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Copyright 1998 by the Wyoming Department of Employment, Research & Planning


Self-Employment as a Work Option in Wyoming

by: Carol Toups


"The top six most highly populated counties basically have some of the lowest self-employment percentages . . . The six lowest populated counties also have all of the highest self-employment percentages."

The purpose of the research for this article is to determine the proportion, and therefore the importance, of self-employment in Wyoming and its counties. The percentage of self-employed in Wyoming in 1995 (latest data available) is 22.7 percent or 69,110 independent small businesses. 1 Self-employment has been gradually increasing through the years both in the U.S. and Wyoming.

What are some common reasons people are compelled to start their own businesses? They have been laid off from their regular jobs and are unable to find another; they are tired of having a boss or trying to work with fellow employees; they have the ability to work more flexible hours; if more income is desired, more hours could possibly be worked; and there can be more job satisfaction for individuals when they are interested in and committed to their work. The personal computer has also made self-employment more feasible as it cuts down on many time-consuming tasks.

Data for this article are from the U.S. Department of Commerce, Bureau of Economic Analysis (BEA), Regional Economic Analysis Division, Washington D.C. 2 All percentages, rankings and increases/decreases are derived from this source. The BEA’s information regarding self-proprietorship is obtained from the Internal Revenue Service (IRS). The other portion of their total employment and wage data is provided by the "ES-202 Report." The Covered Employment and Wages (ES-202) program compiles monthly employment and quarterly wage data which has been collected from employer’s unemployment insurance (UI) quarterly contribution reports. The BEA tables also break out self-employment into two more detailed categories: "Farm Proprietors" and "Nonfarm Proprietors." BEA information includes both full- and part-time self-employment and "multiple jobholders" (those both self-employed and/or having a regular job(s) covered by UI). 3

Ratios of self-employment and UI by county vary greatly, perhaps due to the structure of the economy, population and location of larger industries. Research from this article shows that UI coverage decreased in many counties. But since Wyoming as a whole has not declined in both UI and self-employment, this suggests that counties with losses in UI or self-employment are balanced out by counties with gains in UI or self-employment.

Self-employment has been gradually increasing (both numerically and as a relative share of the whole) through the years both in the U.S. and Wyoming. In Wyoming, the number of self-employed grew from 49,620 to 69,110 (an increase of 19,490 jobs) from 1980 to 1995. During this time period, within the U.S., self-employment expanded from approximately 16,550,000 to 24,437,000 (an increase of 7,887,000 jobs). To show the proportion of self-employment, percentages of UI coverage and self-employment are calculated from the BEA’s numbers. Wyoming’s self-employment in 1980 was 17.7 percent of total employment and grew in 1995 to 22.7 percent (an increase of 5.0%). The U.S. as a whole has a lower percentage of self-employment and growth; it was 14.5 percent in 1980 and rose to 16.4 percent in 1995 (1.9% growth). Why is this? The amount of farm proprietorships (see Table 4) and multiple jobholders in Wyoming are contributing factors. In 1995, Wyoming’s farm proprietorship was 13.0 percent, while the U.S. stood at 8.7 percent. Self-employment as a primary job may be associated with an industry like production agriculture, while self-employment as a second job may be associated with survival strategies in low earnings states such as Wyoming.

The 1995 numbers for self-proprietorship increased in most Wyoming counties since 1980. This is shown in Table 1, which ranks 1995 total change by county since 1980 and lists employment for 1980, 1985, 1990 and 1995. Ten counties had increases of 1,000 or more self-employed. They are listed, as follows, by rank and amount increased:

  1. Laramie County (2,519)
  2. Teton County (2,387)
  3. Natrona County (2,084)
  4. Albany County (1,433)
  5. Fremont County (1,363)
  6. Sweetwater County (1,300)
  7. Sheridan County (1,221)
  8. Uinta County (1,083)
  9. Weston County (1,048)
  10. Park County (1,034)

Twelve counties had increases of less than 800 self-employed. It should be noted here that when examining each county from 1980 to 1995, there is not one that had steadily increasing levels of self-employment each and every year. (Increases/decreases from the year 1980 to the year 1995 are being shown, rather than the entire time period.) "Unpredictable, unstable and uncertain" often describes the past and probable future of the self-proprietor starting a business. There are several reasons for such erratic self-employment behavior. For example, there may not be enough activity or demand in the chosen business area; being unable to pay quarterly taxes; being unable to buy equipment/supplies to properly run the business; having no medical insurance or leave benefit programs available; being unable to afford Workers Compensation or UI if desired; finding that they are not suited to the extra responsibilities of being self-employed; or finding regular employment.

