Unemployment Boosts Entrepreneurship


NEW YORK (MainStreet) — The number of businesses without paid employees in the U.S. reached 22.7 million, which marks the third straight annual increase, according to statistics released by the U.S. Census Bureau.

"It indicates a fall in quality full-time jobs," said Margie Baldock, author of the book The Mother Lode Manifesto (Star Fire Books 2013). "More new job opportunities are part-time or lowly paid jobs. As a result, professionals are being forced to become self-reliant financially just to make ends meet."

Non-employer businesses are those with no paid employees and annual business receipts of at least $1,000 that are subject to federal income taxes.

Also See: Starting Small Is the Secret to Smart Entrepreneurship

"It's never been easier to start a business," said Paul Schwada, director with Locomotive Solutions. "The tools that are now in place eliminate many barriers to entry and when a business stays non-employee it avoids added hassles."

Those hassles include taxes being levied on businesses who do employ full time workers.

"It is becoming increasingly expensive for small business operators to afford employees in the traditional method," Baldock told MainStreet. "Employers must not only provide holiday time and pay but also expensive benefits. Given the new Obamacare laws I would expect this trend to continue for some time to come."

Tools that make it easier to operate a staff-less business include the internet, social media and accounting software.

"Often the first step in becoming financially self-reliant is becoming a one-person small business and then growing from that base," Baldock said.

While California still has the largest number of non-employer businesses at 2.9 million, Florida had the largest increase in with 57,978 added.

"If California has a greater number of non employer businesses, it may be because the state has more oppressive legislation for business owners to follow when it comes to employment," said Baldock.

Texas ranked third with 38,504 non employer businesses added, and New York came in fourth with 15,207 businesses added.

Another study found that the number of businesses owned by women of color has more than doubled since 1997, accounting for 32% of women-owned firms in the U.S., according to the American Express OPEN 2014 State of Women-Owned Businesses Report.

The increase is partly due to rising levels of education among women and targeted support for them from business centers, business associations and programs such as CEO BootCamp from American Express OPEN.

Also See: Only 23% of Americans Prefer a Female Boss

"Increasing numbers of women are obtaining post-secondary education," said Julie Weeks, research advisor with American Express OPEN and author of the report. "There's also more women role models. The growing visibility of women in business ownership roles provides more inspiration for would-be female entrepreneurs."

The greatest number of African American female-owned firms are located in New York compared to California for Latina, Native American and Asian American women-owned firms.

"There's never been more interest in entrepreneurialism in general," Schwada told MainStreet. "Just look at the popularity of 'Shark Tank' and the vast coverage of entrepreneurial thinking, activities and stories across the media."

--Written by Juliette Fairley for MainStreet

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