AMES, Iowa – Employees across the nation saw a significant impact during the COVID-19 pandemic, but a recent study by an Iowa State University sociologist shows it may have been the self-employed who were hit the hardest.
Samuel Mindes, adjunct assistant professor in rural sociology and sociologist with Iowa State University Extension and Outreach, tracked Current Population Survey data of nearly 238,000 individuals with findings that show self-employed workers were 2.4 to 4.7 times more likely than wage workers to face a work stoppage caused by the pandemic.
The study found that self-employed immigrants and people of racial and ethnic minorities were more adversely affected, and that women, non-whites and Hispanics were more adversely affected whether self-employed or working for someone else.
Mindes published his findings in an article titled “Self-employment through the COVID-19 pandemic: An analysis of linked monthly CPS data,” which appeared in a fall edition of the Journal of Business Venturing Insights – an international journal read by entrepreneurship researchers. The study and article were co-written by Paul Lewin, extension specialist with the University of Idaho.
“Prior to the pandemic, I was already studying self-employment and minority employment and as the pandemic worsened, we were starting to see that it was minorities who were being hurt the worst,” said Mindes.
In some cases, contrary to the overall trend, self-employed workers actually fared better. Self-employed workers with incorporated businesses, which have some legal and financial advantages, were generally more protected than informal entities. Also, in some industries, like agriculture, food service and accommodation services, self-employed workers fared better than wage workers.
“This pattern is not necessarily unexpected,” said Mindes. “In these industries, wage workers would be the first to lose their employment during an economic crisis. Self-employers may endure the impact and preserve their own employment, running their business at a lower capacity.”
Mindes continues to track employment data and demographics as new threats from COVID-19 continue across the globe. He said the results illustrate the disparity among self-employed and wage workers, and the way marginalized workers have been impacted the most.
“This sort of shows us the initial impact and disparity, where self-employers fared much worse,” he said. “That initial hit hasn’t balanced out between the employment sectors, and there are businesses that have never recovered and probably never will.”
Mindes is hopeful his study will be useful to others researching self-employment and wage work as a result of the pandemic. He said even for those workers who remained employed during the pandemic, employment alone does not necessarily reflect the disruptions and challenges they faced.
This research was supported by the Agriculture and Food Research Initiative (AFRI) award No. 2019-68006-29638 from the USDA National Institute of Food and Agriculture given to the University of Idaho.
- Self-employers were hit harder by the COVID-19 pandemic and recovered more slowly.
- The pandemic's impact on self-employers was less severe in hard-hit industries.
- Household composition had unequal effects across self-employed and wage sectors.
- Minorities face higher odds of pandemic-related inability to work overall.
- Different effects of additional human capital for self-employed and wage workers.
Photo credit: Manager of a bakery, by BullRun/stock.adobe.com.