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Why the Recession Made Self-Employment Go Down

NEW YORK (TheStreet) -- The stagnant economy has really taken a toll on self-employment numbers, but a closer look says it is growing at least in one key area -- an area that really needs the work.

First the numbers.

According to CareerBuilder.com, the economy holds 10 million self-employed jobs right now, or 6.6% of all U.S. jobs.

But CareerBuilder says the self-employed made up 7.2% of the workforce in 2006, before the recession. That represents a decline of 936,000 self-employed jobs in the past seven years, after a five-year period starting 2001 in which those numbers grew by 1.8 million.

Why, in a six-year period where employers laid off workers in droves, would self-employment take a dive? It seems that in times of economic strife, Americans workers consider corporate work a "safe harbor," even if there's no guarantee they'll keep those jobs.

"The market for self-employment was significantly weakened by the recession. However, as full-time employment in traditional workplaces continues to improve we expect entrepreneurial opportunities to follow suit," says Matt Ferguson, chief executive of CareerBuilder. "A rebound in housing will lead to more growth for independently employed construction and real estate workers as well as other occupations in the supply chain. Moreover, many high-paying jobs in IT and consulting have already seen positive self-employment growth in recent years."

Americans are taking on part-time, moonlighting jobs to cover the bills. According to CareerBuilder, 20% of full-time employees landed a second, part-time job last year. But while "more people are getting second and third jobs ... fewer people are dropping their day jobs altogether to work on their own," the firm reports.

A report from the University of Missouri, shows that it's men, especially older men, who are increasingly drawn to self-employment.

"Gender is one of the most enduring social factors ... a fact that is particularly evident in differing economic opportunities for men and women and their decisions to be self-employed," notes Angela Curl, an assistant professor at the University of Missouri and lead author of the study.

Curl's research reveals that men "have a greater willingness" to accept the risks of self-employment. They also have more savings to cushion the financial blow of starting a business from scratch, especially older workers.

"The results seem to suggest a complex interplay between cultural norms and retirement policies," Curl said. "Self-employment may help older adults remain productively engaged in society and should be encouraged."

Curl says government can help make self-employed work more attractive to entrepreneur-oriented individuals.

"American policymakers could reduce barriers to self-employment by offering and promoting small-business loans for start-up costs," she says. "If older adults delay claiming Social Security benefits, remain in the labor force and continue paying taxes, some of the pressure on the Social Security retirement system would be reduced."

That would help Americans of all ages and release dissatisfied workers into the entrepreneurial life -- a win-win.

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