Self-Employment Accounts for All Added Jobs

Yes, all of those new jobs that Obama says he created are due to a large increase in the numbers of the self-employed.  Many of these newly self-employed have become self-employed because they could not find jobs otherwise in the never-ending Great Socialist Recession.  The self-employed have kept Obama from looking like the total job-destroyer he is.  I seriously doubt that many of these newly self-employed believe Obama created their job, though many may think he necessitated their job.

Let us look at the numbers in the working age population, the labor force, and those employed who are covered by unemployment benefits from an important and fascinating article by Mike Shedlock called 100% of U.S. Jobs Added Since 2010 Have Been Self-Employment, Contractor, or Other Jobs Without Unemployment Insurance Benefits.  Note that the self-employed pay unemployment taxes, but are not eligible to collect benefits if their business fails or if they are unable to pay themselves a paycheck.  As Shedlock reported in another article, 23% of the self-employed have gone a full year during this recession without a paycheck.  This is 6.21 million working Americans who have worked a year without pay.  69% of small business owners have loaned their companies their own money to keep their companies going through the recession.

The gap between the labor force, which is those employed plus those known to be seeking employment, and the population has been increasing since the depths of the recession.  The number of employed people who are eligible to draw unemployment benefits if they lose their job is still below the number who were employed and covered at the end of 2008 by 3.2 million people!  Now we need to examine the number of self-employed and contractors who are not covered by unemployment insurance to find out where the jobs come from that Obama is claiming he has created.

The red line is the BLS total employment number by year, while the blue line is the number of employed people covered by unemployment insurance.  Both of these are plotted against the number on the left axis.  The difference between these numbers is the number of uncovered employees, or those without unemployment insurance coverage.  The uncovered employee numbers are on the right axis and plotted in green.  This number is mostly equal to those who are self-employed, though in some states some may be people who are periodically employed with long gaps in their employment.

Since 2009, self-reliant Americans have become self-employed in growing numbers each year.  But covered employees, those working for an employer, decreased from 2009 to 2010 and then again in 2011.  There was finally a small increase in covered employees so far in 2012, though the number is still slightly below the number in 2010!  The important thing to note is that whether we measure the increase in the total number employed from 2009 or from 2010, the entire net increase is due to an increase in the number of self-employed Americans!

Total employment dropped sharply in 2009 and hit its low point in 2010.  The number of self-employed had been slowly dropping since 2005, but dropped sharply in 2009.  Then it rose sharply in 2010 and again smartly in 2011.  It was the self-employed entirely who gave some temporary credence to the false jobs recoveries of 2010 and 2011.  The increase in 2012 has been more modest and was matched for the first time by an increase in the covered employed.

In 2009, the self-employed or uncovered employed were a low 9.1% of the employed.  Now, they are 13.1% of the employed.  Many of these employed are tenuously employed since even in normal times about half of all small business start-ups fail within 5 years.  According to a survey by Citigroup, 54% of small business owners say they have gone without a paycheck to stay in business.  38% say their employees worked overtime without pay.  18% of the small business owners say employees had delayed paychecks.  Life for small businesses can be very tough in decent times, but when the federal government is determined to be anti-business and even promises to put whole industries into bankruptcy while tossing money madly at businesses with no possible market, the life of small businesses can become truly nightmarish.  The withdrawal of wealth from the private sector, whether by taxes, by deficit spending, or by regulatory mandates, is particularly tough on small businesses.

This is the thanks Obama has given to the self-employed who have single-handedly provided him with his only possible rationale for being re-elected.  Obama keeps talking about some 4 million jobs he has created.  Apparently, these jobs are the jobs these 5.91 million newly self-employed Americans really created.  I suspect few of them will vote for Obama.