Number of Self-Employed On the Rise

In the second quarter of 2012, the number of self-employed was nearly 9.9 million, up seven percent from the first quarter.
September 20, 2012

After nearly a year of steep decline, the number of Americans who are self-employed is rising again, according to the Office of Advocacy in the U.S. Small Business Administration.

Up, Down and Back Up Again

In the second quarter of 2012, the number of self-employed was nearly 9.9 million, up seven percent from the first quarter.

The number of self-employed had been rising since mid-2010, and reached 9.6 million in the second quarter of 2011. It then dropped by 400,000 in the third quarter, and fell for another two quarters.

SBA economist Brian Headd writes in his report that the growth was part of the broader recovery in the small-business sector.

“Business births, self-employment and proprietors' income are rising, while business deaths and bankruptcies are declining," he says.

Declining Bankruptcies

Business bankruptcies have been declining steadily since the first quarter of 2010, when the figure was 14,607. The number has fallen each subsequent quarter, and in the second quarter of 2012 was 10,374, down 5.7 percent from the first quarter. (The total figure for the year in 2006 was 19,695, and peaked at 60,837 in 2009.)

Rising Employment?

Jobs at new businesses had been declining for more than a decade but also have increased recently. Proprietors’ income has inched up 1.3 percent to $1.2 billion in the second quarter of 2012.

"Employment from business births, which has been on the decline for the last decade has been rising in the most recent quarters," Headd wrote. "But there are concerns over the slowdown in net job increases from small businesses with fewer than 20 employees and those with 20 to 499 employees."

Another Look at the Economy

The encouraging SBA report comes as a separate study—this one by Citigroup Inc.—shows half of all U.S. small-business owners experienced a sudden shortage of cash in the past year.

Over a quarter of those surveyed (28 percent) said sales that didn’t improve as much as they’d expected was to blame for their cash crunch. About 30 percent of the some 750 business surveyed said customer payments that were slow or late along with bankruptcies posed the biggest challenge to their cash-flow management. Nearly a quarter (24 percent) blamed nonpayments.

The overwhelming majority—85 percent—of small businesses think the economy may see another downturn. But that figure is down from 90 percent a year earlier.

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