Nonemployer establishments continue to increase in the United States, outpacing employer growth and reducing employer share of U.S. businesses by 3% to 21.6% from 2012 to 2023.
The total number of nonemployers grew an average of 2.7% annually during that time, while employers averaged only 1.1% growth year over year, according to Census Bureau data. Nonemployer establishments have increased every year between 1997 and 2023 except in 2008 during the financial crisis. Most nonemployers are self-employed individuals who operate their own business, which may or may not be their primary income source.
During the pandemic, employer establishments grew 0.5% compared with 0.2% for nonemployers, however growth of nonemployer establishments spiked to their highest rates following the pandemic at 4.9% in 2021 and 4.7% in 2022. That far outpaced employer growth of 1.9% in 2021 and 1.8% in 2022.
The top three sectors experiencing nonemployer growth are accommodation and food services, which added 40,234 establishments, transportation and warehousing, which added 202,407 establishments, and utilities, which added 884 establishments. The transit and ground passenger transportation subsector added more nonemployer establishments than any other subsector from 2022 to 2023 and surpassed its own pre-pandemic numbers for the first time. The taxi and limousine service industry fueled much of the increase, adding nearly 122,000 nonemployers, said the Census Bureau report.
Meanwhile, there was a large decrease in nonemployer establishments in subsectors like health and personal care retailers, which lost 46,558 nonemployers between 2022 and 2023. The retail trade Nonemployer Statistics (NES) sector shrank between 2021 and 2022, losing nearly 2.2 million establishments across the country.
Some sectors experienced a loss of revenue, or receipts, said the report. Six North American Industry Classification System (NAICS) sectors saw revenue among nonemployers drop in 2023, including three sectors that experienced an increase in establishments. Mining, quarrying and oil and gas extraction led the group of declining sectors with a 10.1% drop in revenue between 2022 and 2023. The other five revenue-losing NAICS sectors were transportation and warehousing; agriculture, forestry, fishing and hunting; retail trade; information; and real estate, rental and leasing.
The nonemployer overall share of revenue in the U.S. economy narrowed between 2022 and 2023, accounting for approximately $1.8 trillion of gross domestic product. That represents about 6.4% of the economy.
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