One of the interesting aspects of self-employment is that the likelihood of being self-employed increases with age.
The chart below shows self-employment as a percentage of total employment by age group. The data comes from the U.S. Bureau of Labor Statistics (BLS) and includes both unincorporated and incorporated self-employed.
It shows how self-employment increases with age, peaking with over a quarter of workforce participants 65 and older being self-employed. This works out to about 1.9 million 65+ self-employed workforce participants.
By way of comparison, overall about 10% of the U.S. workforce is self-employed.
Also illustrating this point is the age composition of the self-employed. 85% of the self-employed are 35 or older, 64% of the are older than 44 and 12.5% are 65 or older. Only 15% of the self-employed are younger than 35.
Based on our interviews and other research on the independent workforce, there are several reasons self-employment increases with age:
1. Older workers are more likely to have the skills, networks and financial resources to become successfully self-employed.
2. Older workers are more likely to be interested in the work flexibility and control self-employment provides. This is especially true for workers 65 and older.
3. Older workers, especially those 65 and older, face diminished traditional job prospects due to age discrimination and other issues associated with hiring older employees (increased benefits costs, etc.).
One of the reasons we're forecasting a continued increase in the number of U.S. independent workers is demographics.
The large cohort of aging baby boomers are moving into the years when they are more likely to become self-employed. Aging boomers are also more likely to delay their retirement and stay in the workforce longer than prior generations. The result of these trends will likely be an increase in self-employment.
Special thanks to BLS economist Steve Hipple for providing me with this data. See his report on self-employment in the U.S. for more information.