New England Job Changes during the Recession: The Role of Self-Employment

by Katharine L. Bradbury
September/October 1994

During the recent recession in New England, the number of unincorporated self-employed individuals grew while all the other major classes of workers shrank. A shift into self-employment represents one part of a set of changes in the mix of workers and jobs that reflects the nature of the region's downturn and the economic adjustments it entailed. This article examines patterns of job and income change for different classes of workers in New England from the pre-recession peak year of 1988 to the recession-low year of 1992, with an emphasis on the role of the self-employed.

Income data suggest that the self-employed fared better than the unemployed during the recession, but their earnings declined more, on average, than the earnings of individuals still working for other employers in 1992. Thus, self-employment apparently represented a successful stopgap measure, for some, to keep earning after the loss of a wage and salary job, but typically at a lower level. A key question is the degree to which these adjustments will be reversed as the New England economy recovers.

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