Only Niobrara County showed a decrease of self-employment (-95) from 1980 to 1995. However, UI covered employment (see Table 2) also slightly decreased during this 16-year time frame, indicating a decline of total jobs in Niobrara County. Ten other counties had decreases in UI coverage during this period. Looking at the three greatest levels of change, Natrona County had the highest loss of UI coverage (-8,928), followed by Carbon County (-4,572) and next was Fremont County (-1,908). Table 2 also lists the 11 counties with UI coverage increases in terms of numeric and percentage gain from 1980 to 1995. Among the growth category, Teton County had the highest gain of UI coverage (8,097), in second place was Laramie County (4,903), followed by Uinta County (3,080). Since Wyoming as a whole has not declined in either UI covered or self-employed, the change in county UI suggests workers may be migrating to new jobs in different Wyoming counties or holding multiple jobs. Johnson County and Weston County fell into a unique category during this time frame. Both had decreases in UI, but their increase in self-employment was high enough that, instead of declining, total employment showed growth. Teton County also deserves special note: total employment (both UI and self-employment) went from 8,107 in 1980 to 18,591 in 1995, an increase of 10,484 or 56.4 percent. The ratios of UI and self-employment in Teton County have remained almost constant through these years, averaging around 77.0 and 23.0 percent, respectively, indicating an overall balanced economy.

The ratio of Wyoming’s self-employment varies by county and region. This can be seen in Table 3, which lists self-employment percentages by county (grouped by regions) for 1980, 1985, 1990 and 1995. For example, the 1995 self-employment percentage in Campbell County is 14.1 percent (the lowest in the state, probably due to large numbers of people employed in coal mining), while Weston County (mainly a rural area) has the highest percentage in Wyoming at 47.0 percent in 1995. Both of these counties happen to be in the Northeast Region.

It appears that county population has some effect on self-employment ratios. Table 4 shows ranked population (using 1995 Census Bureau estimates) by county and number/percentage of self-employment. The top six most highly populated counties basically have some of the lowest self-employment percentages. These include: Campbell County (14.1%), Sweetwater County (14.8%), Laramie County (18.2%) and Albany County (19.2%). Natrona County (24.6%) and Fremont County (25.6%) are the remaining two with the highest population, yet their self-employment percentages are higher than the others. An explanation is that both counties have high numbers of decreasing UI coverage (see Table 2), so perhaps self-employment increases have compensated for this. The six lowest populated counties also have the highest self-employment percentages. They are: Weston County (47.0%), Niobrara County (38.2%), Sublette County (36.2%) and finally Johnson and Crook counties (both 34.0%). Hot Springs County (25.8%) is lower than the rest; this could be partly accounted for by more job positions available due to tourism in Thermopolis. Two of these counties, Niobrara and Crook, have the highest self-employment percentages due to the fact that they also have the highest percentages of farm proprietorship self-employment (47.3% and 41.1%, respectively). Table 4 also lists, by number and percent, those involved in farm proprietorship self-employment for each county. The remaining 11 counties are in the more average range of self-employed, from 20.5 to 29.8 percent.

Another factor that influences the self-employment ratio is the number of larger businesses located in a county. Several large employers have locations in Campbell and Sweetwater counties.4 Table 4 reveals, at least in these two cases, that the number of larger businesses in a county does seem to have a lowering effect on the self-employment ratio. In fact, Campbell and Sweetwater counties had Wyoming’s lowest self-employment percentages in 1995. Therefore, where a larger business is in operation, that area tends to have fewer self-employed people.

Wyoming’s residents are very reliant upon the option of self-employment as a first or second job, with close to one-quarter of its workers fitting into this category in 1995. A low number of larger industries in Wyoming along with sparsely populated areas, leads to smaller businesses having a better chance at self-fulfillment for the owners and long-term success for the economy.

 

Carol Toups is an Economist, specializing in the Covered Employment and Wages (ES-202) program with Research & Planning.

1 Wyoming Department of Employment, Research & Planning, "Wyoming 1996 Annual Covered Employment and Wages" has more detailed UI information (published about one year later, while the more comprehensive BEA data takes longer to compile).

2 Krista R. Shinkle, "Wages as a Share of Personal Income," Wyoming Labor Force Trends, February 1998, p. 5, has more details on BEA personal income.

3 David Bullard, "Multiple Jobholding Revisited: Why is it a Regional Phenomenon?," Trends, December 1997, pp. 1-5.

4 Wyoming Department of Employment, Research & Planning, Wyoming’s Largest Employers June 1997: The Gems of Wyoming Industry, p. 11.


 
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