IBJOpinion

MARCUS: 'Self-employment gap' endangers state

Morton Marcus
November 6, 2010
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Morton Marcus

“Simply lazier than other people,” Bill Blatant says. “Your typical Hoosier is just not imaginative enough to do something different.”

“Outrageous,” I object. “That’s both false and mean-spirited. Where do you get that?”

“Simple, look at the data,” he says. “Hoosiers are wage slaves. People earn money either by working for themselves or for someone else. Here, only 9.4 percent of earnings come from self-employment, compared with 11.6 percent nationally. It’s all right there in the statistics from the U.S. Bureau of Economic Analysis.”

“What?” I ask in confusion.

“It’s a matter of fact,” Bill blares, impatient with my failure to acknowledge what he knows to be truth. “Indiana ranks No. 1 in percentage of jobs receiving wages and salaries. Back in 1969, we were just about average among the 50 states, with 86.1 percent of our earnings coming from wages and salaries. But, since then, Americans have become less dependent on working for others and more self-reliant, working for themselves.

“In 1969, nationally 86.5 percent worked for others; in 2008, the United States was down to 78.7 percent. Over that same period, Indiana crawled down from 86.1 percent to 81.8 percent. And that is how we got to be No. 1 in the nation.”

I don’t know what to say. Bill has no such problem:

“As for that silliness that we work for others more than other folks do because of higher-paying jobs here in Indiana: It’s totally false!” he exclaims. “The average earnings of a worker in the United States in 2008 approached $50,300; in Indiana, the average was closer to $44,100.

“The surprising part is that self-employment is not a faster-growing part of the U.S. economy,” he continues. “In bad times, when many folks are losing jobs, it makes sense for people to try supplementing their incomes with work they do in the open market.”

“What do you mean?” I ask.

“Well, now,” Bill says, puffing his chest like some exotic bird, “In these hard times, I’ve become a consultant to attorneys who want to overwhelm the opposition with bluster. I’m independent, work when I want, choose my cases from what’s offered by the law guys.”

“That’s not a solution,” I say, piercing his buffoonery. “Unemployed people need income. If they go to work for themselves, they have to figure out where to get the startup money, what to produce, where the market is, how to attract and keep customers. There’s a lot to starting and running a small business before you can see income. Bluster isn’t a career for everyone.”

“Precisely what I was saying,” Bill sneers. “Hoosiers are not cut out to start or run small businesses. Each year in this decade, the number of business proprietors in Indiana has failed to keep pace with national growth trends. Indiana is experiencing a “self-employment business gap,” which I say is hurting our prospects for a robust recovery in this state. Know what our declining share of self-employment is costing us?”

“No,” I admit.

“Six-hundred and twenty million dollars a year,” he says with great emphasis.   

“There’s a real appeal to the idea of more Hoosiers owning their own businesses,” I agree, “but it’s not a simple matter. It takes time and planning, vision and courage.”

“And,” Bill beams, “since we have less self-employment than other states, it must mean that we are what I said originally: Hoosiers are either lazy or lacking in imagination.”

“There might be other reasons,” I say, looking for the door. “There are few quality resources to assist small businesses as they try to launch.”•

__________

Marcus taught economics for more than 30 years at Indiana University and is the former director of IU’s Business Research Center. His column appears weekly. He can be reached at mmarcus@ibj.com.

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