Olin Wrigh, Erik-The Fall and Rise of Petty Bourgeoisie (1989)

The Fall and Rise of the Petty Bourgeoisie: Changing Patterns of Self-Employment in the Postwar United States Author(s):
George Steinmetz and Erik Olin Wright Source: American Journal of Sociology, Vol. 94, No. 5 (Mar., 1989), pp. 973-1018 Published by: The University of Chicago Press Stable URL: http://www.jstor.org/stable/2780465 . Accessed: 20/05/2013 16:40
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The Fall and Rise of the Petty Bourgeoisie: Changing Patterns of Self-Employment in the Postwar United States'
GeorgeSteinmetz University ofChicago Erik Olin Wright University of Wisconsin-Madison
This articleexploresthe historical trajectory of the self-employed since segment of the labor forcein the UnitedStates,particularly 1940. Self-employment declinedin theUnitedStatesalmoststeadily fromthe 19thcentury to the early 1970s. Since then,it has risen ofthe in thehistorical fortunes everyyear. Explainingthisreversal is the centraltask of thisarticle.We reach four pettybourgeoisie basic conclusions:first, the reversalin the declineof the self-emand robustacrossa rangeofdefiniployedis statistically significant tionsof self-employment is nota simple rates.Second,thisreversal sincethe countercyclical responseto theincreasein unemployment middle 1970s. Third, part of the resurgence of self-employment resultsfromthe expansionof various postindustrial servicesthat tendto have higher levelsof self-employment within them.Within been any postindustrial sectors,however,therehas not generally a significant increasein self-employment. Fourth, partoftheexpansion of self-employment is explainedby an increasein self-employmentwithinmostof the traditional sectorsof the industrial economy. Thomas Jefferson ([1786] 1984, p. 580) argued 200 years ago that the prospectof self-employment justifiedwhateverdepredations accompanied indentured service and wage labor: "So desirousare the poor of Europe to get to America,wheretheymay better theircondition, that, beingunable to pay theirpassage, theywill agree to servetwo or three yearson theirarrivalthere,rather than not go. Duringthe timeof that
1 We wouldliketo thank Bill Martin and Cheryl Knobeloch for technical assistance. Rebecca Emigh,Thomas Hagelstange, Marta Tienda, Loic Wacquant,Hal Winsborough, and severalanonymous reviewers are gratefully acknowledged fortheir comments. Requests forreprints shouldbe sentto George Steinmetz, Department of Sociology, University ofChicago,1126East 59thStreet, Chicago,Illinois 60637.
? 1989 by The Universityof Chicago. All rightsreserved. .50 0002-9602/89/9405-0002$01
AJS Volume 94 Number5 (March 1989): 973-1018
973
Journal of Sociology American labour than clothed,and have lighter fed,better servicetheyare better they buy to workforhirea fewyearslonger, whilein Europe. Continuing a farm,marry,and enjoy all the sweets of a domesticsocietyof their AbrahamLincoln([1865] 1907, own." In the middleof the 19thcentury as the naturalrouteto individualprosp. 50) also saw self-employment in the world labors forwages "The prudentpennilessbeginner perity: then awhile,saves a surpluswithwhichto buytoolsor land forhimself, labors on his own account anotherwhile, and at lengthhires a new to helphim."And even in thewaningyearsofthe20thcentury, beginner Ronald Reaand powerful governments, in an era of large corporations Speakingat the awards ceregan extolsthe virtuesof self-employment. monyforthe National Small Business Personof the Year, Reagan reand thedruggist thatthoseshopkeepers marked:"I am vividlyreminded businessmen and and the feed storeownerand all of thosesmalltown and were also women made our town work, buildingour community, ournation.In so manyways,youheretodayand yourcolleagues building America'spioneerspirit.... You also hold represent acrossthecountry that It's in yourdreams,youraspirations future. thepromise ofAmerica's of will be moldedand shaped"(PublicPapers ofthePresidents ourfuture the UnitedStates: Ronald Reagan 1983, p. 689). is a deeplyheld ideal in Being one's own boss, being self-employed, in a nationalU.S. survey culture.As table 1 (col. 1) indicates, American of adults in the work forcein 1980, 57% of all people in the American wouldlike say thatthey ofall male workers working class and two-thirds barriers mayexistto whatever to be self-employed Moreover, someday.2 the ideal is not a completefantasy.Rather,a becomingself-employed, with has personalexperience partof theU.S. population verysignificant and data While, depending on precise definitions self-employment. in theUnitedStateswere sources,onlyabout 8%-14% ofthelaborforce at in 1980, an additional 17% have been self-employed self-employed some timeduringtheirwork lives (almost21% formen), whichmeans ofthemalelabor and a third ofthetotallaborforce, thatat leasta quarter When we turnto the backforce,eitheris or has been self-employed. 32% comefrom nearly in thelabor force, currently ground ofAmericans mostof in which the head of the householdwas self-employed families in the timewhile theywere growing up, and 46% come fromfamilies whichthe head of householdwas self-employed at least partofthetime. Finally,when Americanswere asked to describethejobs of theirthree was selfbest friends, 31% indicatedthat at least one of theirfriends ofAmericans two-thirds Whenwe takeall thesedata together, employed.
2 Thiscorroborates study suchas Chinoy's sociological research, from earlier evidence automobile factory (Chiin a midwestern aspirations from theearly1950sofworkers' noy1955,chap. 7).
974
PettyBourgeoisie in the labor forcehave some personal linkage to self-employment by havingexperience ofself-employment, by coming from a family in which thehead ofhousehold was self-employed, or byhavinga closefriend who is self-employed. is thusa centralpart of boththe culturaland social Self-employment fabricof Americanlife. Yet, remarkably, self-employment has received almostno systematic empiricalstudyby sociologists. When sociologists studystratification, it is rarethatself-employment is treated as a distinct question. The typicalclass schema for sociologicalstudies runs from upper-white-collar to lower-blue-collar and farmoccupations,and the self-employed are fusedwiththesecategories according to their occupational activities.3In a keywordsearch of the major recentEnglish, French,and Germanliterature in sociology, economics, and history, we were able to findonly about 20 articlesthat dealt centrally with the questionof self-employment different (as opposedto thesomewhat questionsof small businessor the "informal economy"), none of whichconstituted a rigorous statistical of the category.4 investigation The basic objectiveof thisarticleis to beginto remedy thisabsenceof itshistory systematic empirical research on self-employment byanalyzing in the UnitedStates,particularly in thepost-WorldWar II period.The articlewill revolvearounda striking feature of thetrendin ratesof selfemployment in the labor force:on the basis of the best available time series,it appearsthatbetween1940and 1973there was a virtually monotonicannual declinein the rateof self-employment in the UnitedStates, from around20% to under10%; from1973 to 1976 theself-employment ratewas basicallystable,butsincethenthere has beena slight butsteady
Goldthorpe. Goldthorpe makesa point ofdistinguishing sometypes ofself-employed from wage laborers in his occupationally based hierarchy of classes(see Goldthorpe 1980). 4 The literature specifically on smallbusinesses is muchlarger (as is theliterature on the informal economy) but has a different object. Granovetter (1984) and Rainnie (1985)deal with a paradox somewhat similar totheoneaddressed here, thepersistence of smallestablishments, whilePortesand Sassen-Koob (1987) notethe survival of smallestablishments" "very without an explanation. offering The morerecent sociological and economic literature on theself-employed includes: Baudelot, Establet, and Malemort (1974); Bechhofer and Elliott(1978, 1981, 1985); Becker(1984); Berger (1981);Bertaux and Bertaux-Wiame (1981);Bogenhold (1985);Bregger (1963);Burris (1980); Cuneo (1984); Curranand Burrows(1986); Dale (1986); Daly (1982); Fain (1980); Gagliani (1981); Hagelstange(1986, 1988); Leppert-Fogen (1974); Linder (1983);Mayer(1977); Ray (1975); Scase and Goffee (1980, 1982);Van Regemorter (1981);Weiss(1984);and Zarca (1979).In addition, there are a number ofhistorical studies on theUnitedStatesand Europedealingcentrally withtheself-employed in general (i.e., notfocusing on specific occupations): Blackbourn (1984,1985);Crossick (1978);Geiger (1932);Gellately (1974);Grunberg (1932);Haupt (1985);Philips (1962); Volkov(1978);and Winkler (1972).
3One partial exception to thisis thework on stratification and socialmobility ofJohn
975
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Journalof Sociology American

UNITEDSTATES SELF-EMPLOYMENT RATES, 1948-1984
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SELF-EMPLOYED0 UNPAID FAMILY AS % OF ADULTPOPULATION MEMBERS .%

