Study Shows Three Decades of Self-Employment Trends

The U.S. economy and workforce landscape have seen many dramatic changes in the past three decades, not just in terms of trends, crises, and types of jobs workers pursue, but also in the way we work and structure careers. The team at Ooma created a new study displaying trending changes in self-employment. Their chart shows the percentage of the workforce that was self-employed each year. The numbers show that self-employment has always played a strong role in the American economy, with new Internet and digital industries pushing it to evolve. These changes present new opportunities and shake-ups to old work patterns.

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The Rise and Fall of Traditional Self-Employment

Ooma’s analysis is based on data from the U.S. Bureau of Labor Statistics. It shows that in 1994, self-employment represented 12.2% of the workforce. That’s 14.93 million Americans, a peak representing an economy where entrepreneurs, freelancers, contractors, and trades workers formed the backbone of the economy.

The next two decades saw a shift in self-employment, however. It declined to 9.8% by 2018, representing a shift to corporate employment in the era of social media and dot-com booms. The economy was recovering from a major recession that affected self-employed workers. Workers needed stability and benefits, and they turned away from gig work during the recession, with numbers plummeting to 59% in 2023.

The Impact of the Internet

Smartphone technology was developed in the late 1990s and perfected throughout the 2000s until it became a force that transformed the way we work. New apps like Uber, Instacart, and DoorDash ushered in a huge demand for gig work in the form of delivery drivers and people who could transform their own car into a taxi service. These platforms offered many work opportunities on top of a flexible schedule. People using these apps to get jobs could work whenever they wished.

Social media offered other exciting self-employment opportunities as we watched the rise of influencers and content creators who could market all kinds of digital goods and other services. A digital ecosystem made it more possible for personal brands to affordably market themselves to a wider audience.

The Pandemic as a Catalyst

The COVID-19 pandemic prompted huge changes in the way we work. Businesses closed down, layoffs surged, and many people looked for the quickest way to get flexible new employment. Self-employment options were the most accessible for many people. The self-employment workforce rose again to 4.2% in 2020. Many began to feel that starting their own business was more reliable than trusting a corporation. Marginalized people were especially drawn to self-employment, particularly women with families, and Black and Hispanic women. The flexible scheduling and greater power over work decisions was a more equitable fit for these women.

The team’s data proves that self-employment is so much more than just an alternative career choice. It can be an equalizer and drive American innovation. Self-employment can be a huge boost to local communities and continues to serve a vital role in our economy.