The NYT’s Floyd Norris marvels this morning (registration required) at the increased importance of self-employed workers in the government’s rosy employment figures announced this week. These workers, notes Norris, account for 6.6 percent of the workforce, up from 6.1 percent when Bush took office. While there are about 2.25 million fewer jobs today than during the height of the boom, the government’s tally of the officially employed increased by 328,000 since last July. The rise of self-employment allows politicians to claim that their policies are working and that the labor market is on the rebound (just in time for new election season).
But wait. Lost in the marveling about Bush’s possible luck in having a strong recovery coincide with a reelection campaign are the reasons why workers are opting for self-employment in such record numbers. It is important to keep two facts in mind. First, the regulatory state under Bush has grown at a pace not seen since the 1960s. Second, smaller sized firms are exempt from many of the costly requirements being imposed on private capital--requirements that promote the overall weakening of property rights in the economy. This means that many are opting for self-employment to (a) avoid incurring the costs of regulation, or to (b) simply create work for themselves because firms that otherwise might have hired them have been forced to transfer resources from hiring labor toward regulatory compliance.
In any event, the rise in self-employment does not suggest the movement toward a free labor market. In fact, it could reflect the opposite. One wonders if the pols will be held responsible. (If so, we should probably look elsewhere than the New York Times.)