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1945
1950
1955
1960
1965
1970
1975
1980
1985
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FIG. 1. -U.S. self-employmentrates, 1948-84. (Source.-U.S. Labor, Employment and Earnings.)
Department of
(see fig.1). By 1984thatratewas increasein therateof self-employment overa decade earlier.What 15%-20% higher thanit had beenjust a little a reis the explanationforthis ratherdramaticchange?Does it reflect in theAmerican sincetheearly1970s?Is it economy sponseto stagnation an aspect of the transition to a "postindustrial" economy,in which a little involving relatively physical variety of new kindsof services,often changingownershippatterns capital, are growing?Or does it reflect withinoldersectorsof the economy? These are the questionswe will try to answer. Beforewe can examinethisempiricalproblem,however,the concept This ofself-employment a morerigorous theoretical elaboration. requires is the task of SectionI below. This will be followedin SectionII by a discussionof the data we will use and various measurement problems. SectionIII willthenpresent a statistical analysisoftheannual time-series data forthe UnitedStatesin thepost-WorldWar II period.The central that therehas indeed been a objectiveof this sectionis to demonstrate reversalin the decline of the pettybourgeoisieand that this reversal ofcyclicalunemployment the cannotbe seen as simply a reflection during 1970sand 1980s.Finally,in SectionIV we willdecomposethechangesin foreach decade between1940and 1980intocomponents self-employment withineconomicsectorsand attributable to changesin self-employment
978
PettyBourgeoisie components due to changesin the distribution of the labor forceacross economic sectors. This willallow us to pinpoint exactly wherethecurrent expansionof self-employment is occurring. I. THEORETICAL ISSUES IN THE STUDY OF SELF-EMPLOYMENT A. The Conceptof Self-Employment Self-employment means,literally, beingemployed by oneselfand is primarilycontrasted to two otherconditions: beingemployed by someone else (a wage earner)and earning an incomewithout at all beingemployed (i.e., a rentier of one sortor anotherwho receivesan incomewithout theintersection The category thusdescribes working). "self-employment" one's incomedeof two dimensions of economicrelations: whether first, in orderto whether pendson sellingone's capacityto workand, second, A self-employed workone has to enterthelabor market. personis someone who earnsan incomeat leastin partthrough hisor herownlaborbut notby sellinghis or herlabor powerto an employer fora wage. In these a self-employed hire workers or terms, personmay may employno one but would be distinguished rentier froma passive, coupon-clipping (a These "rentier capitalist") receiving an incomestrictly from investments. are displayedin table 2, whichpresents a descriptive alternatives typolfrom otheremployment the self-employed ogyfordistinguishing categories. accountof the cateTable 2 does not, however,providea theoretical gory"self-employed." One analytically powerful way of accomplishing thisis through theMarxian contrast betweensimplecommodity productionand capitalistcommodity In commodity the production. production conproductsof labor are meant to be exchangedratherthan directly
TABLE 2 THEORETICAL CRITERIA FORSELF-EMPLOYMENT

