Idaho has a relatively high rate of self-employed workers at 12.1 percent compared to the nation’s 9.7 percent to rank sixth among the 50 states.
A nationwide survey of small business owners in June 2014 ranked Idaho the second friendliest state for small businesses. Neighboring Utah was first. The survey found Idaho had the highest share of entrepreneurs who receive their primary income from their businesses, and the state had the second highest share of business startups.
Self-employed workers tend to be older and typically become self-employed after learning skills on the job. They often put off starting their own businesses until their children are older and the family can take on more financial risk. Studies by the U.S. Bureau of Labor Statistics and the Federal Reserve Board have found many older workers transition into retirement by becoming self-employed as part-time consultants or service providers, and people who run their own businesses tend to work past 65 more often than payroll workers.
About 74.9 percent of self-employed Idahoans were married in 2014 compared with 58.5 percent of all workers. Some of the disparity is due to the older ages of the self-employed. It may make it easier to risk starting a business when there is another earner in the household.
While women made up 50.7 percent of Idaho’s population 16 and older in 2014, they accounted for only 37.5 percent of the self-employed and 46.4 percent of all payroll workers.
Those with greater education are more likely to be self-employed. Many people with professional degrees – medical and law degrees – often own or are partners in their own businesses. People with associate degrees in in-demand repair services often start their own businesses. Those with more education often have greater knowledge of accounting and finance, which makes it more likely they can succeed in their own businesses. And those with higher education tend to have higher incomes, which gives them more cash to start their own businesses.
More than half of Idaho’s self-employed workers are in management, professional, technical and related occupations. The largest category is farm owners and managers. In 2014, more than 12,000 Idaho agricultural workers were self-employed in their own unincorporated businesses. They made up 12.5 percent of Idaho’s self-employed workers.
There were also business owner-managers, management consultants, accountants and auditors, architects, counselors, financial planners, attorneys, photographers, writers, doctors, dentists and other medical practitioners. Construction and services have relatively high rates of self-employment. Among the service occupations with high levels of self-employment are child care providers, personal care aides, automotive and other repairers, hairdressers and cosmetologists, landscapers, gardeners and lawn maintenance workers, massage therapists and house cleaners. Real estate agents and door-to-door vendors account for a large share of self-employed sales and office workers.
Of the nearly 98,000 self-employed in 2014, more than 36,000 worked in their own incorporated businesses while the rest had unincorporated businesses. On average, incorporated businesses tend to have employees while unincorporated businesses do not.
Census Bureau statistics on businesses that have no paid employees and are subject to federal income tax show most nonemployers are self-employed in unincorporated businesses, typically known as sole proprietorships which may or may not be the owner’s principal source of income. In 2012, the Census Bureau found 114,700 nonemployers in Idaho with receipts totaling $4.6 billion. Receipts of the average nonemployer In Idaho totaled $40,400.
Idaho’s south central and northern regions had the highest percentage of self-employed workers, according to estimates for 2009-2013 from the Census Bureau’s American Community Survey. Southeastern and southwestern Idaho had the lowest percentages. But those percentages still were considerably higher than the national average of 9.8 percent.
Kathryn.Tacke@labor.idaho.gov, regional economist
(208) 799-5000 ext 3984