The Steady Rise of the Non-employer Business
The total number of U.S. nonemployer establishments increased every year from 1997 to 2023 except during the financial crisis in 2008, according to the newly released Nonemployer Statistics.
Most non-employers are self-employed individuals who operate their own business, which may be (but isn’t necessarily) their primary income source. Nonemployer Statistics (NES) includes all nonemployer establishments in a given year that were subject to federal income tax and had receipts of $1,000 or more ($1 or more for the Construction sector). NES data are classified by industry according to the North American Industry Classification System (NAICS).
From 2012 to 2023, the total number of non-employers grew an average 2.7% annually, while employers averaged only 1.1% year-over-year growth. During this same timeframe, non-employers’ share of all U.S. businesses grew by 3%, shrinking employers’ share from 24.6% to 21.6%. Nonemployer dominance was only interrupted by the COVID-19 pandemic in 2020. That year, the number of employer establishments grew 0.5%, outperforming the 0.2% increase in non-employers.
Post-pandemic numbers of non-employer establishments spiked to the highest growth rates in nearly two decades: up 4.9% in 2021 and 4.7% in 2022, far outpacing the employer growth of 1.9% in 2021 and 1.8% in 2022. The data show non-employer establishments climbed 2.1% in 2023, a slowdown compared to early post-COVID growth (Table 1).
The rising tide of non-employer establishments since 2012, however, has not lifted all industries equally.
Growth Distribution
Despite the growth slowdown in 2023, 15 of 18 NAICS sectors saw an increase in the number of non-employer establishments.
The top three sectors by percentage increase from 2022 to 2023 were the Accommodation and Food Services sector, which added 40,234 establishments (up 6.4%), followed by Transportation and Warehousing with 202,407 establishments (up 5.3%) and Utilities with 884 establishments (up 5.1%).
The Transit and Ground Passenger Transportation subsector added more non-employer establishments than any other three-digit NAICS from 2022 to 2023 and surpassed its own pre-pandemic numbers for the first time.
The Taxi and Limousine Service industry fueled much of the increase, adding nearly 122,000 non-employers to its ranks from 2022 to 2023.
To read on visit uscensus.gov