Does Not WorkforIncome Worksforan Income
Hires labor power .......... Neitherhiresnorsells labor power............. Sells labor power ...........
Rentiercapitalists Domesticworkers, welfareunderclass, permanently disabled Unemployed
Entrepreneurial capitalists Pettybourgeoisie Workers
NOTE;.-The cellsmarked"Entrepreneurial capitalists" and "Petty bourgeoisie" composethecategory " "Self-employed.
979
American Journal of Sociology sumedby theproducer and his or herprimary social group,as is thecase all direct forsubsistence production.5 In simplecommodity production, and thusown producers of commodities own theirmeans of production the productsof theirlabor and sell them on the market;in capitalist do notown commodity production, the directproducers (theproletariat) labor themeansof production and thus,in orderto work,mustsell their power on the labor marketfor a wage to the ownersof the means of production, who consequently own and sell products of labor. are thuslocated The directproducers in simplecommodity production in a distinctive "mode" of production that should not simplybe amalin simgamatedwithcapitalismas such.6Although thedirectproducers bourgeoisie, ple commodity production are frequently called the "petty" as "little"capitalistssince theyproduce theyshould not be understood are of production.7 Pure petty bourgeois underquite different relations from in thatthey do nothireand exploit wage laborers; distinct capitalists theyare distinctfromworkersin that theyown theirown means of production and do not sell theirlabor poweron thelabor market. Actualsocieties, ofcourse,are nevermade up ofpuremodesofproduc(1985, p. 11), tion,whether capitalistor other.As Wolpe (1980), Wright and othershave argued, actual societiesshould be analyzedas specific combinations of modes of production.For the category"self-employemployers-comment,"thisimpliesthatcertainself-employed-small class. bine characteristics of thepurepetty and thecapitalist bourgeoisie Such positions are an exampleofwhatWright (1978)called a "contradic" a locationthatis simultaneously situlocationwithin tory class relations, ated in two distinct forms of class relations. (Since mostsmallemployers are indeed very small-in 1980 over 50% of all employers employed fewerthan five employees-Marxists generally assume that the petty locationsis dominant,and thus, bourgeoispole of such contradictory are descripsmall employers and the pure pettybourgeoisie typically, The tivelycombinedin a moregeneralpettybourgeoisclass location.)8
5 The concept ofsubsistence production is notrestricted to cases where theproducer directly consumes hisorherproduct butincludes caseswhere this product is consumed bytheproducer's family orcommunity without themediation ofan exchange relation. 6 It maybe objected thatsimplecommodity production shouldnotbe treated as a proper "mode"ofproduction, coequalto capitalism orfeudalism in theMarxist typologyofmodes ofproduction. In this context we areusing theterm simply todesignate a distinctive way of organizing the relations of production and are thusnot distinguishing ofproduction between "forms" and "modes" ofproduction. 7 Indeed, as John Roemer (1982,chap. 2) has argued, many petty bourgeois mayeven be exploited by capitalists through unevenexchanges on themarket. 8 Throughout thisarticle, whenwe wishto refer to theself-employed whoemploy no wagelabor,we willuse theterm "pure The unmodified petty bourgeoisie." expression willinclude smallemployers as well.
980
PettyBourgeoisie empirical category "self-employment" available from such as the surveys censusthuscombines thepurepetty conceptually distinct class locations: bourgeoisie, the entrepreneurial capitalistclass, and small employers. B. The HistoricalTrajectory of Self-Employment in MarxistTheory TraditionalMarxisttheory offers a specific accountof the history of the In historicalterms,simplecomvarious sectionsof the self-employed. modity production is generally regardedby Marxistsas a formof precapitalistproduction, as one of the forms of production thatexistedin in the feudal societyand that gained particularhistorical importance in simple transition feudalism rooted from to capitalism. Social categories and so commodity production-peasants, artisans,small shopkeepers, on-are therefore as categories generally seen as a kindof anachronism, whose long-term social existenceis continually eroded by the dynamic forces of capitalism. More specifically, Marx identified causal processes that two long-term shape the fateof both the pettybourgeoisie and small employers (e.g., [1867] 1977, pp. 776-81). First, thereis an inherent forthe tendency expansionof capitalismto destroyall precapitalist formsof economic relations. At timesthisdestruction takes a violentand politicalform, as when"bourgeois revolutions" abolishcertain kindsofprecapitalist propertyrelations(slavery,feudalism).Other timesthe destruction of precapitalistrelationsproceedsby a strictly economicerosionof theireconomic viability,as characteristically occurs in the decline of simple In either commodity production. case, the resultis thatan ever broader rangeofeconomic activity is directly organized within capitalist relations. The second long-term causal processthat shapes the fateof self-emis the "concentration ployment and centralization of capital." As capitalismdevelops,so the story goes, not onlydoes simplecommodity production dwindle, but there is also a tendencyfor capitalistunits of accumulation to becomelarger bothrelatively and absolutely. Because of increasing returns to scale, capitalistcompetition selectsagainstsmaller unitsofproduction, and thus,overtime,theproportion ofthelaborforce thatworksin smallenterprises shoulddecline.This in turn would reduce the proportion of small employers in the population. Taken together, thesetwocausal processes led Marx and latertheorists to predict thatthe petty bourgeoisie (understood as smallemployers and the "pure" pettybourgeoisiecombined)would graduallywitheraway underthe dual pressure of the destruction of simplecommodity productionand theconcentration/centralization ofcapital.Thus, for example,at theturn ofthecentury theGermanSocial Democratic theorist Karl Kauttheinexorable skypredicted demiseofartisans, family farmers, and small
981
American Journal of Sociology businesses:"The factorynow rules and the artisan'sdays are numbered.... The complete disappearance [ouremphasis] ofthesmallbusiness sectoris . . . thelast act of thetragedy" (Kautsky1902,pp. 21, 25). This is echoedin theworkofrecent Marxists suchas ErnestMandel,who writesthat"the history of capital is the history of the destruction of the property of manyforthe benefit of an ever smallerminority" (Mandel 1972, p. 193).9 Certainly on a broad historical scale, this has been one of the most robust ofMarx's predictions (at leastin theadvancedcapitalist countries; in the developing on the persistence of highself-employment world,see Portesand Sassen-Koob[1987,p. 35]). As table3 indicates, in theUnited decline States,France, and Germany, therehas been a steadylong-term in self-employment from around40% of thelabor force100 yearsago to 10%-15% of the labor forcetoday. in the classicalMarxistarWhilewe thinkthereis considerable merit gument, there are two considerations thatsuggest thatitneedssignificant over modification. First,giventhemassiveness ofcapitalist development the past 100 years,one mighthave expected(in lightof the theoretical claims of the classical Marxist argument)that the pettybourgeoisie should have virtually disappearedby now. Instead of seeingthe drop from 40% to 10%-15% of thelabor force as unequivocalconfirmation of theclassicalargument, ofas much perhapswe shouldsee thepersistence as 15% of the labor forcein self-employment as evidencethatthe argumentwas deficient. If thetacitprediction ofthetraditional is that theory in theera ofmultinational theexpectedlevel of self-employment monopofthelaborforce, then15% is olycapitalism shouldbe onlya fewpercent indeedhigh. Second, and perhaps even more telling,thereare strongindications thatthe erosionof self-employment has at least temporarily stoppedin many advanced capitalistcountriesand, perhaps, has even been reversed.Table 4 presents for theninecore annualdata on self-employment European countries.In four of these countries-Italy, Belgium, the UnitedKingdom,and Ireland-there was a fairly steadyincreasein the between the mid-1970sand self-employment rate outside agriculture the mid-1980s.Overall in the nine countries, rate the self-employment in was nearlystable duringthe same period.Whileof coursethisarrest thehistorical be temporary, it declineofthepetty bourgeoisie maysimply does suggest at a minimum thatthe classicalMarxistargument needsto
9 Other recentpredictionsof a continuingdecline in self-employment based on similar Marxist argumentsinclude Szymanski (1983) and Burris (1980).
982
PettyBourgeoisie be supplemented by an accountof the mechanisms thatreproduce, and perhapseven expand, the petty bourgeoisie.10 C. Alternative Explanationsof the Stabilization and Rise in Self-Employment Varioustheories, some of themcompatible withMarxism(ifnotwithits "classical"variant),suggest in selfexplanations fortheobserved reversal employment rates. Our examination in the United of self-employment Statesin the postwarperiodwill addressthreeof themdirectly. Self-employment as countercyclical response.-One suggestion from historical literature is that-the growth ofself-employment is a micro-level responseby workers to economicduress;thisproducesshort-term countercyclical responsesof self-employment to unemployment. Historical studieshave demonstrated countercyclical increasesin self-employment and small businessstartsin the United States (Ray 1975; Alderfer and Mitchell1950,pp. 431-34; Linder1983),France(Steinmetz 1983,pp. 46, 285), and England, whereworkers used part-time self-employment as a "cushionagainstperiodicunemployment," from theTudor periodto the present (Pahl 1984, pp. 47, 96; see also Samuel 1975). Much of thework on the "informal," or "underground," economy arguessimilarly thatinformalself-employment is a responseto crisisand poverty (Portesand Sassen-Koob 1987; Mingione1983; Huber 1982, pp. 123-25).1"We will
10SomeMarxist authors suggest thatMarx'sontogenetic account oftheprecapitalist factof its origins of petty commodity production does not rule out the structural continual reproduction, and under certain circumstances evenexpansion, within capitalism itself (Luxemburg 1951;Mandel1972,pp. 195-96;Hagelstange 1986,pp. 197or arguethatin various 99). Theseauthors focuson the"pioneer role"ofsmallfirms services (repair shops, etc.)andother branches, smaller units aresimply more efficient. Thus, contrary to themorehistoricist Marxist treatments, thepetty bourgeoisie may notbe an anachronism at all but,rather, a dynamically important element ofcontemporary capitalism. In most Marxist approaches there is nonetheless an assumption that as sectors age, self-employment willeventually givewayto centralized massproduction. " The unifying dimension ofthe"informal" sector inthis literature is that itis centered on activities notreported to thestate.Whileunreported activities are by definition excluded from changes in self-employment drawnfrom official Portes statistics, and in the Sassen-Koob arguethatdespite failure fully to report earnings and casualhires "informal economy," theself-employed themselves generally do appearin official statistics becauseofregulatory enforcement ofbusiness licensing (1987,p. 42). In Britain, officials haveexplicitly argued thatinformal "self-employment . .. reduces theactual levelofunemployment" (Report oftheHouse ofLordsSelectCommittee on Unemployment 1982,cited in Pahl 1984,p. 121).As Huberwrites, "Unemployment drives many intotheunderground [economy]" (1982,p. 124).
983
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PettyBourgeoisie testfora countercyclical logicbyrelating ratesto unemself-employment ployment. Postindustrialism. -While theorists who analyzecontemporary social trends withconceptsof the postindustrial or "information" society have not systematically addressedthe questionof self-employment, theirgeneral arguments about theeffect of new technologies suggest thata risein self-employment might be partof a qualitatively new phase of economic development (Bell 1973; Touraine 1971; Hirschhorn 1984; Huber 1982; Nora and Minc 1978). Within such an interpretation, an increasein selfemployment can be expected,not because the forces driving centralizationand concentration have in generalceased to operate,butbecausethe emergent sectorsare more decentralized and heavilyweightedtoward at leastat theoutset.One ofthehallmarks ofpostindusself-employment, trialism, it is often argued,is theimportance of knowledge, communications, and information. One mighthypothesize that the expansionof various kinds of "high-tech" servicesopens up greaterpossibilities for self-employment sincein manyinstances theseservices requirerelatively littlephysicalcapital. We will examinethe plausibility of thesekindsof expectations bylooking at thespecific economic sectors thathave contributed mostto the expansionof self-employment in recent years. in the olderindustrial Decentralization sectors. -Finally, severalapproaches predictthat small firms (and hence self-employment) should becomemoreprevalent even in theolder,nonpostindustrial ofthe sectors in response economy, to contemporary macroeconomic changes.Michael Piore's model of "dual industrial structure" argues that smallerfirms, withtheir moreflexible forms ofproduction, are better suitedthanmassproduction firms to markets characterized by fluctuating or low levelsof demand(Piore 1975, 1980; Sabel 1982,pp. 34-37; Pioreand Sabel 1984, pp.26-28, 56-57). 12 Moderncraft is thusnotan atavismbut production a "necessarycomplement to mass production" (Piore and Sabel 1984, p. 27). This view of technologically based dualism can accountforthe upsurgein self-employment as a responseto the challengesto business from increased international competition and less stabledemandsincethe early 1970s. Small firms have particular advantagesin adaptingto the challengeof "flexible specialization" (pp. 248-49), and self-employment mayalso be raisedby theresponses ofolderfirms-federated enterprises with"solar firms," or orbiting and the breakdownof vertical suppliers,
12 Managers of mass-production firms orient their productive capacities to thestable component of demand,whichis demandat the bottom of the business cycle.The "secondary" sectorof the economy, withits less specialized, product-specific techniques, persists becauseitcan better meet the component ofdemand fluctuating (Sabel 1982,p. 35). Pioreand Sabel (1984)also see theadvantages ofsmaller firms inprovidingcertain services and specialized machinery formass-production firms.
987
Journalof Sociology American integration (pp. 282-84; see also Huber 1982,pp. 168-69; Scherrer 1988, or servicesec1989). These changesare not seen as limited to emergent tors.In contrast to the postindustrial thisview arguesthat perspective, less centralized ownershipstructures may emergein all sectorsof the economy, including the older,morebasic industries.
II. DATA AND METHODS
In therestofthispaperwe willattempt a preliminary empirical examinationof thesehypotheses. The view ofself-employment as countercyclical responsewill be assessed using a time-series analysisof the effects of unemployment on self-employment. Postindustrialism and decentralizationwill be assessedindirectly usinga shift-share analysis.In thissection we will first describethe data used in the time-series and shift-share analysesand will thendiscussbothtypesof methodology. A. Data Used in the Annual Time-Series Analysisof Self-Employment forthe UnitedStates labor-force data forthe measures.-The time-series Self-employment analysisof self-employment are takenfrom the Current PopulationSurofLabor vey(CPS) statistics, publishedmonthly bytheU. S. Department 13 The annual seriesconcern in Employment thesize ofthe and Earnings. civilianlaborforce, thework-age theannualaveragenumber population, and unpaid family workand the number of self-employed unemployed, we ers. All statistics refer to civiliansaged 16 or over. For mostpurposes, consider members" but we "unpaid family partof "totalself-employed," as will presentthe data for the more formally definedself-employed well.14
13 The CPS self-employment ratesare almostidentical to thoseyielded by another source, theNationalIncomeand Product Accounts oftheUnited States, published by theU.S. Department ofCommerce. 14 Manysmallbusinesses In suchcases it and farms are runas "family" enterprises. often makes little sensetodescribe onemember ofthefamily (typically thehusband) as as "unpaid "self-employed" and the others(typically the wifeand adult children) and gender relafamily workers." Whilesuchlabelsmayreflect cultural conventions tions,we consider theessential class location of thesetwo categories to be identical (contra Cuneo 1984,p. 294).Whenwe refer to"self employed" or"petty bourgeoisie," therefore, thiswillinclude unpaidfamily workers, unlessexplicitly stated otherwise. Whenwe wishto refer to theself-employed, ofunpaidfamily we exclusive workers, willuse theexpression "formal self-employment." We also analyze thetwocategories separately (seeApp. B). Thisis becauseunpaidfamily workers mayrespond todifferentforces thanthepaid self-employed. Pahl (1984)and Gershuny (1978)argue,e.g., that self-provisioning is increasing, especially intheBritish "middle mass."Thesenew forms ofhousehold work mayshowup inofficial statistics as "unpaid family workers," butnotas self-employment.
988
PettyBourgeoisie Estimating thenumber ofself-employed is morecomplicated after 1967 thanforthe earlierperiodbecause of changesin censusand CPS procedures.Sincetax laws made itprofitable formanybusinessmen to incorporate and technically become employeesof theirown corporations, the CPS and thecensusbeganclassifying suchpersons 15 The as wage earners. critical questionnaire itemthatis used to producethisclassification does notappear on thepublic-release CPS data tapes,and thusitis impossible to reclassify the"incorporated self-employed" from thewage-earner to the self-employed category. This resultsin a seriousunderestimation of the numberof people who, accordingto the sociologicaldefinition, are selfemployed. If the proportion of theself-employed who incorporated were constant, thenit would not be a particularly difficult task to adjust the annual estimates. Unfortunately, thisis notthecase. On thebasis ofdata other thantheCPS, it appearsthatin 1967about 10.5% ofthe"true" selfemployedwere incorporated (and thus misclassified as wage earnersin the CPS), whileby 1982 thissharehad risento 23.9%.16 In orderto have a consistent annual timeseriesof self-employment, therefore, we facedthetaskofcorrecting fortheseunderestimates; otherwise, changesin the nominalself-employment rate mightsimplyreflect changesin the proportion of self-employed who chose,forlegalistic reasons,to incorporate their businesses.Fortunately, we wereable to obtain estimates of the proportion of all self-employed who were incorporated for four years:1967,1975, 1978,and 1982.17 On thebasis ofdata for these years,we wereable to estimate theintermediate figures withlinearinterpolation,and thefigures after1982 by linearextrapolation. The method used to correct these figures guaranteesthat if we have erred,it is by underestimating ratherthan overestimating the increasein self-employ18 mentrates.
15 Some of the advantages of incorporation by the self-employed are discussed in Alston (1978). 16 These estimates comefrom Fain (1980)and Becker(1984). 17 Thesedata are from articles in theMonthly LaborReview,published by theU.S. BureauofLabor Statistics (Fain 1980;Ray 1975;Becker1984). 18 Our correction factor is conservative forthefollowing reason.We usedinterpolations and extrapolations tocalculate an "inflation factor" bywhich tomultiply theCPS self-employment figures. This inflation factor was appliedonlyto theformal "self" It mayalso be thecase,ofcourse, employed" figures, notthe"unpaid family workers. thatsomeunpaidfamily workers have beenconverted to paid employees ofan incorporated business as well. However,it seemsunlikely thatthisis as common as for peoplewhowereformally self-employed, and, in anycase,we had no wayofestimatingtheproper inflation factor forunpaidfamily workers. Our estimates oftotalselfemployed, therefore, are basedon a corrected figure for formal self-employed plusan unadjusted figure forunpaid family workers (thusunderestimating the totalselfemployed). Since the rateof incorporation has increased in thisperiod, thismeans
989
American Journal of Sociology is thatone would expectthe rateof One problemwiththisprocedure sectorthan in the incorporation to be much lower in the agricultural however, sector.The fourdata pointson incorporation, nonagricultural sector.Fortunately, the 1970census werenotbrokendown by industrial by sector.We therefore data do permita breakdownof incorporation from the 1970 census-96% of the incorporated applied the proportions 4% in agriculture-toour interpolated self-employed in nonagriculture, 19 estimates forthe annual timeseries. and extrapolated It might be objectedthattheuse ofsuch interpolated in a time-series bias the results.20 analysismightsignificantly estimates First,we Thereare tworeasonswhywe feelthisis nota seriousproblem. ratesas self-employment or extrapolating are not actuallyinterpolating to the annual CPS data neededto correct such but onlythe adjustments all we estimated forincorporation. Second, and of utmostimportance, and, figures, thetime-series self-employment analysesusinguncorrected it did not while this affectedthe magnitudesof certain coefficients, of the analysis.21 conclusions changeany of the substantive
