Micro entrepreneurs an uncounted business sector

05/25/2014 7:18 AM

05/25/2014 7:18 AM

The micro-entrepreneurship site Etsy now has a more than a million sellers, individuals – overwhelmingly women – making things like barnwood cutting boards, hand-sewn tea towels and children’s toys out of their homes or small manufacturing plants.

You would not get any indication that many of them exist, however, if you looked at government data on traditional jobs and small businesses. Their businesses are so small as to get swept aside by the definitions of the Small Business Administration, which include more than 500 employees and millions of dollars in annual receipts.

“That would put Etsy the company in the same category as our sellers,” says Althea Erickson, Etsy’s public policy director (yes, Etsy has a public policy director). “That’s crazy.”

And the work these people do is either sporadic or so inseparable from personal life that it often doesn’t look like a “job.” Or a “second job” for that matter.

“They get shoved into the ‘bad jobs’ or ‘bad businesses’ frame,” Erickson says, “as opposed to being taken on their own terms.”

We tend to think these jobs are “bad” – or not even jobs at all – because they don’t come with benefits, because they seem part-time in nature, because they appear to have popped up in response to a bad economy.

And as businesses, we think they’re “bad,” too, because no one expects the woman who makes custom fire station playhouses to grow into the next Mattel.

In fact, according to Erickson, most Etsy sellers don’t particularly aspire to become big businesses, or to obtain the credit and investors that might get them there.

These people are, however, are engaged in business. They’re making money and producing something, after all.

But the government hasn’t counted what it calls “contingent workers” since 2005. You can tell the government that you’re self-employed, or that you have a “second job,” or a “part-time job.” But it’s harder to communicate that while you have a regular job at a coffee shop, and maybe even a temp job on the side, you also make money roughly eight hours a week stitching pillows for sale in your living room while you watch TV.

“If I were to ask the government for one thing, it would be to count this sector better,” Erickson says. “I feel like things aren’t real until they’re counted, often.”

The Bureau of Labor Statistics’ Current Population Survey asks questions like “Altogether, how many jobs do you have?” and “How many hours per week do you usually work at your other job?” But these questions assume that someone who gives a ride on UberX, or runs chores through TaskRabbit, or sells crafts on Etsy considers the activity a “job.” They also assume that all work can be counted in hours.

But how would you count the amount of time you spend hosting people on Airbnb, or giving rides in your car when you’re already on your way to the grocery store? And it’s particularly hard to measure work when the people doing it don’t consider themselves making “income” so much as rent or gas money.

Here are some more measurement conundrums: If you’re one of these “micro entrepreneurs,” how would you decide which parts of your “home office” you can write off on your taxes when the economic activity you do at home involves making bath products in your kitchen? How would you calculate your estimated quarterly self-employment taxes when 90 percent of your earnings come around the holidays?

We are, in sum, looking for answers to several questions:

• How many people are layering this type of Internet-enabled more nebulous work on top of more traditional labor?
• If micro entrepreneurs run the gamut from dabblers to full-time proprietors of a business of one (maybe two), how large is that universe?
• Then we might begin to ask questions about average earnings and economic impact, about who’s doing this as a last resort, and who thinks it’s “meaningful work.”

“That data is a huge part of what’s missing from the policy conversation,” Erickson says, although she defers to others to figure out how the government should pose the questions. “Once you have data to show scale, then people start to say, ‘Oh yeah, maybe this is something I should care about, maybe this is something we should start building public policies around.’ ”

At that point, we can start asking questions about how to enable “micro entrepreneurs,” whether they’re doing this work because of the crummy economy, or because they’d actually rather make hand soaps at home than work in a traditional office.

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