Self-employment rate, explained

What it measures

The self-employment rate is the percentage of the civilian employed population age 16 and older who work for themselves rather than for an employer. The numerator includes both incorporated self-employed (people who own a corporation that employs them, typically professionals, consultants, and small-business owners with a more formal structure) and unincorporated self-employed (freelancers, sole proprietors, independent contractors, farmers, and gig workers). The denominator is the civilian employed population age 16 and older.

The measure is the closest single proxy for the share of a local labor market that operates outside of W-2 employment. It tends to be high in places with strong agricultural sectors (where farm operators are self-employed), large professional-services clusters (lawyers, consultants, doctors with their own practices), and concentrated arts and creative industries.

Why it matters

Self-employment share is one of the cleanest read-outs of entrepreneurial activity at the place level. Metros with high self-employment shares tend to have lower median wages but more income volatility, the upside is concentrated in a small number of successful operators. The metric also matters for safety-net design: self-employed workers don't have employer-provided health insurance, don't pay into unemployment insurance the same way, and have to manage their own retirement contributions. Cities with rising self-employment shares are usually seeing a structural shift away from large-employer wage jobs.

How the Census measures it

ACS Table B24080, Sex by Class of Worker. CensusEasy sums the four "self-employed" cells (incorporated male, unincorporated male, incorporated female, unincorporated female) and divides by the civilian employed total. The class-of-worker question asks respondents to describe their main job; gig workers who treat a side hustle as their main income source are counted as self-employed.

How to read the numbers

The US self-employment rate is about 10%. Agricultural states (Montana, North Dakota, South Dakota) and arts-economy enclaves (Santa Fe, Asheville) tend to post the highest rates, often above 15%. The lowest rates are in places dominated by a few large employers, military bases, single-employer mill towns, government towns like Huntsville, Alabama. A self-employment rate that has risen by more than 3 points in a decade usually reflects either a deliberate small-business policy push, a shift to gig-economy work, or the loss of large W-2 employers.

Caveats and limitations

Census class-of-worker is self-reported, which can blur lines for gig workers who hold multiple jobs. The measure also doesn't distinguish high-earning incorporated professionals from low-earning sole proprietors, a city of independent surgeons and a city of independent house cleaners would post similar self-employment shares despite very different economic realities. Look at the metric alongside income to interpret it.