that,ifanything, we have underestimated thetrueexpansion ofself-employment in thepost-1967 period. 19Although agricultural and nonagricultural self-employment are also analyzed separately (in App. B), we wantedto treat thetotalcategory as well. 20 Analternative strategy for correcting theCPS annualfigures wouldhavebeentouse the1970and 1980censusdata on thenumber of"incorporated self-employed" as the basisformaking theinterpolations. We decidedagainst usingthedecennial censuses forthispurposebecause of the large discrepancies between the censusand other in the estimates of surveys of self-employment. Even if we disregard the problem incorporation, thecensushas consistently lowernumbers of self-employed thanthe in thecategories CPS: in 1970,thecensusreports "unincor9.85% ofthelaborforce poratedself-employed" and "unpaidfamily members," whilethe comparable CPS estimate is 11.30%;and in 1980thecensus result is 9.47%,whiletheCPS's is 11.70%. The censusestimates are also nearly alwaysseveralpercentage points lowerthanin in theUnited mostquestionnaire of class structure surveys. Wright's (1986)survey in oftotalself-employment and unpaidfamily workers States, e.g., yields an estimate 1980 of just over 14%, compared withthe censusestimate of 9.5%. This largea discrepancy is notunusualbetween surveys and censusdata. Whilewe knowof no research that has carefully investigated thereasons thechronically for lower estimates ofself-employed in thecensus, we suspect thatit has todo withtheself-administered nature ofthecensusquestionnaire, in which on thechecklist ofemployment statuses, the response for category "Employee of privatecompany, businessor individual, in own business, wages,salaryor commission" comesbefore "self-employed professionalpractice or farm." We suspectthatmanyself-employed peoplewho sell their services toindividuals and arepaidon an hourly basisincorrectly check the"employee ofprivate for wages"category. ... individual, The CPS, incontrast, is an intervieweradministered In any questionnaire and therefore less subjectto thisresponse error. in thecensus case, becausewe havesomewhat lessconfidence figures, we chosenotto use them as thegeneral basisforcorrecting theannualCPS time series. 21 One final theincorporation factors for theannual aroseinconstructing complication 990
PettyBourgeoisie rates. Unemployment -One of the main purposesof the time-series in SectionIII is to estimate analysis ofand historical theexistence changes in the size of effects of unemployment rates on self-employment rates. This raises the issue of what is the appropriate denominator forthese "rates"-the totallabor forceor the totalpopulation.The problem with using the labor forceas a denominator in eitherset of rates is that as unemployment increases, thelabor force itself tendsto declinebecauseof the increasein "discouraged workers."This impliesthattherewill be a tendency forself-employment as a proportion of the labor forceto increase undertheseconditions declines. simplybecause the denominator in thispaper concerns Since one of the centralhypotheses the effects of it is important not to build such a on self-employment, unemployment relationship intothevariables.We therefore use totalU.S. adultpopulationas a denominator fortheunemployment and self-employment rates, ratherthan labor-force size. We also performed the regressions using labor-force afratios, and none of the conclusionswas substantively
fected.22
B. Data Used in the Shift-Share Analysis:Decennial Censuses and Self-Employment Data In SectionIV below we will conducta shift-share analysisofthechanges in self-employment by economicsectorand by decade between1940 and 1980. The only data available forthese fourdecades are the national censuses,and, thus, despite our qualms about the accuracyof census measuresof self-employment, we are forcedto use these data forthis analysis. -The shift-share Self-employment. analysisuses the"class-of-worker" itemfromthe 1940-80 decennialU.S. censuses,including the recently released1940 and 1950 U.S. Census Public Use MicrodataSamples(1% files)(U.S. Bureau of the Census 1983a, 1983b). The "class of worker"
self-employment timeseries.The totallabor-force size forthe1970s,uponwhich the 1975 and 1978estimates ofincorporated self-employed werebased,was reestimated by theCPS following the1980census.Becausewe areusing therevised figures, we have also adjusted the1975and 1978incorporated self-employed estimates upward according to thesame factor by whichthetotallaborforce was reestimated. The original figures on incorporated self-employed were1,500,000 for1975and 2,100,000 for1978. With theuse oftheexpanded laborforce these wereincreased to 1,517,573 estimates, and 2,135,832, respectively. 22 A final problem withtheCPS data involves changing estimates of thesize of the totallaborforce, whichwerereestimated after each census forthepreceding decade. We have used thelatestand bestestimates but stopped at 1984rather thanuse the 1985figures, giventherather significant change in labor-force estimation procedures in January beginning 1985(see Fenstermaker 1985). 991
American Journal of Sociology variableincludesemployment categories thatcan be collapsedtoyieldthe total numberof self-employed and wage earners.We generated tables of industrialsector by self-employed/wage earner using the "class of worker" and industry variables.These data are forall employed adultsin thelabor force16 yearsand older.We restrict theanalysesin thispartof the articleto employed adults (ratherthan the adult labor forceor the entire adultpopulation, as in thegeneral time-series analyses)becausewe are interested in thesectoral distribution ofself-employment. Sinceunemployment has at best an ambiguousstatuswithineconomicsectors, it is difficult to define the totallabor forceof a sectorin a meaningful way. 23 The self-employment ratesused in theshift-share analysis,therefore, all use employed adults in sectorsas the denominator. The class-of-worker variableused bythecensusbureauappearedin its current formonly afterthe 1940 census (Jenkins1985, p. 63).24 In the 1940 census,the self-employed were distributed betweenthe categories "own account" workerand "employer."Census enumerators were instructed to excludepersonsworking forwages from the "own account" status(U.S. Department of Commerce1940, p. 69). The category "own account," with its connotationsof "workingfor oneself,"was thus roughly equivalentto thecurrent notion of"self-employment." However, some wage workerswithoutsteadyemployment-for example,day laborers-may have been entered in thiscategory.25 Unpaid family workersare includedalong withthe traditionally definedself-employed in the shift-share analyses,as withthe timeseries. The difficulty in theannualCPS data withestimating we encountered the incorporated self-employed does notarisewiththe 1970 and 1980 census data because thesecases are identified in thePublic as a separatecategory Use Samplesand can thusbe merged withunincorporated self-employed. The analysisofthe 1940-80 data excludesthecurrently and unemployed all personsunder 16 yearsof age.26 Economicsector.-For theeconomic sector we reliedon classification,
23 One could,ofcourse, define theunemployment ratewithin a sector bythesectoral location ofan unemployed person's latest job. Thismakessense, however, onlyifone is willing to assumethatlabormarkets are so stratified thatan unemployed person is queued up forfuture jobs onlyin thesector of last employment. Sincethisis nota realistic assumption, unemployment is notgenerally assignable to thelaborforce of givensectors oftheeconomy. 24 The 1910 censuswas thefirst to differentiate amongoccupations on thebasis of socialclass (Conk 1979,p. 25). 25 MargoConk,a historian who has written extensively on theCensusBureau,sugin a personal gested communication thatthesekindsofclassifications werelikely to have occurred. 26 The 1950data are weighted according to theweight plO-13-BRWT. The 1940data are unweighted becauseonlypersons from theself-weighting samplewereselected.
992
PettyBourgeoisie the37-sector industry schemedevelopedby Singelmann (1978) and used to collapsesomeof byWright and Singelmann (1982),butwe wereforced the categoriesbecause the industry codes used in the 1940 and 1950 censuseswere not as detailedas in latercensuses.The relationship betweenour 31-industry classification schemeand thatused by Singelmann is givenin table 5. C. Methods The time-series analysis. -Time-series analysisis used to testforthe presenceof trendsin U.S. self-employment after1948 and forcounterAll the time-series cyclicalresponsesto unemployment. modelsinvolve generalizedleast-squaresregression using a maximum-likelihood estimatorofp as a correction The Durbin-Watson forautocorrelated errors.27 testforserialcorrelation is presented in each table.28 The "shift-share" analysis.-Shift-shareanalysiswill be used to explorethepatterns of changing self-employment acrossand within industriesfrom1940 to 1980. The shift-share analysisis the same used by and Tienda (1985) and Wright and Singelmann Singelmann (1982). In the present case, thisprocedure breaksdown the overalldecennialshifts in the divisionof the labor forcebetweenself-employed and wage earners intothree components: one called the"sector shift effect," whichis due to a secondcomponent changesin thesectoralcomposition of theeconomy; is denotedthe"class shift effect," reflecting changesin theself-employed/ balance withineach sector;and a thirdis the "interaction wage-earner shift effect" traceableto combinedchangesin the relativesize of sectors and in the self-employed/wage-earner balances withinsectors. The basis of the technique involves the comparisonsof the selfdistributions employed/wage-earner impliedby counterfactual class-bysectortables that we construct with actual class distributions. For example, to calculatethe sectorshift forthe decade 1940-50, one assumes thatthe self-employed/wage-earner distribution withinsectors remained the same betweenthe two timepointsbut thatthe divisionof the work
27 The method usedtoestimate p is that developed byBeachandMcKinnon (1978)and is availablein theprogram TSP (Time SeriesProcessor). 28 For equations withtwo independent variables (excluding theconstant term), the appropriate lower boundoftheD-W test (dl)belowwhich we still mayhaveautocorrelationis 1.36 (P = .05); forthreeindependent variablesdl is 1.31; and forfour variables dl is 1.25(Johnston 1984,p. 556). Valuesbelowthese limits lead us toreject thenullhypothesis ofno serial correlation. It should be noted that becauseourR2sare generally closetoone,dl is a better test ofautocorrelation thantheupper limit du; high R2stendto pushtheD-W statistic toward zero(Pindyck and Rubinfeld 1981,p. 161). Nonetheless, the uppervalues forthe D-W testprovidelimits beyond whichit is possible to retain thenullhypothesis ofno autocorrelation.
993
TABLE 5 INDUSTRY CLASSIFICATION CATEGORIES FOR SHIFT-SHARE ANALYSIS Our Categories 1. Extractive: ..... Agriculture, forestry, fishing ........................ Mining 2. Transformative: Construction ................... Food ......................... Textiles ....................... Metal......................... ..................... Machinery Chemical ...................... Miscellaneousmanufacturing ..... Utilities ....................... 3. Distributive: Transportation ........ ......... Communication ................ Wholesale ..................... Retail......................... 4. Businessservices: ....................... Banking Insurance..................... Real estate .......... .......... Law, engineering, and other professional services..... ..... Businessservices....... ........ 5. Social and politicalservices: Medical and healthservices ...... Education.......... ........... Welfareand nonprofit ........... Postal services........ ......... Government ................... 6. Personalservices: Domesticservices ............... Hotels and lodging...... ....... ...... Eating and drinking ...... Repair (auto, miscellaneous) ..... Laundry...................... Entertainment ................. Miscellaneouspersonalservices.. . 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 Singelmann's Categories* 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18, 21 19, 20 22, 23 24 25, 26, 29 27 28 30 31 32 33 34 36 35, 37
* Thesenumbers to theindustrial refer classification system developed by andusedin Wright andSingelmann Joachim Singelmann (1982).
PettyBourgeoisie forceacross sectorschangedas it actuallydid. A class-by-sector table is thengenerated usingtheseassumptions and the actual size of the labor forcein 1950. The resultant counterfactual estimateof the sizes of the self-employed and wage-earner "classes"is thencompared withtheactual sizes of thoseclasses, and the difference betweenthe two figures is the sectorshift effect. Similarly, theclass shift effect is obtainedby allowing the class distribution to change as it actuallydid betweenthe two censuses while assumingthat the intersectoral distribution remainedthe same. The interaction shift effect is the remaining changein the size of each class, net of the workforce. III. TIME-SERIES ANALYSIS OF SELF-EMPLOYMENT IN THE UNITED STATES In thissection ofthearticle twoprincipal we willtry to accomplish tasks. First,we will show thatfortheUnitedStatesthedeclinein self-employis mentrateshas indeedbeen reversed in recent yearsand thatthisresult robustacross alternative rate. Secspecifications of the self-employment forthisreverond, we will examineone important possibleexplanation of unemploysal, namely,thatit is a directresponse to cyclicalpatterns ment.A certain be a response to a lack amountofself-employment might inof good wage-laboremployment opportunities. Whileunemployment suranceand welfareprograms forthe unemmay reducethe incentives ployedto seek self-employment, one would nevertheless expectincreases in the unemployment rate to generateincreases in self-employment. Given the relativeeconomicstagnation in the Americaneconomy since theearly1970s,itmight ofthelongreversal be thecase thattheapparent term in self-employment in unemployment trend increases simply reflects in the period. A. Basic Time-Series Results The annual time-series ratesfortheUnited estimates of self-employment 1 and AppendixA. ColStatesfrom1947 through 1985 appear in figure umn 1 in table 6 presents thebasic time-series modelsbothfortotalselfand and for the employed (formally self-employed unpaidfamily workers) formal"self-employed" taken separately,as a percentage of the adult population. The results fora rangeofother forms oftheself-employment rate variableare givenin AppendixA. A visual inspection in self-employof figure1 shows the turnaround ment rates in the middle 1970s, regardlessof whetherunpaid family is workers are includedor whether thelaborforce or theadultpopulation in calculating used as the denominator the rates. The resultsin table 6
995
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PettyBourgeoisie confirm thatthisrisein self-employment sincethemiddle1970sis statisticallysignificant. Time squared in thesemodelsis measuredas (t - 20)2, while t goes from0 to 36.29In table 6, column1, onlythe simpletrend variable, time, appears. This trendvariable is significant and positive both fortotal self-employment (i.e., includingunpaid familyworkers) and forformal self-employment. Its significance confirms of theexistence a long-term processof proletarianization, of self-employor destruction ment.In column2, a quadraticterm(time2) is added. The significant, positivecoefficient forthis termindicatesthatthe timetrendfollowsa basicallyparaboliccurve,first and thenincreasing. This basic declining quadratic relationalso holds if we examine agricultural and nonagriculturalself-employment or if we calculateself-employment separately, ratesusingthelaborforce as thedenomrather thantheadultpopulation inator(see App. B). The visual appearanceof a reversalin self-employmentpatterns in figure in theformal is confirmed statistical 1, therefore, analysis. B. The Effects of Unemployment Columns3 and 4 in table 6 present therelationship betweentheratesof unemployment and self-employment. In column3, the annual average unemployment rate appears as an additiveterm;in column4, it is interacted withtime.Two basic results are particularly in these important models. First,when the unemployment rate and the unemployment interaction withtimeare includedin the equations,the magnitude of the quadratictimetermis notreducedin themodels.This suggests thatit is unlikely thatthe reversalin the declineof self-employment in the early 1970sis simply a direct effect ofincreasing unemployment. Second,there is a significant positivecoefficient forunemployment ratesand a significant negativecoefficient forthetime x unemployment interaction term. This suggeststhat while there is a countercyclical characterto selfemployment-asunemployment rises,self-employment rises-this effect is declining over time.30
29 For the quadratic term,t - 20 rather than t is used because subtracting this constant in model2 yielded thehighest t-value. Thisreflects thefactthat thecurve in fig.1 reachesits lowestvalue in theearly1970s.Subtracting a constant from t, of course, does notaffect thecoefficient fortimein model1. 30 As discussed in SectionIHAabove, theseself-employment ratescontain an interpolatedadjustment factor forincorporated self-employed after1967. Since we are concerned to document thedecline of thecountercyclical effect ofunemployment on self-employment, theinterpolation procedure couldconceivably affect theresults. To ensure that thedecline intheunemployment effect was notan artifact oftheestimation procedure forthe incorporated self-employed, we ran the regression forthe years 1967-84only on theuncorrected figures. Hereagainthere was a nonsignificant unemployment effect.
997
American Journal of Sociology hold whether analyses,thesebasic results As in the simpletime-series figures. workers are includedin theself-employment or notunpaidfamily are the same for Furthermore, as indicatedin AppendixB, the patterns and theyare the same self-employed taken separately, nonagricultural of thelabor rate is measuredas a proportion when the self-employment herethe interacforcerather than the entireadult population(although seems to have a However, unemployment tion termis nonsignificant). muchsmallereffect thanforthe nonagself-employment on agricultural ricultural sector.31 analyseswe can draw two basic conclusions: From these time-series in thedecline and sustained reversal first, there appearsto be a significant in the past decade or so in the United States. of the pettybourgeoisie of increasing countercyclical effect Second, while thereis a significant this effecthas been decreasing. on self-employment, unemployment stillbe partoftheexplanation, might Whilegeneraleconomicstagnation linkage other thanthedirect mechanisms it would have to workthrough next will The section ratesand self-employment. between unemployment in the of some of these mechanisms provide a basis for consideration conclusion. IV. SECTORAL DECOMPOSITION OF CHANGES IN SELF-EMPLOYMENT ofthe forthereversal ofthehistorical trajectory One possibleexplanation are forself-employment is thatexpanding opportunities petty bourgeoisie to a postindustrial in one way or anotherbound up withthe transition are explanationis that markettransformations society.An alternative of ownershipin all sectors,even the older leading to decentralization of both hyway the plausibility ones. We will explorein a preliminary betweenchangesin the sectoral the relationship pothesesby examining usingthe of the employed labor forceand self-employment composition decomposition proceduredescribedin Section IIC sectoralshift-share for the Table 7 presentsthe decennial changes in self-employment labor forceand forthe six employed period 1940-80, bothforthe entire decombroad sectorsof the economy.Beforewe analyzethe shift-share Table 7 of theseresults, a comment about thedata is necessary. position
up shop" "setting Presumably, self-employed. becoming wageearners' volveslaid-off in farming thanin retail or services. moredifficult is considerably 32 As noted of willbe doneon distributions analysis IIB all theshift-share in Section todefine as itis problematic laborforce, thantheentire rather laborforce theemployed ofthelaborforce. segment oftheunemployed distribution thesectoral 998
31 This makessensewithin inwhosemicrofoundation argument, thecountercyclical
above.32
PettyBourgeoisie
TABLE
PROPORTION OF THE EMPLOYED
7
SELF-EMPLOYED, 1950 1960
LABOR FORCE 1940
1940-80
1970 1980
1. Self-employed as a percentage of total employed labor force....... ....... 2. Change from ... previousdecade 3. Proportionate changefrom previous decade* . ........... Percentage self-employed by sector:t Extractive.......................... Transformative ...................... Distributive ......................... Businessservices .......... .......... Social-political services....... ........ Personalservices .....................
23.5
19.1 -4.4
18.7
13.8 -5.3
-27.7 58.25
9.9
-3.9 -28.3 48.04
9.3
-.6 -6.1 39.91
5.47 20.68 21.07 7.14 20.43
66.24
66.02
5.76 17.03 17.01 5.75 20.19
5.25 14.24 15.81 5.25 19.74
4.90 12.42 13.52 3.59 17.74
6.03 10.38 13.46 3.23 15.69
* These figures are calculatedbydividing theentry from row2 bythepercentage self-employed in row 1 forthe previouscolumn. t See table 5 above fordefinitions of theseaggregated sectors.
showsa smalldeclinein theself-employment ratebetween1970and 1980 (from 9.9% oftheemployed to 9.3%), rather thana rise,as in labor force theCPS data analyzedin SectionIII. We believethatthismainly reflects the fact that the low point of the self-employment occurred trajectory around 1976 (see fig. 1) and thatthe 1970 figure was not definitely surpassed untillaterin the 1980s.This meansthat,rather thandecomposing an actual rise in the rate of self-employment forthe finaldecade in this analysis,we will be decomposing a verysmall decline. in table 7. Two thingsare important to note in the overall patterns First,theyindicatethat the period 1950-70 was the periodof the most intense was declinein self-employment. Duringthosetwo decades,there nearly a 3% annual rateofdeclinein theproportion oftheemployed labor force In the 1940sthisfigure thatwas self-employed. was just under2%; and during the 1970s,under1%. Second,thedeclinein self-employment in the 1950s and 1960s was fairly proportions generalacross the entire in boththe it occurred withineverybroad sector.In contrast, economy: 1940sand the 1970sthere in the was considerable variation acrosssectors of self-employment. in detail trajectory We will examinethesevariations shortly. Table 8 presentsthe basic sectoralshift-share of the decomposition changesin the proportion of self-employment by decade from1940 to 1980. These are all decompositions of thedecennialrateof changein the proportion self-employed. Thus, forexample,in 1940 23.5% of the em999
American Journalof Sociology

