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Self-Employment Is Surging—And Making It Harder to Hire

More American workers are self-employed than at any point since the Great Recession. It helps explain those 11.3 million open jobs.

The lockdown is over, but the offices are still empty. Sure, much of that is the switch to remote or hybrid. But there’s something else at play.

Call it BYOB (Be Your Own Boss). Americans are choosing independence and autonomy.

June data from the Bureau of Labor clocked the total number of self-employed U.S. workers at 16.8 million, or 10.2 percent of the workforce—the highest level since the Great Recession. Except there's a key difference between now and then.

The last time the self-employment rate was this high, the job market was in shambles, with a 6.5% unemployment rate that would quickly rise to 10%. Many people were likely striking out on their own out of necessity. This time, with 3.6% unemployment and a red hot job market, it appears that people are doing so out of choice.

A key piece of the Great Resignation puzzle

Record numbers of workers have quit voluntarily in 2021 and 2022, and Bloomberg's analysis indicates that a large portion has chosen to strike out on their own rather than take another traditional job.

More than one-third of the expansion of the labor force between June 2020 and June 2022 came from the self-employed. That helps explain why there are still 11.3 million open jobs, and nearly two candidates for every opening.

Companies turning to freelancers and independent workers

For the last decade, companies have been upping their employee-to-contractor ratios at a steady clip. Reliance on independent workers is fast becoming the norm.

Data from over 200,000 small- and medium-sized businesses by HR and payroll platform Gusto shows the extent of contractor hiring in the modern workforce. According to their findings, companies with 25+ employees saw their year-over-year contractor use rate grow 25% in 2021. Smaller organizations, too, expanded their contractor usage by over 10% in the same period. 

Since 2017, the ratio of contractors per employee has increased by 48%.

With an increasing number of skilled workers choosing self-employment over traditional jobs, that trend is only likely to continue.

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