Is there evidence that wage and salary workers turned to self- employment in the Great Recession? William B. Beyers Department of Geography University of Washington Seattle, WA Pacific Northwest Regional Economic Conference, Portland OR., May 2014

Outline of Presentation Introduction Background Literature Data Sources Results – U.S. Total change, state patterns of self-employment, state change in wage & salary employment, joint patterns of change in wage & salary employment & self-employment Concluding Comments (There is a written version of this paper if anyone wants it)

Introduction Job growth globally has been slow in the wake of the Great Recession In the U.S. wage and salary employment is finally back to the level in 2007 In contrast, self-employment has continued to grow, and has dramatically outpaced the growth of wage and salary employment since 1990.

Background Literature Marshall & Wood lean on Christopherson’s work, viewing self-employment as an aspect of flexibility in the labor force. Rubalcaba viewed it as an employment opportunity, especially for women Dickson argues “Lone Rangers” are related to declining sectors, but questions if there are bases to reverse these declines Beyers & Lindahl’s “Lone Eagles” Various case studies BLS work based on the Current Population Survey; the U.S. Census nonemployer program; BEA proprietors/self employment estimates

Dawson, Henley & Latreille’s UK survey of motivations for self-employment

Data Source BEA data online Series SA- 25 – Full & part-time employment by industry Series SA – 27 – full & part-time wage and salary employment by industry The difference between these two series is the level of self-employment by industry Data were developed for states in 1990, 2007, and 2011

Results First a national perspective Then state level analysis

National Industry Trends Table 2 in paper has three broad sets of data: Documents trends of self employment by industry – most services have fast growth Reports the share of self-employed by industry – highly variable in services Coefficients of industry concentration report on the spatial distribution – most services have low coefficients, suggesting relatively even spatial distribution

Location Quotients – All self- employment 2011 Alaska– 0.96 Hawaii – 0.93

Location Quotients – Services Self Employment 2011 Alaska – 0.89 Hawaii – 1.04

Location Quotients Producer Services 2011 Alaska – 0.73 Hawaii – 0.99

Location Quotients – Arts, Entertainment and Recreational Services 2011 Alaska – 1.23

Shift-Share Analysis A technique that allows focus on changes in regions compared to national change Three models – ; ;

Competitive Shift Alaska –0.9% Hawaii –0.6% Percentages are of total positive or negative shift values

Competitive Shift Alaska -1.0% Hawaii -1.2% Percentages are of total positive or negative shift values

Cluster Analysis Used Ward’s algorithm to define clusters of 6 industry groups for the year 2011 **** * Small clusters – only 3 states each

Cluster Classification of State Self- Employment 2011

Correlations Location Quotients Wage & Salary and self-employment

Correlations Red – positive sig. 01; yellow – positive sig..05 Green – negative sig. 01, blue negative – sig..05

Wage & Salary Employment Change – competitive shift U.S. Lost 4% of wage & salary employment over this time period

Change in Wage & Salary and Self- Employment (1)

Change in Wage & Salary and Self- Employment (2)

Change in Wage & Salary and Self- Employment (3)

Financial Services Change California Texas

Administrative Services Change Texas California Florida

Manufacturing Change WS & SE

Finance Change WS & SE

Real Estate Change WS & SE

Administrative Services Change WS & SE

Arts, Entertainment and Recreation Industry Change W&S and SE

Accommodation and Food Services Change – WS & SE

Other Services Change – WS & SE

Concluding Comments This paper used BEA self employment data; different results are possible if BLS or Census data had been used There are some industries where self-employment gains occurred and wage & salary employment declined, at the state level Micro-data would be needed to tease out the paths of individual workers Given the long-run gains in self-employment in the U.S., more research is needed to understand the dynamics of wage & salary and self-employment at the industry and occupational level