the reader can guess which borough is the king of self employment.  Kings County (Brooklyn) had 270,000 self employed people working there in 2011, or 34.9% of all those working in the borough’s private sector.  That figure has nearly tripled in less than 20 years.  And it is perhaps the most stunning number.  Not too long ago, this borough’s employment was dominated by those working in the institutional “non-profit” health and social services sector.  And most of its small business entrepreneurs commuted in from more entrepreneurial places such as Staten Island or the suburbs.

The BEA will be releasing Local Area Personal Income in May, if the past is any guide (and the sequester cuts are not targeted at statistical agencies), so the total income of self employed proprietors working in New York City could be tabulated, and divided by the number of self employed proprietors.  This will show if mean (less valuable than the median but what we have) self employment income has been rising or falling relative to inflation over the years.  Regardless, there is clearly a revolution in the world of work going on, for better, worse, or some of both.  (Either way it beats the 1 million welfare recipients we used to have).  Young people coming out of college expect to look for a job.  Is a job even a reasonable expectation anymore?

(Note:  the U.S. Census Bureau’s American Community Survey typically shows fewer self employed people.  But that is because it does not include all the self employed.  For example, those who incorporate are counted as wage and salary employees of the corporation that they own, which I think is a mistake).