Why are so few Philadelphians self-employed?
Please note: This article is published as an archive copy from Philadelphia City Paper. My City Paper is not affiliated with Philadelphia City Paper. Philadelphia City Paper was an alternative weekly newspaper in Philadelphia, Pennsylvania. The last edition was published on October 8, 2015.
A new Pew report shows that Philadelphia lags far behind the rest of the nation for self-employment — a crucial stat for immigrants and millenials.
Some corner stores are unincorporated businesses and are counted in self-employment statistics
Colonial Philadelphia was regarded as a city of artisans — most businesses were owned by self-employed craftsmen who lived above their workshops. Now, many struggling, post-industrial cities are again looking to prop up their local economies by attracting skilled, self-employed residents who frequently base their businesses out of their own homes. They're an attractive demographic for cities like Philadelphia, which have largely failed to attract new employers, as full-time freelancers are less dependent on living near job centers.
But according to Pew's 2014 "State of the City" report, Philly is doing a pretty bad job of attracting these kinds of workers: The study found that just 3 percent of Philadelphians were self-employed. While the number of self-employed workers, which includes full-time freelancers and the owners of unincorporated small businesses, has declined nationally, Philadlephia's rate of self-employment is still less than half the national average.
It's a crucial measure for two reasons. Philadelphia's recent population growth has largely been built on the backs of immigrants and young, college-educated transplants. Both groups are two to three times more likely than the average U.S. citizen to rely on self-employment as their primary source of income.
And although the stereotype of a self-employed worker may be a laptop wielding Brooklynite (indeed, 10 percent of Kings County workers were self-employed) national statistics reveal that a range of occupations fall into that category. Most are contractors, personal-care nurses, and landscapers — jobs that can be the first stepping stone toward a middle-class life for many Americans.
So why aren't more Philadelphians self-employed? One answer might be the city's historically complex and burdensome tax codes — which are fortunately set to change in the near future. Thanks to legislation spearheaded by Councilwoman Maria Quiñones-Sánchez and former Councilman Bill Green, the city will lift a $300 fee on the issuance of "business priviledge" licenses this year, andwill exempt up to $100,000 in net income from taxation by 2016.
This is good news for the self-employed and small-business owners in general, but it will likely take a lot more to close the gap.
