Self-Employment in the U.S.: Trends, Demographics, and State Comparisons

Self-employment remains a vital but often underappreciated segment of the U.S. economy. According to the U.S. Census Bureau, the nation’s 29.8 million nonemployer businesses—those with no paid employees—generated $1.7 trillion in receipts in 2022, accounting for about 6.8% of the U.S. economy. At the same time, just over 11% of U.S. households reported self-employment income in 2024, with significant variation across states. This article breaks down the latest official data on self-employment, including definitions, state comparisons, and the economic role of independent workers.

Key Numbers

• Total nonemployer businesses (2022): 29.8 million
• Total receipts: $1.7 trillion
• Share of U.S. economy: 6.8%
• Employer businesses: 8.3 million
• U.S. households with self-employment income (2024): 11.1%
• Highest state self-employment rate: Montana and Vermont, both 15.7%
• State with most nonemployer businesses: California, 3,502,950
• Highest average receipts per nonemployer: Delaware, $85,950

Explanation

Self-employment encompasses a wide range of economic activity, from full-time entrepreneurs and freelancers to part-time gig workers and independent contractors. The U.S. Census Bureau tracks self-employment primarily through two lenses: nonemployer businesses, which are firms with no paid employees, and self-employed workers identified in household surveys such as the American Community Survey (ACS). Nonemployer businesses are often sole proprietorships, partnerships, or single-member LLCs that operate without a payroll. They may be the owner’s principal source of income or a supplemental activity.

In 2022, there were 29.8 million nonemployer businesses in the United States, compared with 8.3 million employer businesses. This means that roughly 78% of all U.S. businesses have no paid employees. While nonemployers are numerous, their average receipts are much lower than employer firms, reflecting the part-time or small-scale nature of many self-employed ventures. Nevertheless, their combined $1.7 trillion in receipts underscores their collective economic weight.

State-level data reveal sharp geographic differences. Florida leads the nation in nonemployer establishments per capita, with 13.3 such businesses for every 100 people. California has the largest absolute number of nonemployers, while Montana and Vermont have the highest share of households reporting self-employment income. These patterns reflect differences in industry mix, population density, and economic opportunity.

Definition

In official U.S. statistics, a nonemployer business is a business that has no paid employees, is subject to federal income tax, and operates as a sole proprietorship, partnership, or other unincorporated form. Most nonemployers are self-employed individuals. The Census Bureau’s Nonemployer Statistics (NES) program counts these businesses based on administrative tax records. By contrast, an employer business has at least one paid employee. Self-employment can also be measured through household surveys, where individuals report whether they worked for themselves in the reference period.

Most nonemployers are self-employed individuals operating small unincorporated businesses, which may be the owner’s principal source of income.

How the Statistic Is Calculated

The Census Bureau derives nonemployer counts from federal tax data, specifically business income tax returns that report self-employment income but no payroll. Each distinct business entity with $1,000 or more in receipts is generally included. The American Community Survey, by contrast, asks individuals directly about their class of worker—whether they were employed by a private company, government, or were self-employed in their own incorporated or unincorporated business. The self-employment rate cited by Visual Capitalist is based on the share of households reporting any self-employment income, which captures both full-time and part-time self-employment.

Because these two methods measure different things—businesses versus households—the figures are not directly comparable. The 29.8 million nonemployer businesses count business entities, while the 11.1% figure refers to households with at least one self-employed member. Both are valid but answer different questions.

State Comparison

Self-employment varies widely by state, reflecting local industry structure, tax policy, and demographic factors. The table below summarizes key state-level indicators from the most recent Census Bureau data.

Florida’s high per capita rate reflects a large number of small service and real estate businesses, while California’s sheer population size drives its top ranking in total nonemployers. Texas leads in construction nonemployers, consistent with its large construction sector.

Ranking Table

Although a complete state-by-state ranking of self-employment rates is not available in the cited sources, the following table ranks the leading states on several self-employment metrics.

Montana and Vermont’s high self-employment rates are linked to their large agricultural sectors, where family farms and independent operators are common.

Largest States

In absolute terms, the most populous states naturally have the largest numbers of self-employed individuals and nonemployer businesses. California leads the nation with 3,502,950 nonemployer establishments, followed by other large states. Texas stands out for having the most nonemployer construction establishments at 376,379, reflecting its robust construction and real estate industries. Florida, while not the largest in total nonemployers, ranks first per capita, indicating a high density of small businesses relative to its population.

These large states also have diverse self-employment ecosystems, ranging from tech freelancers in California to energy and construction independents in Texas to tourism and real estate sole proprietors in Florida.

Smallest States

Smaller states can exhibit distinctive self-employment profiles. Delaware, one of the least populous states, has the highest average receipts per nonemployer at $85,950—well above the national average. This may reflect the presence of certain professional and financial services businesses that operate without employees but generate substantial revenue. Montana and Vermont, both small in population, have the highest share of self-employed households at 15.7%, driven by agriculture and rural entrepreneurship. These examples show that small states can be leaders in self-employment intensity even if their total numbers are modest.

Why It Matters

Self-employment is a key indicator of economic dynamism and individual economic opportunity. Nonemployer businesses contribute $1.7 trillion to the U.S. economy, about 6.8% of total output, and provide income for millions of households. They also serve as a pathway to business growth; some nonemployers eventually hire employees and become employer firms. Tracking self-employment helps policymakers understand labor market flexibility, the gig economy, and the health of small business formation. Moreover, self-employment can be a buffer during economic downturns, as displaced workers may turn to freelance or independent work.

Factors Behind the Trend

Several factors influence state and national self-employment rates. Industry composition is critical: states with large agricultural sectors, such as Montana and Vermont, tend to have higher self-employment because farming and ranching are often family-operated. Construction and real estate also support self-employment, as seen in Texas and Florida. Tax and regulatory environments can encourage or discourage business formation, though the sources do not provide specific policy analysis. Demographic factors, including age, education, and access to capital, also play a role. The rise of digital platforms and remote work has made self-employment more accessible in many occupations.

Limitations of the Data

Self-employment data have several limitations. Nonemployer statistics count business entities, not individuals, so a person operating multiple businesses may be counted more than once. The data exclude businesses with no receipts or those below reporting thresholds. Household surveys like the ACS rely on self-reporting and may undercount informal or intermittent self-employment. Additionally, the 11.1% household self-employment rate from 2024 is not directly comparable to the 2022 nonemployer business count because they measure different units and time periods. Users should interpret state rankings with caution, as small differences may not be statistically significant.

Source & Data Date

Primary source: U.S. Census Bureau, Nonemployer Statistics (NES), 2022 data released May 6, 2025, as reported in the Census Bureau story ‘Census Bureau Statistics Shed Light on Self-Employment by Sector and State During Small Business Week.’ Additional data on 2024 self-employment rates by state come from the U.S. Census Bureau as visualized by Visual Capitalist. Supporting methodological context is drawn from Census Bureau working papers on self-employment and the American Community Survey.