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May, 1987, Vol. 110, No. 5
On their own: the self-employed
and others in private business
Between 1948 and 1973, the percentage of self-employed persons in nonagricultural industries fell from 12.0 to 6.7 percent,1 but by 1985, it had risen to 7.5 percent. Given this recent growth in entrepreneurial activity, it is of some importance to obtain as accurate information as possible about the size and composition of the entrepreneurial class and of the businesses they operate. The Bureau of the Census' Survey of Income and Program Participation (SIPP) provides an opportunity for obtaining this information. This article reports on some new findings, derived from this survey, relating to businesses and business ownership as distinct from self-employment.
The Current Population Survey (CPS), conducted for the Bureau of Labor Statistics by the Census Bureau, defines the self-employed as sole proprietors and partners of unincorporated businesses.2 Individuals who identify themselves as owning a controlling interest in incorporated businesses are shown in published tabulations as wage and salary workers because they are employees of the businesses they operate and are paid a salary for the services they render. Omission of this group from the self-employed leads to an underestimate of the number of business owners. Wage and salary workers who report self-employment as a secondary activity (that is, own a side business) also are business owners and they, too, are excluded from the CPS count of the self-employed. In fact, this group is the fastest growing group among business owners.3
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1 T. Scott Fain, "Self-employed Americans: their number has increased," Monthly Labor Review, November 1980, pp. 3-8 and Eugene H. Becker, "Self-employed workers: an update to 1983," Monthly Labor Review, July 1984, pp. 14-18. For earlier studies of self-employment, see Robert N. Ray, "A report on self-employed Americans in 1973," Monthly Labor Review, January 1975, pp. 49-54 and John E. Bregger, "Self-employment in the United States, 1948-62," Monthly Labor Review, January 1963, pp. 37-43.
2 Prior to 1967, no distinction was made in the CPS between persons operating unincorporated and incorporated business. Individuals in both groups were classified as self-employed. In 1967, when incorporated business owners were separately identified, they were classified as wage and salary workers.
3 Sheldon Haber, A New Perspective on Business Ownership (U.S. Small Business Administration, Office of Advocacy, July 1985). See also The State of Small Businesses: A Report of the President (U.S. Government Printing Office, 1986).
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