TABLE 8
DECOMPOSITION OF RATES OF CHANGE OF SELF-EMPLOYMENT
1940-50
1950-60
1960-70
1970-80
1. Rate of changeof proportion of self-employed* ....... ...... 2. Class shiftt................ . 3. Sectorshiftt . . . 4. Residual? ...................... Percentage of rate of changein self-employment attributable to each component:11 ........... 5. Class shift . 6. Sectorshift effect............. 7. Residual .....................
-18.7 - 3.0 -14.8 -.9
- 27.7 -9.2 -20.8 +2.3
- 28.3 -16.1 -11.2 -1.0
-6.1 -4.5 -1.2 -.4
16.1 79.3 4.6
33.2 75.0 -8.2
56.9 39.5 3.6
74.2 19.6 6.1
* These figures thechangein therateofself-employment comefrom row 3 oftable 7. They constitute of the decade. over the decade divided by the rateof self-employment at the beginning in row is thecounterfactual estimate ofhow muchofthetotalchangein self-employment t This figure within 1 is attributable sectors. to a changein the distribution of self-employment in row is thecounterfactual estimate ofhow muchofthetotalchangein self-employment t This figure 1 is attributable to a changein the distribution of thelabor forceacrosssectors. in row2 + row3 and row 1, i.e., thepartofthetotal is thedifference between theentries ? This figure in row 1 thatis notuniquelyattributable either to changesin thedistribution changein self-employment of self-employment withinsectors. of thelabor forceacross sectorsor to changesin the distribution IIThese entries in are calculatedby dividing in rows2, 3, and 4 bythecorresponding thefigures figure row 1.
ployedlaborforce was self-employed, whilein 1950only19.1% was selfemployed (table 7, col. 1). This 4.4 percentage pointdeclinerepresents an 18.7% declinein theproportion self-employed. The taskoftheshift-share analysisis to allocatethenetdeclineintothree components-oneindicatingthedeclineattributable to changesin theproportions ofself-employed withinsectors(the class shift one indicating the declineattributeffect), able to changesin the employedlabor-force distributions across sectors (thesectorshift effect), and one indicating theinteraction betweenthese two changes(the"residualshift"). In thecase ofthe 1940-50 decomposition, of the total decline of 18.7%, 3.0 were due to changes in selfwithinsectorsand 14.8 to changesin distributions employment across sectors. The most striking featureof the resultsin table 8 is the monotonic declinein theimportance ofthesectoralshifts relative to theclass shifts. In thefirst decade of theperiod(see row 6 in table 8), nearly80% ofthe decline in self-employment was attributable to changes in the sectoral of the employedlabor force.This declinedto 75% in the distribution 1950s,about 40% in the 1960s,and only20% in the 1970s. Correspondingly,the contribution of changes in the self-employment distributions
1000
PettyBourgeoisie
TABLE
DECOMPOSITION OF SECTORAL
9
ON SELF-EMPLOYMENT 1950-60 1960-70 1970-80
EFFECTS
1940-50
Contribution of changesin distribution of employment to specific sectorsto the overallsectoralshift effect on self-employment: Total sectorshift* ............... Extractive ....................
Transformative ....... ........
-14.8 -17.1
-.5
-20.8 -21.3
-.2
-11.2 -15.8
- 1.0
-1.2 -5.3
- 1.0
Distributive ......... ......... Business..................... services ......... Social-political Personalservices ....... ....... Percentage of totalsectorshift attributable to employment shifts in each sector:t Extractive ...................... Transformative ......... ........ Distributive ........... ......... Business....................... services ........... Social-political Personalservices ........ ........
2.1 .0 .9 -.2
-.4
1.6 1.6 - 2.5
.5 1.9 2.5 .6
-1.4 4.5 1.8 .1
115.17
102.32
140.68
3.30 -14.13 .12 -5.92 1.45
.93 1.93 -7.57 -7.52 11.77
9.28 -4.07 -16.68 -22.58 - 5.38
81.22 113.83 -376.26 -152.61 - 10.22
444.02
* The figures in thisrow are the same as row 3 in table 8. in thispart of the table represent of each sectorto the the proportionate contribution t The figures overalleffects ofsectoraldistributional changesin row 3 of table 8. They are calculatedby dividing the contribution of each sectorto the totalsectoraleffect by the totalsectoraleffect.
withinsectors(the class shifteffect) increasedfrom16% of the total changein self-employment in the 1940s to nearly75% in the 1970s. Let us examinethisdeclinein thesector shift effect moreclosely.Table 9 breaksdown thetotalsectorshift foreach decade intothecontribution of each broad sectorof the economy.33 Two patternsare particularly important forunderstanding theoveralldeclinein thesectorshift effects fromthe 1950s to the 1970s. First,thereis the steadyreduction in the effect of declinesin the extractive sector(primarily agriculture) on selfemployment. Agriculture is the sectorof the economywiththe highest levels of self-employment. Declines in the agricultural sector,therefore, contribute heavilyto the sectoraleffects on the declinein self-employment. In the 1950s, the decline in the extractive sectorreduced selfemployment by 21.3%. This droppedto 15.8% in the 1960sand 5.3% in
3 It should be notedthatthesector shifts in table9 are calculated on thebasisofthe 31-sector typology, notthesebroader 6-sector categories.
1001
American Journalof Sociology the 1970s. As the agricultural sectorbecomessmallerand smaller, it has less effect on changesin the overallclass structure. The secondresultin table 9 is the steadily increasing importance over four decades of sectorswhose expansion has a positive effect on the proportion of people self-employed. Such positivesectoreffects act to counteract at least partially the negativesectoralshift effects of the decliningsectors.In the 1940s (table 9, col. 1), the sum of thesepositive effects is 3.0; in the 1950s (col. 2), it is 3.2; in the 1960s (col. 3), 5.5; and in the 1970s(col. 4), 6.4. Even moretelling, whenexpressed as a proportion ofthetotalsectoral shift, thesecounteracting effects increased from about - 15% in the 1950s to about -50% in the 1960s to over -500% in the 1970s.34 Thus, in the 1970sthe verysmall overallsectoral shift effect on of - 1.2 is the resultof two counteracting self-employment sectoraleffrom fects,a negativeeffect extractive, transformative, and distributive sectors of - 7.7 and a positiveeffect from businessservices, social-political services, in theeconand personalservicesof + 6.4. The importance withabove-averageproportions of self-employomyof industrial sectors menthas been increasing over time. Table 10 breaks down the contributions of different sectorsin each in a mannerparallelto the sectorshifts in decade to thetotalclass shifts table 9. In the 1950sand 1960s,self-employment declinedin virtually all in personal sectors oftheeconomy was a slight (theonlyexception growth services the 1950s).The 1960sin particular were self-employment during thehighpointofan intensive within-sector proletarianization process:the totalclass shift was 16.1%, muchhigher thanin anyotherdecade, effect and the sectoralcontributions to this declinewere fairly evenlydistriba sharp uted across the economy.The decade of the 1970s represents breakin thepattern twodecades. In thosesectors thatstill oftheprevious contributed a negativeclass shifteffect duringthe 1970s, the negative effects are always smallerthan in the 1960s. And in two sectors-the is transformative effect sectorand businessservices-the negativeshift ofthelabor increasedas a proportion actuallyreversed: self-employment forcein thesesectorsover the decade. Can theresults fortheview that oftables9 and 10 be takenas support theexpansion is largely a postindustrial ofself-employment phenomenon? are consistent withthisview: in table 9, thegrowth of Some oftheresults businessservicesgeneratesa relatively on large positivesectoraleffect is a small,but positive, class shift and in table 10 there self-employment, effect withinbusiness services.However, in table 10 thereis a much largerpositiveclass effect withinthe transformative sector,suggesting
34 These percentages are negative becausetheycounteract a negative sectoral shift effect.
1002
PettyBourgeoisie
TABLE
DECOMPOSITION OF TOTAL CLASS
10
SHIFT BY INDIVIDUAL SECTORS 1970-80
1940-50
1950-60
1960-70
Contribution of changesin distributionof self-employment withinspecific sectorsto the overallclass shift effecton self-employment: Total class shift* -3.0 ..... ....... .7 Extractive ................ Transformative 1.7 ............ - 2.7 Distributive ...... ......... Business -.5 .................. services ..... -.7 Social-political -1.4 Personalservices.......... Percentage of totalclass shift attributable to class shifts in each sector:t -24.28 Extractive .................. Transformative -55.60 .............. Distributive 89.82 ................. 17.62 Business .................... 24.31 Social-political services....... 48.12 Personalservices............
-9.2 -5.3 -.6 -3.7 -.1

