Sep 2, 2022 - Economy

Why more women are self-employed now

Change in
<span style="background:#757575; padding:3px 5px;color:white;">total nonfarm</span> and <span style="background:#1085df; padding:3px 5px;color:white;">child care</span> employment
Data: Bureau of Labor Statistics, Center for American Progress; Chart: Simran Parwani/Axios

More women are self-employed now than prior to the pandemic — particularly Black and Hispanic women and those without bachelor's degrees, finds a new analysis from the Center for Economic and Policy Research.

Why it matters: The likely explanation here is not simply an explosion of entrepreneurship, but also a reaction to the childcare worker shortage. Mothers are scrambling to care for children at home and still earn money.

  • "A lack of access to childcare has made many women seek more flexible work arrangements in order to oversee their kids," write the authors of the piece.
  • And those with less education have a harder time finding jobs that allow for remote work.

By the numbers: Overall, in the first half of 2022, self-employment levels were up .4 percentage points  about 600,000 people — as compared to the period before the pandemic that the authors examined.

  • Drilling down, the share of employed women who report being self-employed rose by .7 percentage points to 8.2 percent. That's slightly more than twice the increase men reported.
  • Black women saw even bigger gains. The share of Black women who said they were self-employed in 2022 rose more than 1 percentage point, from 4.1% pre-pandemic to 5.2%. Hispanic women saw a similar increase. (For white women the number ticked up by .6 percentage points.)

Zoom out: There aren't enough people working in the childcare sector to meet demand. Employment levels are 8.4% lower than where they were in February 2020 — while overall employment in the private sector has recovered.

  • That means centers that look after very young children don't have enough staff and serve fewer families, write the authors of a new report released by the Center for American Progress (CAP) Friday morning.
  • "Every state has stories about programs having to slash capacity and even close permanently because they simply can't staff up. The reason is simple: programs cannot offer competitive compensation," says Elliot Haspel, an early-childhood policy expert and the author of "Crawling Behind: America's Childcare Crisis and How to Fix It."

"The child care industry was sick before the pandemic, now it's dying. It's a failed market, it's in a death spiral," Haspel says.

The bottom line: Despite this, there hasn't been a mass dropout by young mothers from the workforce, notes CAP associate director Rose Khattar.

  • The tight labor market and the rise in remote work allows some parents the flexibility to do, essentially, two jobs.
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