Self Employed hide a weakening US Job-Market

Government figures indicate that the increase in self-employed people is jeopardizing economic growth and fuelling US unemployment.

The number of worked by the self-employed has fallen by 15.5 percent, the lowest for 15 years. According to the forecasting firm Lexington this decline “is probably related to the housing downturn, since one in six workers in construction is self-employed, twice the average for all industries.”

Government statistics show that 365,000 owner run businesses have been lost since in the last quarter compared to last year as payrolls has dropped in the past month after four years of stability.

The unemployment rate, jumped 0.3 percent in December, and economists have inferred that this increase can be used to predict the U.S. will be entering a recession.

However Michael Englund, chief economist at Action Economics is less skeptical as he argues against the relevance of the 0.3 percent increase stating that “Self-employment, as only calculated by the household survey, is probably reflecting the slump in the subprime mortgage market” rather than a signal of a recession.

This is because many mortgage brokers who were involved in the subprime industry work for themselves.

Self-employment can also be used to explain the reason first-time applications for jobless benefits have not reached the expected levels associated with a weakening labor market due to the fact that Self-employed Americans are not eligible for benefits under the unemployment insurance system.

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