NFIB

Self-Employed Entrepreneurs May Enjoy Greater Job Security
03/ 25/ 2002

A recent USA Today article reported that, contrary to what many workers believe, freelancers and other self-employed entrepreneurs may have greater job security in an economic downturn than those who are employed by others. While employee status has traditionally been viewed as more secure, increased layoffs and the rapidly changing world economy could give self-employed individuals an edge. Jeffrey Moses discusses this in today's Workshop.

With even the largest companies announcing layoffs, Cisco, Dell, Honeywell and Kodak among them, salaried workers in almost every industry are beginning to wonder when their company will be next. Self-employed entrepreneurs who have established a diverse base of clients, however, can lose several clients and still retain an adequate income. In contrast, when salaried workers are downsized, they are out on the street looking for work.

The resulting feelings of self-worth among the self-employed has been noted in several recent studies. One conducted by Northwestern University Economist Charles F. Manski and University of Wisconsin economist John D. Straub studied 3,600 workers during a four-year period. It found that self-employed workers feel more secure than those who work for others.

Author and labor economist Sharon Cohany concluded in a Monthly Labor Review article that self-employed individuals who work as consultants or in other "irregularly scheduled" jobs do not think of their positions as unstable.

Self-employed workers feel that they have greater job security and job satisfaction than any other group, according to a study by David Blanchflower of Dartmouth College and Andrew Oswald of the University of Warwick.

Today more than 30 million workers are self-employed or owners of their own small businesses. Many of those are beginning to see the advantages offered by self-employment and are diversifying their income through part-time freelancing.

Perhaps the studies reported in this Workshop should not come as a surprise in light of the flexibility and adaptability inherent in the nature of many self-employed workers. Entrepreneurs are experts at adjusting to change and are therefore well suited to periods of economic uncertainty.

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