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Self-Employment in Rural America:
The New Economic Reality

A new publication published by the Rural Sociology Society and written by Stephan Goetz of the Northeast Regional Center for Rural Development highlights recent research related to the substantial growth in self-employment in the United States. While this publication provides a broad discussion of a wide range of issues related this increasingly important segment of the economy, highlights include:

1. Since 1969, the number of self-employed rural workers has expanded by over 240 percent to 5.3 million. In comparison, there was only a 61 percent growth in rural wage and salary workers over the same time period.
2. If current trends continue, one rural worker will be self-employed for every three wage-and salary workers by 2015
3. In the last four years, self-employment earnings relative to earnings of traditional workers have reached historic lows. In 2005, the average self-employed worker earned only one half of what wage-and-salary employees captured ($16,851 versus $31,596).
4. There are several factors that have bearing on both the rates and earnings associated with self-employment. These factors can be classified into two major categories: (1) characteristics of the population pool from which the self-employed are drawn; and (2) community-level attributes that help assist, or serve as barriers, to the self-employed.

Policy options include:

1. Individual entrepreneurs and the self-employed must rely on the availability of auxiliary supporting businesses to operate efficiently and profitably. Often, these supportive services are not available. Strategic temporary public investments may be needed and justified to help facilitate the development of these key services in some rural areas (such as temporary help, daycare, courier/messenger, legal and accounting services, and office supply businesses)
2. Self-employed persons need better access to higher-education institutions (i.e., business schools, community colleges, land-grant institutions) that offer specialized entrepreneurship and business training. New ways to deliver programs and technical assistance to current and potential entrepreneurs/self-employed must be encouraged.
3. State and local governments should explicitly recognize the growing importance of self-employed workers, especially in rural areas. Since state governments only keep track of workers who are covered by unemployment insurance (the so called ES-202 information), they have little knowledge of how their policies affect a growing segment of the labor force. As such, state governments are urged to take an important first step in collecting and reporting basic economic data on this expanding sector of their economies.

For more information or to obtain a copy of this edition of Rural Realities go to http://www.ruralsociology.org/pubs/RuralRealities/Volume2Issue3.html

For more information contact:
Walt Whitmer
Extension Associate, Economic & Community Development, Penn State Cooperative Extension
Associate Director, Northeast Regional Center for Rural Development
6C Armsby Building
University Park, PA 16802
(814) 865-0468
(814) 865-3746 (fax)
wew2@psu.edu