March Jobs Report: Ten Percent of Workers Are Self-Employed, But Millions May Be Misclassified

Nationwide—The unemployment rate dipped slightly to 3.8% in March, while the economy added 303,000 jobs. Data released today by the Bureau of Labor Statistics also shows that 16.75 million workers were self-employed in March, accounting for approximately 10% of the total workforce. The share of self-employed workers has generally trended up since the start of the COVID-19 pandemic, with research suggesting that, as of 2022, increasing numbers of women, and especially women of color, are reporting self-employment.  

“Many workers thrive by running their own businesses,” said Rebecca Dixon, president and CEO of the National Employment Law Project (NELP). “At the same time, millions of workers who are not actually in business for themselves are cheated out of pay, benefits, and worker protections when their employers wrongfully classify them as self-employed independent contractors. That’s why it’s so important that the U.S. Department of Labor has now finalized a rule to ensure that only true independent contractors—people who run their own businesses—are left out of the vital protections established to safeguard employees.”  

In a recent Newsweek opinion article, Dixon highlighted the ways that employers attempt to dodge minimum wage laws, avoid unemployment insurance taxes, and evade other employment obligations by misclassifying workers, effectively creating a second-tier workforce. She noted that misclassification has been most prevalent in low-paying occupations where Black and immigrant workers are overrepresented, including home care, construction, and janitorial work. App corporations like Uber, Lyft, and DoorDash, which use technology to set and control working conditions, also profit by misclassifying employees as independent contractors. 

The unemployment rate for Black workers was 6.4% in March, a notable increase from last month’s rate of 5.6%. The unemployment increase was driven by rising unemployment among Black women, even as more Black women left the workforce in March. Overall, there were 181,000 fewer Black women employed in March than in February, a troubling sign for the direction of the economy. The unemployment rate for Latinx workers was 4.5% compared to a rate of just 3.4% for white workers. Unemployment among Asian workers was 2.5%.  Continuing disparities in unemployment rates are a result of structural racism in the U.S. labor market, including occupational segregation. 

The unemployment rate among unincorporated self-employed workers was 3.3% in March, compared to 3.9% among private-sector wage and salary workers outside of agriculture.   

When their work dries up, self-employed workers are generally not eligible for unemployment insurance. However, the Unemployment Insurance Modernization and Recession Readiness Act, introduced by Senators Ron Wyden (D-OR) and Michael Bennet (D-CO) and Representative Don Beyer (D-VA), would establish a new, federally funded Jobseekers Allowance to support jobless workers who are not otherwise covered by unemployment insurance, including not only self-employed workers but also people returning to the workforce after caregiving, extended illness, or incarceration, and new entrants to the labor market such as recent high school or college graduates. The bill would also strengthen unemployment insurance overall by mandating that states offer at least 26 weeks of unemployment benefits, raising benefit amounts to replace a greater share of workers’ prior earnings, and increasing coverage for part-time workers, temp workers, and workers whose earnings fluctuate over time. In addition, the bill modernizes the Extended Benefits program that makes additional weeks of unemployment benefits available in times of high unemployment.