-.5
1.0
-16.1 - 4.1 -1.0 -4.8 -1.7 - 2. 1 - 2.3
-4.5 -2.2 2.6 -1.9 .2 - 1. 1 -2.2
57.68 6.64 39.98 1.51 5.45 -11.26
25.77 6.43 29.8 10.35 13.13 14.47
48.67 -58.40 41.45 -5.34 25.08 48.52
* The figures in thisrow are the same as row 2 of table 8. thecontribution of each sectorto the in thispartof the table are calculatedby dividing t The entries totalclass shift by the totalclass shift.
that self-employment is growingmuch more rapidlyin the traditional core of industrial societythan withinthe newerpostindustrial services. Some sortofrestructuring seemsto be occurring within theoldersectors. For a morenuancedpicture of the changesin the 1970s,it is usefulto in tables9 and 10 intothefull31-sector disaggregate theresults typology. These results, presented in table 11, rankorder theoverallcontribution of detailedsectorsto the changein self-employment ratesfrom the largest positivecontribution to the largestnegativecontribution. The two sectorsthat make the biggestpositivecontributions to the change in self-employment in the 1970s are businessservicesand construction: the former added + 2.3% overallto therateof changein selfemployment, the latter + 1.8% (table 11, col. 4).35 Together, thesetwo
3 It is interesting to notethatin mostEuropeancountries between 1960and 1982, theproportion ofself-employed grewmost in construction as well(Hagelstange 1986, pp. 238-39). 1003
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American Journal of Sociology to the accountfornearlyhalfof the overallpositivecontribution sectors howforthesetwo sectors, of effects rate. The patterns self-employment 95% ofitsinputto increasing forconstruction different: ever,are entirely effect, whereasforbusiness comes fromthe class shift self-employment effect. the sectorshift servicesabout 75% comes from and between theindustrial difference is a striking there More generally, sectorsof the economy:whereas the positiveclass shift postindustrial in the various industries are concentrated on self-employment effects are concensector,the positivesectoreffects withinthe transformative alone accountsforgreater sectors.Construction tratedin postindustrial manuWhenmiscellaneous effects. ofthepositiveclass shift thana third increasesto 58%. In conare added, thefigure and machinery facturing of prototypiwithina number effects trast,thereare negativeclass shift services, and professional sectors: legal, engineering, callypostindustrial If we combine all thespecific education, and medicaland healthservices. and contrast sectorsthat would be seen as centralto postindustrialism thatare at thecoreoftheolder ofall thesectors themwitha combination thereis an sectors theindustrial we findthatwithin economy, industrial of 3.0%, whereasamongall postinduseffect overallpositiveclass shift of 1.0%.36 The effect class shift trialservicesthereis an overallnegative does notseemto therefore, withinsectors, expansionof self-employment be primarily a postindustrial process. however,are clearly The sectoralshifteffects on self-employment, legal, engineering, sectors.Businessservices, anchoredin postindustrial accountforover together services, and medicalservices and professional on self-employment. Taking shift effects 55% ofthetotalpositivesectoral we finda positivesectorshift all the postindustrial servicestogether, sectors yielda negative effect of 5.1%, whereasthe combinedindustrial that may of 1.2%. Clearly,then,the sectoraleffects sectorshifteffect are declinein self-employment accountforthe reversalof the historical rootedin postindustrialism. V. CONCLUSIONS AND UNRESOLVED ISSUES ofthevariousdata standout amongtheresults Four generalconclusions is strong evidencethatthenumerical here.First,there analysespresented
Takinga liberaldefinition of what constitutes a postindustrial service, we have defined thisaggregate postindustrial sector as business services, banking, insurance, welfareservices,government services,communications, education,medical and healthservices, and legal,engineering, and professional services. The sectors at the coreoftheindustrial economy are construction, foodprocessing, textiles, metal working,machine building, chemical, miscellaneous manufacturing, utilities, andtransportation.
36
1006
PettyBourgeoisie of history thathas markedthelong-term bourgeoisie declineof the petty stoppedand perhapsbeen Americancapitalismhas at least temporarily declineof the reversed.Second, thiscessationof the historical modestly movepettybourgeoisieis less a directconsequenceof countercyclical thanin thepast. to self-employment unemployment ments ofpeoplefrom has been on self-employment of unemployment The traditionaleffect in thepostwarperiodand in any case does notaccountforthe declining of since the mid-1970s.Third, the growth increasein self-employment servicesdoes appear to explainthe expansionof self-empostindustrial a directsectoralchange through but thisis entirely partially, ployment within postinincreasing is generally notbecause self-employment effect, has grown dustrial sectors. Fourth, it appears that self-employment sectorsof the economyin industrial withinthe older, more traditional and miscellanenoticeable in construction recent years.This is especially and transportation. but is also true in machinery ous manufacturing have also occurredin the towardself-employment Slightpositiveshifts and in utilities.The expansionof selfchemicaland textileindustries is nota posttherefore, particular kindsof activities, within employment of segments feature ofmoretraditional processbut a structural industrial the economy. the possible The data in thisstudydo not allow us to exploredirectly intraditional within forthisexpansionof self-employment explanations to the ofalternatives However,a number sectors oftheeconomy. dustrial on literature by therecent are suggested dualism"explanation "industrial trendsin advanced capitalisteconomies. contemporary in the transformative sectors of First,the increasein self-employment to bypass unionsand restrategies employer the economycould reflect workercontrol in the duce wages. For example,in responseto growing of the late 1960s, and to the labor militancy factories mass-production (Piore Italian employers pursued a policyof full-scaledecentralization and Sabel 1984, p. 156; Sabel 1982, p. 221; Brusco 1982, p. 171). In to smaller outcome of subcontracting Emilia-Romagna,the long-term of small artisanal of a dense network producerswas the establishment and so on. Empiricalstudiesofthe in textiles, machineengineering, firms relianceby UnitedStatesand Britainindicatean increased contemporary and out-sourcing on sweatshops, (Davis 1986, subcontracting, employers p. 209; Pahl 1984; Rainnie 1985; Sassen-Koob 1985, pp. 309-12). Such rates,butmuchoftheapparent raisenominalself-employment strategies of particular changes in systemsof classification expansionrepresents underproperly thana genuineexpansionofself-employment jobs rather stood. Dale (1986) has argued, forexample,that much apparent"selfto hireworkers under is simplya new way foremployers employment" and thelike. Marsh, subcontracting, free-lancing, schemesofhomework,
1007
American of Sociology Journal selfHeady, and Matheson (1981) found that a thirdof the formally for industry workedexclusively employedworkersin the construction contractors and providedonly theirown labor. In such cases thereis themfromwage workers.While fortax reallyverylittleto distinguish for oflaborrelations itmaybe advantageous purposes and considerations this part of theirlabor forceas "self-employed," employers to reclassify bourmeaningful expansionof the"petty does notreflect a sociologically in Second, while we have shownthatthe increasein self-employment responseto the 1970s cannot be attributed to a directcountercyclical responseto be a structural unemployment rates, it could nevertheless economy.Many forgood jobs in the industrial decliningopportunities commentators have arguedthatmuch of thejob expansionin the wage jobs in the service on low-paying labor forcein the 1980s has centered coreindustrial whilemuchof the declinehas been in well-paying sector, and public sectorjobs (e.g., Davis 1986, p. 209). Many people may because oftheabsenceofgoodjob altertherefore enterself-employment natives,notsimply because oftheabsenceofjobs as such. If thisexplanationis correct, it would be expectedthat verylittleof the expansionof would be would be amongsmall employersbut,rather, self-employment in the individualself-employed bourgeoisie. concentrated petty protectionism or Third, strictly politicalfactors(such as agricultural and apprenticeship conlegislation, subsidies,tax relief,antimonopoly to the preservation, expansion,or declineof selftrols)oftencontribute in theUnitedStatesfrom thelate employment.38Many policyinitiatives as "government-initiated entre1970sto thepresent can be characterized offinancial tax breaks, thederegulation markets, preneurship," including Act of 1985 (whichaimed at providing and the U.S. Self-Employment assistanceto the unemployed to become entrepreneurs [Mayer 1985]). The Reagan era has seen increased as wellas ideological support material the 240-41). Moreover, (Davis 1986, pp. by state forself-employment and stateand community sectionsof thewelfare development significant which could increase selfhave been privatized, employment programs in sectorssuch as construction (Mayer 1987, employment opportunities p. 80; Mayer 1985, p. 47).
37 The taxadvantages ofsuchreclassification include exempting employers from payingmostbenefits and socialsecurity taxes. 38 Various in regimes have promulgated laws to propup smallbusinesses and artisans order to consolidate II in Imperial political support: Wilhelm Germany (Rohl 1967, p. 255), theItalian and German fascists (Winkler 1977;Winkler 1983,p. 102; von in postwar Saldern1979),Christian-Democratic and Gaullist governments Italyand France(Weiss 1984;Berger1981;Burris1980),and even communist leadersin the Emilia-Romagna region ofItaly(Pioreand Sabel 1984,pp. 228-29).
geoisie."37
1008
PettyBourgeoisie Finally,thereare demographic factors thatmight accountforpartof theincrease in self-employment oftheindustrial within traditional sectors of the baby boom generaeconomy.This increasecould reflect theentry of self-employment. tionintothe age rangeof maximum likelihood Selfemployment is mosttypicalin mid-to late-career stages,aftera certain amountof savingshas been accumulated.As the baby boom generation entersmidcareer,therefore, one mightexpecta temporary increasein self-employment. If thisdemographic explanation is correct, thentherate of self-employment shoulddeclineagain as thisgeneration ages further. It might also be arguedthatincreasing self-employment could be partiallyan indirect effect of the increasing of womenin the participation labor force. Self-employment generally bringswith it more risksthan wage-labor employment. If those risks were to decline, more people mightattemptto starttheirown businesses.A mechanism that could reduce risksto a householdwould be forone memberto hold a stable wage-earner job whileanother The increasing attempts self-employment. prevalence oftwo-earner households, therefore, could be partially underthe expansionof self-employment. writing The Americanclass structure appears to be in a periodof significant As noted by Wrightand Martin (1987), the structural reorganization. strongtendency toward proletarianization withinthe wage-laborforce in the 1970s.We also now see that thatexistedin the 1960swas reversed the decline of the pettybourgeoisiethat had persistedsince the 19th has beenhalted,at leasttemporarily. century Explaining themechanisms thatare generating thesechangesis essentialifwe are to understand the trajectory of the Americanclass structure intothe nextcentury.
1009
APPENDIX
A
TABLE Al
U.S. RATES OF SELF-EMPLOYMENT, 1948-84: CORRECTED CPS ESTIMATES

