Friday, March 21, 2008

Self-employment rises in rural areas, but average income of rural self-employed appears to fall

"Self-employment has become a major source of jobs in large areas of rural America — particularly down the midsection of the country," Bill Bishop writes in the Daily Yonder. "But even as more people begin to work for themselves, incomes are dropping" -- at least on average, and according to the available data.

Bishop's report is based mainly on a study by Stephan Goetz of Penn State, published in the latest edition of Rural Realities, the quarterly of the Rural Sociological Society. "Since 1969, the number of self-employed rural workers has expanded by over 240 percent, to 5.3 million," Goetz writes. "In comparison, there was only a 61 percent growth in rural wage and salary workers over the same time period." If the trend continues, by 2015, one of every four rural workers will be self-employed.

But even as self-employment booms, average income of the self-employed has declined "to historic lows," Goetz writes. "In 2005, the average self-employed worker earned only one-half of what wage-and-salary employees captured ($16,851 versus $31,596)." But those data may not be definitive, because they could be driven in part by part-time proprietorships of retirees, spouses or partners who are not a household's main source of income, and so on. Goetz acknowledges, "Better data than those currently available are needed to examine whether these differences are due to part-time vs. full-time employment differences or linked to underreporting of self-employment income." (Read more)

Goetz's report includes county-by-county maps showing percentages of self-employed workers, divided into five categories, or quintiles. "The South has the lowest proportion of self employed," Bishop writes. "Tunica County, Miss. ... has the lowest proportion of self-employed in the country." It's a big casino county, near Memphis, Tenn. Not too far away, Meigs County, Tenn., has the highest percentage of self-employed. Decatur is the county seat.

"In Meigs, located in the southeastern portion of the state, for every 100 wage workers, there are 185 people who are self-employed," Bishop writes. "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." For the rest of Bishop's report, also based on an Ohio State study in Ohio, click here.

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