Proprietor Employment Grows Faster than Wage & Salary Employment

Posted by admin on September 10, 2010 under Demographics, Macro Economy | Be the First to Comment

Proprietor’s income represents about 9% of personal income nationally. This is the income reported on IRS tax returns under Schedule C. It excludes self employment where individuals work through their corporation or LLC. In many cases it represents supplemental income to households. For instance, when my wife decided to raise Labradoodles, we reported the additional income and expenses on Schedule C. Because of the reporting, the activity shows up as proprietor employment.

From 2001 to 2008 non-farm proprietor’s employment grew 4.7% per annum in Colorado as compared to 1.7% per annum for non-farm employment. This can be seen in the indexed chart which shows that while non-farm wage and salary employment dropped by 1.2% in the 2001 recession, bottoming out in 2003, non-farm proprietor employment never decreased. By 2008, prior to the current downturn, the gap became quite dramatic. Unfortunately there is a significant lag time in the BEA reporting this data and thus we can only speculate what might be occurring in 2010. In the 1991 recession proprietor employment did decline.

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This is part of a long-term trend where the fastest growing source of employment, both in Colorado and nationally is proprietor employment.   Over the 30 years from 1977 to 2007, proprietor employment in Colorado tripled while the State’s population almost doubled and Colorado total employment more than doubled.  The trend is gaining momentum as the growth rate in proprietor employment is increasing relative to growth rates in total employment and population.  The same trends can be seen nationally, albeit at much lower level across the board.