USED IN TIME-SERIES ANALYSIS + Self-employed Unpaid Family as Proportion of Adult Population .119 .118 .112 .106 .102 .100 .100 .099 .098 .095 .092 .091 .088 .087 .082 .078 .077 .075 .071 .068 .067 .067 .065 .065 .064 .064 .064 .063 .063 .065 .067 .069 .070 .070 .071 .072 .073 + Self-employed Unpaid Family of as Proportion Labor Force .206 .204 .192 .183 .179 .175 .175 .172 .168 .164 .158 .158 .152 .149 .144 .137 .134 .130 .122 .117 .115 .114 .113 .114 .112 .110 .110 .112 .110 .112 .112 .114 .117 .118 .122 .124 .122
Year 1948 .... 1949 .... 1950 .... 1951 .... 1952 .... 1953 .... 1954 .... 1955 .... 1956 .... 1957 .... 1958 .... 1959 .... 1960 .... 1961 .... 1962 .... 1963 .... 1964.... 1965 .... 1966 .... 1967 .... 1968 .... 1969 .... 1970 .... 1971 .... 1972 .... 1973 .... 1974 .... 1975.... 1976 .... 1977 .... 1978 .... 1979 .... 1980 .... 1981 .... 1982 .... 1983.... 1984....
Self-employed as Proportion of Adult Population .103 .102 .097 .091 .088 .086 .086 .085 .083 .081 .079 .078 .076 .074 .071 .068 .067 .065 .062 .060 .059 .059 .058 .058 .057 .058 .058 .058 .058 .060 .062 .064 .065 .066 .067 .069 .070
Self-employed as Proportion of Labor Force .178 .176 .167 .158 .154 .152 .152 .147 .142 .139 .136 .135 .131 .128 .125 .119 .117 .113 .107 .104 .102 .101 .101 .102 .100 .099 .100 .102 .101 .103 .104 .106 .110 .111 .116 .118 .117
forincorporated self-employed. SOURCES.-Same as in fig. 1, same corrections
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American Journal of Sociology

