Erik Pages detailed the emergence of the 1099 economy in a recent New Geography article, in which he categorized 1099ers — workers outside traditional W-2 payrolls who file 1099 forms with the IRS — into several categories:
- Reluctant 1099ers (those who have no choice);
- Entrepreneurial 1099ers (sole proprietorships, LLCs/LLPs); and
- The “gig economy” workforce (film-makers, actors, writers, construction workers).
We’ve touched on the 1099 trend in several recent posts that focused on the sectors with the most proprietors and contract workers. EMSI uses data from the U.S. Bureau of Economic Analysis (BEA) and the Census Bureau to incorporate workers not covered by unemployment insurance — an estimated 23.5% of the workforce (up from 19% in 2001).
Now we want to look at the states with the highest proportion of non-covered — or 1099 — workers, according to 2011 EMSI employment estimates. Not all jobs included in this breakdown are occupied by proprietors; EMSI’s “Complete” dataset also includes railroad and military employees, farm workers, insurance and real estate agents receiving commissions, etc. Nonetheless, this is perhaps one unscientific way of measuring the nascent stages of entrepreneurship activity by state.
Montana Leads the Way in 1099ers
For the last decade, there’s been consistency at the top. Montana had the largest share of 1099 workers in 2001 and 2006 … and it still has the largest share in 2011 (nearly 30% of its overall workforce). The sectors driving 1099 growth in Montana include oil and gas extraction (read more here); construction; real estate; and professional, scientific, and technical services (e.g., accounting, tax prep, consulting services)
The next four states on the list — Idaho, Vermont, Oklahoma, and Colorado — are above the 27% mark.
State Showing Most 1099 Growth: South Carolina
Meanwhile, a slew of Southeastern states — South Carolina, Georgia, Florida — have made the biggest jumps in the share of noncovered workers over the last 10 years. South Carolina’s non-covered workforce has grown 8% since 2001; Georgia’s, 7.3%; and Florida’s, 6.4%.
Nevada and Michigan have also seen considerable increases (6.9% and 6.3%, respectively).
Every state has experienced 1099 growth since 2001 with two exceptions: North Dakota and Alaska. But it’s also worth noting both states’ 1099 workforces have increased, albeit slightly, since ’06. Each state has a considerable oil and gas extraction industry, which might be one explanation for the rebound.
On the other end of the spectrum, Washington, D.C. easily has the smallest share of non-covered workers (11.6%), which makes sense given the huge government workforce. Rhode Island and Virginia have the next-smallest percentages (20.4%), but both have almost twice the share of non-covered workers as D.C.
The breakdowns for each state are below. You can find any state your interested in by using the table’s search function. Feel free to email us or comment below if you have any questions.
Note: The table is ranked by the estimated share of 1099 workers in 2011.
| SHARE OF 1099 (NON-COVERED) WORKERS | |||
|---|---|---|---|
| 2001 | 2006 | 2011 | |
| U.S. | 19.0% | 21.5% | 23.5% |
| Montana | 27.5% | 28.0% | 29.4% |
| Idaho | 24.2% | 26.3% | 28.3% |
| Vermont | 24.1% | 26.4% | 27.8% |
| Oklahoma | 23.9% | 24.8% | 27.5% |
| Colorado | 22.1% | 24.6% | 27.3% |
| South Dakota | 25.2% | 25.7% | 26.3% |
| Utah | 20.9% | 23.9% | 26.1% |
| Wyoming | 23.6% | 24.0% | 26.0% |
| Tennessee | 21.3% | 23.4% | 25.8% |
| Maine | 22.4% | 24.4% | 25.6% |
| Texas | 20.8% | 24.1% | 25.6% |
| Oregon | 21.4% | 22.9% | 25.3% |
| California | 21.3% | 22.7% | 25.2% |
| New Hampshire | 20.9% | 23.7% | 24.9% |
| Georgia | 17.4% | 22.3% | 24.6% |
| Florida | 18.1% | 21.7% | 24.5% |
| Connecticut | 18.6% | 22.3% | 24.4% |
| South Carolina | 16.4% | 21.9% | 24.4% |
| Kansas | 21.5% | 22.2% | 24.3% |
| North Dakota | 24.7% | 23.8% | 24.0% |
| Alabama | 18.6% | 21.6% | 24.0% |
| Mississippi | 19.1% | 21.9% | 23.9% |
| Louisiana | 18.2% | 22.4% | 23.7% |
| Missouri | 20.7% | 22.2% | 23.5% |
| Maryland | 18.4% | 21.5% | 23.5% |
| Iowa | 22.1% | 22.5% | 23.4% |
| New Mexico | 20.0% | 21.2% | 23.1% |
| Arkansas | 20.7% | 21.8% | 23.0% |
| Washington | 20.3% | 21.6% | 23.0% |
| Arizona | 18.1% | 20.1% | 22.9% |
| Michigan | 16.6% | 20.7% | 22.9% |
| Minnesota | 19.5% | 21.4% | 22.9% |
| Nevada | 16.0% | 19.1% | 22.9% |
| Alaska | 23.1% | 22.2% | 22.8% |
| North Carolina | 18.0% | 20.8% | 22.8% |
| Nebraska | 21.2% | 22.1% | 22.7% |
| Kentucky | 19.8% | 21.1% | 22.4% |
| Hawaii | 19.3% | 19.6% | 22.3% |
| New Jersey | 16.2% | 20.1% | 22.2% |
| New York | 17.4% | 20.1% | 22.1% |
| Massachusetts | 18.2% | 20.9% | 22.0% |
| Illinois | 17.2% | 19.5% | 22.0% |
| Pennsylvania | 17.8% | 19.7% | 21.3% |
| West Virginia | 19.1% | 19.6% | 21.2% |
| Wisconsin | 17.5% | 19.8% | 21.2% |
| Ohio | 16.8% | 19.1% | 21.2% |
| Delaware | 15.0% | 18.7% | 20.9% |
| Indiana | 17.7% | 18.8% | 20.7% |
| Virginia | 16.6% | 18.7% | 20.4% |
| Rhode Island | 15.9% | 18.3% | 20.4% |
| D.C. | 10.1% | 10.7% | 11.6% |
For more on EMSI Data, see here.
Illustration by Mark Beauchamp
Are you able to pull out data at a county or msa level for 1099 employment. And, can this information be provided by major industry sector, such as mining/farming, professional services, manufacturing, biotech, etc. Finally, do you have examples of states or regions that have developed tax, labor or other policies to entice and grow 1099 employment? Thank you.
Yes. We are able to do look at 1099ers by county/MSA and by industry (or occupation). See this post for a county-level look at noncovered employment: http://www.economicmodeling.com/2011/08/08/the-spread-of-1099-workers-throughout-the-u-s/ and this post for the data by super sector: http://www.economicmodeling.com/2011/04/29/independent-contractors-other-noncovered-workers-on-the-rise/
As for your last question, the economic gardening movement (e.g., in Florida with GrowFL) is focused on stage two businesses and entrepreneur-centered economic growth. So that’s one possible example. Other, perhaps better examples might be out there.
Thanks for the questions,
Josh