Rise of the 1099 economy?

We’ve written before about how the self-employed in Minnesota took a hit during the Great Recession. Nationally, though, there’s evidence of a rebound — and maybe a larger trend going forward.

Data crunched by the Idaho-based economic analysis group EMSI show the percentage of self-employed Americans has bounced back the past couple years.

While still below pre-recession levels, the data have some labor market watchers talking about the growth of people becoming their own bosses. The idea even has a cool name — the 1099 economy — referring to the IRS form used by independent contractors.

EMSI offers these interesting nuggets:

— The self-employed population includes a large segment of older workers. Over 30% (3.25 million workers) are 55 or older; this includes more than a million workers who are at least 65. Another 28.2% of self-employed workers are 45-54.

— Nearly 20% of all self-employed jobs are in the construction industry. Another 15% are classified under “other services (except public administration),” which includes repair & maintenance, personal & laundry services, religious and civic organizations, and private households. The next-largest industry is professional, scientific, and technical services (11% of self-employed jobs).

— The largest self-employed occupations in the US are child care workers, carpenters, maids & housekeeping cleaners, farmers & ranchers, and construction laborers.

While the overall percentage of 1099-ers remains relatively small (about 7 percent of all U.S. workers, EMSI figures), demographer Joel Kotkin sees the trend growing out of the recession.

“This rise is partially reflective of hard times, and many of the self-employed earn only modest livings in fields such as childcare and construction,” he wrote this week.

“However the shift to self-employment is likely to accelerate in the future, and into higher-paying professions, for reasons including the ubiquity of the Internet, which makes it easier for some types of business to use independent contractors, as well as the reluctance of large firms to hire full-time employees with benefits.”

I’m particularly intrigued by EMSI’s data showing a relatively large group of older workers as 1099-ers.

We know that older workers in traditional jobs were hit hard by unemployment in the Great Recession.

The data, though, suggest many older workers are bringing in income and staying employed in ways that aren’t turning up in traditional employment stats.

— Paul Tosto

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