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The Fall and Rise of the Petty Bourgeoisie: Changing Patterns of Self-Employment in the Postwar United States Author(s):

? 1989 by The Universityof Chicago. All rightsreserved. .50 0002-9602/89/9405-0002$01

AJS Volume 94 Number5 (March 1989): 973-1018

blo o ce ce t00 110 ItC\ S

C14 110 00 CIF)

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Journalof Sociology American

SELF-EMPLOYED0 UNPAID FAMILY AS % OF ADULTPOPULATION MEMBERS .%

SELF-EMPLOYED. UNPAID FALLY EMBERS AS % OF LABORFORCE

FIG. 1. -U.S. self-employmentrates, 1948-84. (Source.-U.S. Labor, Employment and Earnings.)

TABLE 2 THEORETICAL CRITERIA FORSELF-EMPLOYMENT

Rentiercapitalists Domesticworkers, welfareunderclass, permanently disabled Unemployed

Entrepreneurial capitalists Pettybourgeoisie Workers

NOTE;.-The cellsmarked"Entrepreneurial capitalists" and "Petty bourgeoisie" composethecategory " "Self-employed.

-' C,CN 00C4"

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LABOR FORCE 1940

5.47 20.68 21.07 7.14 20.43

5.76 17.03 17.01 5.75 20.19

5.25 14.24 15.81 5.25 19.74

4.90 12.42 13.52 3.59 17.74

6.03 10.38 13.46 3.23 15.69

American Journalof Sociology

-18.7 - 3.0 -14.8 -.9

- 27.7 -9.2 -20.8 +2.3

- 28.3 -16.1 -11.2 -1.0

-6.1 -4.5 -1.2 -.4

16.1 79.3 4.6

33.2 75.0 -8.2

56.9 39.5 3.6

74.2 19.6 6.1

1.6 1.6 - 2.5

-1.4 4.5 1.8 .1

3.30 -14.13 .12 -5.92 1.45

.93 1.93 -7.57 -7.52 11.77

9.28 -4.07 -16.68 -22.58 - 5.38

81.22 113.83 -376.26 -152.61 - 10.22

-9.2 -5.3 -.6 -3.7 -.1

-16.1 - 4.1 -1.0 -4.8 -1.7 - 2. 1 - 2.3

-4.5 -2.2 2.6 -1.9 .2 - 1. 1 -2.2

57.68 6.64 39.98 1.51 5.45 -11.26

25.77 6.43 29.8 10.35 13.13 14.47

48.67 -58.40 41.45 -5.34 25.08 48.52

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U.S. RATES OF SELF-EMPLOYMENT, 1948-84: CORRECTED CPS ESTIMATES

forincorporated self-employed. SOURCES.-Same as in fig. 1, same corrections

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