Number of U.S. Nonemployers Grew Faster Than Employer Businesses Nearly Every Year From 2012 to 2023

The total number of U.S. nonemployer establishments increased every year from 1997 to 2023 except during the financial crisis in 2008, according to the newly released Nonemployer Statistics.

Most nonemployers are self-employed individuals who operate their own business, which may be (but isn’t necessarily) their primary income source.

The U.S. Census Bureau data show annual growth of nonemployer establishments (those with no paid employees) almost always outpaced that of employer businesses (those with at least one paid employee). Nonemployers also represented a larger share of all U.S. businesses each year from 1997 to 2023 (Figure 1).

Post-pandemic numbers of nonemployer establishments spiked to the highest growth rates in nearly two decades: up 4.9% in 2021 and 4.7% in 2022.

Nonemployer Statistics (NES) includes all nonemployer establishments in a given year that were subject to federal income tax and had receipts of $1,000 or more ($1 or more for the Construction sector). NES data are classified by industry according to the North American Industry Classification System (NAICS).

From 2012 to 2023, the total number of nonemployers grew an average 2.7% annually, while employers averaged only 1.1% year-over-year growth. During this same timeframe, nonemployers’ share of all U.S. businesses grew by 3%, shrinking employers’ share from 24.6% to 21.6% (Figure 2).

Nonemployer dominance was only interrupted by the COVID-19 pandemic in 2020. That year, the number of employer establishments grew 0.5%, outperforming the 0.2% increase in nonemployers (Table 1).

Post-pandemic numbers of nonemployer establishments spiked to the highest growth rates in nearly two decades: up 4.9% in 2021 and 4.7% in 2022, far outpacing the employer growth of 1.9% in 2021 and 1.8% in 2022. The data show nonemployer establishments climbed 2.1% in 2023, a slowdown compared to early post-COVID growth (Table 1).

The rising tide of nonemployer establishments since 2012, however, has not lifted all industries equally.

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