The 1099 Economy: The New “Old” Entrepreneurs

Posted by: rlaccmarcom on Thursday, July 25, 2013

Each year the U.S. Chamber of Commerce Foundation analyzes data to determine what states have done over the previous year to create jobs and expand the economy.  The analysis is broken down into two parts, one that discusses what states should be doing and one that details what states are doing and then ranking the states using a performance, data-driven model.  The Chamber calls the annual report, Enterprising States, and provides a copy of the 2013 analysis HERE.

The Enterprising States study found a significant shift in the types of new start ups and entrepreneurs in America since the Great Recession.  The Chamber refers to this new economy as a "1099 Economy," which reflects an increase in single owner businesses that do not employ any additional staff and typically work as a consultant or provide professional services under contract to larger corporations.  The "1099" refers to the tax form these self employed contractors receive from their clients that report income – think of them as W2s for the self-employed.  More than one million self employed contractors have started business since 2005 and some estimate more than 10 million people operate similar one-person businesses.  This is almost 8% of the national labor force.  An additional 31 million people claim self-employment income to supplement their primary job, which represents a 52% increase since 2001. 

Often cited reasons for the growth in these 1099 entrepreneurs are layoffs and shutdowns at larger companies that dump older, experienced workers into the job market where they are unable to find equivalent full-time employment.  However, they are able to use their skills, contacts and experience to land contracts for companies not willing or feeling too uncertain about the future to commit to a full-time hire.  Further evidence of this trend is the self-employment rate for workers aged 55 and over is 16.4% compared to 10% for other age groups. 

Arkansas follows that trend as self employment increased by 11% to 136,000 over the last decade.  Plus more than three out of four Arkansas businesses employ just a single person.  Over the course of the Great Recession in 2008 and 2009, firms employing five or more employees lost net jobs and the only category that added net jobs were businesses employing one to four people.

Self employed, 1099ers require similar support and policies that would benefit any small business: improved access to capital, specialized training, networking opportunities and guidance on expanding into new markets.  The Rogers-Lowell Area Chamber can help 1099ers grasp these opportunities to benefit their business.  Visit or call 479-636-1240 to learn how the Chamber might be able to help you improve your business.


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