Self-employment is on rise as an alternative work style

Only 3% surveyed say they would work for another

December 06, 2003|By CHICAGO TRIBUNE

Self-employment is rising. In the past two years, the number of people going into business for themselves, particularly women, has increased after long-term joblessness, a slow-moving job recovery, mass layoffs and corporate malfeasance.

In a recent survey by the National Association for the Self-Employed in Washington, 15 percent of 1,000 self-employed people or micro business owners - with 10 or fewer employees - said they started their businesses as a substitute for full-time employment.

Maureen Petron, public affairs manager for the association, said she believes that the movement toward self-employment began during the tech heyday of the late 1990s.

"There were a whole bunch of people who had always dreamed of being self-employed. The tech boom gave them the resources and the reason to do it. When the recession started, some thought, `Maybe it's a better option to be self-employed.' Many people were pushed along by the recession."

The survey also found that people are looking at self-employment as a way to supplement income from part-time work (16 percent) and to provide additional household income (61 percent).

For many people, once they become self-employed, there is no turning back. The survey asked respondents if they would go back to working for someone else when the job market picks up, and only 3 percent said they would.

Asked what they would do if a former employer or business contact called with a job offer, 4 percent said they would take it; 20 percent said "no way."

"While people maybe went into this out of necessity, they are planning to stick with it," Petron said.

Statistically, some of the increase in the number of self-employed can be attributed to a change in definition of some industries to nonagricultural from agricultural. But that change does not account for all the noise.

After falling in the last three months of 2001, the number of self-employed people in nonagricultural businesses has increased steadily, with consistent growth in the past five months, according to Bureau of Labor Statistics data.

There also is evidence to suggest that the rise in self-employment has helped drive down overall unemployment.

In Illinois, for instance, the unemployment rate in October dropped to 6.7 percent from 7.1 percent the month before, compared with 6 percent unemployment nationwide.

The average jobless rate over the past three months in Illinois was 6.9 percent, which state officials consider a more accurate indicator of the jobs picture. But in the most recent household survey, there was a sharp increase in the number of people reporting themselves as being employed, said Bern Colleran, spokesman for the Illinois Department of Employment Security.

"Self-employment is not all of it. But the `job creation' data did not correspond" with the lower unemployment rate, Colleran said. "Now, whether that kind of increase holds up in the coming period ... remains to be seen."

The high cost of health insurance always has been a drawback to self-employment, especially with double-digit increases in the past two years. Petron said that 70 percent of business owners in the association's survey do not have health insurance.

"It's a trade-off they're willing to make," Petron said.

The Chicago Tribune is a Tribune Publishing newspaper.

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