Incorporated Versus Unincorporated Self Employment

The U.S. Census Bureau produces a wealth of data on self-employed Americans. This information is useful to a host of people, from policy makers, to researchers, to marketers, to people who simply want to be educated.

However, understanding the data requires those using them to be aware that they discuss two different types of self employment:

• Incorporated self employment: Refers to people who work for themselves in corporate entities.
• Unincorporated self employment: Refers to people who work for themselves in other legal entities.

The most important difference between incorporated and unincorporated self employment lies in their commonality. Many more Americans are unincorporated self employed (6.1 percent of the labor force) than incorporated self employed (3.5 percent of the labor force). This difference in frequency means that any discussion of all self employed workers requires properly weighting the two groups of self employed.

They Differ on Two Important Economic Dimensions

The Incorporated Self Employed Earn Much more

In 2011, the median earnings of the incorporated self employed were $46,872, while the median earnings of the unincorporated self employed were less than half that – $21,630.

The Incorporated Self Employed are More Likely to Have Health Insurance

In 2011, 83.6 percent of the incorporated self-employed, and 68.7 percent of the unincorporated self employed, had some type of health care coverage.

They Have Very Different Demographics

Incorporated Self Employed are Much More Likely to be Male

In 2012, 76 percent of people over 16 and self-employed “full-time” and “year-round” in incorporated businesses were male, while 24 percent were female. For unincorporated self employment, the numbers were 68.1 percent and 31.9 percent, respectively.

Incorporated Self Employed are More Likely to be White and Asian

In 2011, 79.4 percent of incorporated self employed workers and 72.3 percent of unincorporated self employed workers were White, while 6.6 percent of incorporated self employed workers and 4.6 percent of unincorporated ones were Asian.

The Incorporated Self Employed are More Likely to be in the Middle of the Age Distribution

In 2011, only 5 percent of the incorporated self-employed were under 30, as compared to 9.9 percent of unincorporated self employed. At the same time, 9.8 percent of the incorporated self employed were over 65, versus 10.4 percent of the unincorporated ones.

The Incorporated Self Employed are More Likely to be American Citizens

In 2011, 93.9 percent of the incorporated self employed and 88.6 percent of the unincorporated self employed were citizens.

The Incorporated Self Employed are More Likely to be Married

In 2011, 75.4 percent of the incorporated self employed and 62.6 percent of the unincorporated self employed had spouses.

The Incorporated Self-Employed are More Likely to be Proficient in English

In 2011, 7.7 percent of the incorporated self employed “spoke English less than ‘very well,’” while 12.9 percent of the unincorporated self employed fell into this category.

The Incorporated Self Employed are More Highly Educated

In 2011, 44.5 percent of the incorporated self employed had a Bachelor’s degree or higher, as compared to 29.9 percent of the unincorporated self employed.

Unincorporated Self Employed Workers are Slightly More Likely to Work at Home

In 2012, 17.6 percent of incorporated self employed, and 23.2 percent of the unincorporated self employed, worked from their dwellings.

The Incorporated and Unincorporated Self Employed Tend to Work in Different Industries and Occupations

The incorporated self employed were significantly more likely than the unincorporated self employed to report working in management (49.5 percent versus 33.9 percent) and sales (23.5 percent versus 15.8 percent) occupations in 2011.

Incorporated Self Employed Were Likely to Work in:

• Manufacturing
• Wholesale trade
• Retail trade
• Finance
• Insurance and real estate
• Professional and scientific services
• Arts
• Entertainment
• Recreation

They Were Less Likely to Work In:

• Agriculture
• Forestry
• Fishing and hunting
• Construction
• Educational services
• Health care and social assistance
• Other services

Most of this information is available in one place or another on the Census Bureau’s website.

However, it isn’t compiled in one place where readers can easily see the difference between the two groups of self employed people.

Self Employed Photo via Shutterstock

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