Meet the New Boss...You!

One growth area in rural employment over the past 30 years has been working for yourself. If things continue as they have, by 2015 one out of every three wage workers in rural America will self-employed.

The new boss is nothing like the old boss, as readers of the Yonder are learning. Earlier this month, we learned that rural self-employment has been rapidly increasing in Ohio [2]. Now, thanks to Penn State University's Stephan Goetz, we know that the increase in rural self-employment is a nationwide phenomenon.

In a recent issue of Rural Realities [3], Goetz reports that since 1969, the number of self-employed workers in rural America has increased over 240 percent, to 5.3 million people. During that same time, there was only a 61 percent growth (19.6 million people) in the total number of wage and salary workers. Now one out of four rural workers is self-employed.

The number of rural wage workers goes up and down with the national economy. The number of self-employed workers, however, has declined only twice in the last 36 years, in 1989 and in 2001.

But, as in Ohio, wages for self-employment are going down. "In the last four years," Goetz writes, "self-employment earnings relative to earnings of traditional workers have reached historic lows." By 2005, the average self-employed workers made only half what the typical wage worker received. Those who worked for others in rural communities averaged $31,596, according to Goetz. Those who first saw the boss each morning in the mirror earned only $16,851.

These are largely the same findings that came out of Ohio, where in 1969 the average rural self-employed earned 17 percent more than salaried workers; but by 2005, they were earning 52 percent less.

The figures for the nation as a whole were similar, according to Goetz. In 1969, the average self-employed worker earned just over $6,000 a year compared to the $5,569 earned by the wage and salary worker. Thirty years later the rural self-employed were making a little more than half what their wage and salary neighbors were earning.

Goetz mapped where the highest percentage of self-employed workers could be found. The counties with the highest percentage of self-employed are the darkest blue in the map below. The Plains are particularly blue, as is the Mountain West. The South has the lowest proportion of self employed — Tunica County, Mississippi, in the heart of the Delta has the lowest proportion of self-employed in the country.

Meigs County, Tennessee, led all U.S. counties in 2004 in the percentage of its workforce being self-employed. In Meigs, located in the southeastern portion of the state, for every 100 wage workers, there are 185 people who are self-employed.

Meigs has had its problems. The community lost its garment manufacturing base some time ago. It has few public sector jobs. And the county has had a considerable number of people leave. So those working for themselves in Meigs county do wood working. They drive trucks and make pottery. There are also a number of musicians in the county.

The highest income for self employed workers, however, is found in the cities. New York has the highest per capita income for self employed workers, followed by Houston (Harris County) and Denver County, Colorado. The map below shows the income levels of self-employed workers. The darker the green, the higher the income of individual self-employed workers.

Why do some counties have higher levels of self-employment or higher self-employment income than others? Goetz found that counties with older workers had higher self-employment earnings. As local unemployment rates go up, so does self-employment. Eventually, however, high unemployment "eventually has the opposite effect as local economic conditions deteriorate to such an extent that self-employment disappears."

It helps to have technical or trade schools nearby. They are associated with higher self-employment rates. And places with internet broadband services also have higher self-employment wages.

What both the Ohio study and Goetz's report show is that self-employment has become a major source of jobs in large areas of rural America — particularly down the midsection of the country. But even as more people begin to work for themselves, incomes are dropping.