Tradesmen going their own way

Trends in and characteristics of self-employment in the trades

Emerging digital technologies make it easier than ever for people to work in any location and at any time with relatively low investment of capital. This makes it arguably easier for working class Americans to be self-employed. Gig apps like DoorDash and Uber have allowed many Americans to quickly access delivery and transportation jobs. Other technologies such as mobile payment processing, field service management, online booking and lead generation, and digital quoting tools have arguably make it easier for self-employed working-class Americans to go a step further and to own their own businesses. Self-employment has many benefits and drawbacks.

In the next few months, Brandon, who owns a small diesel repair business with his father, will be writing a series of essays about the experience of being a self-employed small business owner within a Machine economy in the United States.

In preparation for this series, I used data from the Census Bureau’s American Community Survey to better understand self-employment in the trades. In this data brief, I will be describing trends in and characteristics of self-employment among 7 key trades people including plumbers, electricians, HVAC technicians, auto mechanics, carpenters, truckers, and masons.

I first examine trends in self-employment between 1980 and 2021. We broke out self-employment by those who were incorporated and those unincorporated. Incorporation refers to the process of establishing a separate legal entity such as a corporation or limited liability company. Unincorporated self-employed works under his or her own name and is the sole proprietor or as part of a partnership without forming a separate legal entity.

I found that there was a small increase in self-employment between 1980 and 2021. Self-employment increased by approximately 3 percentage points over that time period. That was all accounted for by increases in incorporated self-employed. In fact, unincorporated self-employment actually went down in that time by around 0.4 percentage points and incorporated self-employment increased by 3.5 percentage points.

I also describe the characteristics of the self-employed among these trades in 2021. These results are shown in Table 1. I found that 16% of tradespeople are self-employed numbering 1,631,859 individual Americans. Tradespeople are more likely to be self-employed especially incorporate as they age and gain more experience. Approximately 20% of tradespeople 55-64 are self-employed compared to 10% aged 25-34. Men are slightly more likely than women, and White people slightly more likely than Black people are more likely to be self-employed though the differences is small. Foreign born Americans compared to native born are much more likely to be self-employed by close to 7 percentage points. Those tradespeople who are married are much more likely to be self-employed as well. Finally, the majority of trades have 12-15% rates of self-employment though masons are self-employed at about 20% rate. Carpenters are the most likely tradespeople to be self-employed at a rate of 30%.

We hope that you read subsequent pieces by Brandon discussing important topics in self-employment in the United States.