The Mystery of the District’s Self-Employed

When you have eliminated the impossible, whatever remains, no matter how improbable, must be the truth.

-Sherlock Holmes

When the CARES Act passed in March, self-employed persons were granted eligibility to apply for and receive unemployment benefits for the first time in history through the Pandemic Unemployment Assistance (PUA) program.  The self-employed have always been a part of the economy, but the CARES Act marked a turning point for this business type with formal acknowledgement by legislators to the importance of supporting them. But who are the “self-employed”? The identity of the self-employed has long been a mystery. And like the solution to any mystery, one must ask the right questions, find the right clues, and piece together those clues to arrive at the truth.

With the self-employed people two narratives exist. In some cases, self-employed data is lumped in with businesses, and in others they are an employee for themselves. Even among policymakers, the overarching question of, “who and how many are self-employed?” is often debated. Are the self-employed only those people in the “gig economy” or are they established firms that we may frequent daily without knowing they are self-employed? To solve this mystery, we dug through publicly available federal data from the Census for the District of Columbia to gain a better perspective on this significant group. For the sake of simplicity, the self-employed referenced here are “single-person firms” where the owner is the only employee of the firm.

The Tale of the Self-Employed Establishment
From the business perspective, how many businesses within the District are considered one-person self-employed organizations? Using the Statistics on U.S. Businesses and Non-Employer Statistics Data from the Census for 2007 through 2017, Figure 1 reports that in the past ten years self-employed establishments have grown to account for 70 percent of all establishments in the District. Over this same period, the self-employed share of total establishments grew by 4.1 percentage points from 65.9 percent to 70 percent in 2007 and 2017, respectively.

Figure 1: Share of Establishments by Type, 2007 vs. 2017

Source: Census, Statistics of U.S. Businesses and Non-Employer Statistics

As of 2017, 54,965 establishments within the District were registered as self-employed. While these establishments make a significant impact in terms of the number of establishments, their contribution to District total wages and salaries is limited. Traditional businesses with an owner and employees will often budget anywhere from 15 to 30 percent of sales for payroll. Assuming an average of 22.5 percent for payroll as a share of revenues, ORA estimated from sales receipts data the payroll size of self-employed versus employer establishments and compared their contribution to total District payroll.

From the Employee Narrative
In the self-employed establishment, payroll expense varies depending on the share after expenses remaining. As noted in Figure 2, the self-employed account for approximately 1.0% of all payroll earned within the District between 2007 and 2017.

Figure 2: Share of Payroll by Establishment Type, 2007 vs. 2017 (in billions)

Source: Census, Statistics of U.S. Businesses and Non-Employer Statistics, ORA

The share of payroll accounting for those self-employed as employees modestly grew to 1.1% in 10 years, but overall remains marginal compared to the traditional employer establishments. Despite the total establishments that are self-employed, the core fact remains that they are still an employee and when thinking about payroll, this would only account for 60,000 potential employees within the District. Whereas employer establishments employed 527,004 employees according to the data in 2017. Thus, while the self-employed make a significant share of total establishments, as individual employees they are vastly outnumbered by those in traditional employment in the District.   

The Red Herring of the Self-employed and the App-service Employment
Contrary to popular belief, self-employed individuals are not relegated to only ridesharing or other app service employment. As Figure 3 shows, the majority of the self-employed are to be found in the Professional, scientific and technical services sector, one of the District’s largest employment sectors, and a major driver of District economic growth in recent years.

Figure 3: Top 10 Industries for Self-Employed (Total Establishments), 2017

Source: Census, Non-Employer Statistics

According to the Census data, in 2017 the total sales for self-employed establishments was $1.9 billion. In context, that was the going rate if you wanted to buy both the Tampa Bay Rays ($825 million) and Miami Marlins ($940 million) in 2017.. Looking back at Figure 3, Professional, scientific, and technical services accounted for 30 percent of the total self-employed establishments. Jobs within this sector include consultants, lawyers, and computer programmers. In terms of sales, the sector accounted for nearly 43 percent, or $821 million, of the total self-employed sales that same year. Real estate and rental and leasing sector, which includes real estate agents and property management companies, although a smaller share of total establishments accounted for an estimated 10 percent of the total sales in 2017. Combined with Professional, scientific, and technical services, the two sectors account for nearly 35 percent of the total establishments, and 53 percent of all self-employed establishment sales in 2017 or $1.0 billion. While many self-employed could be from ride-sharing, the data indicates a larger portion may be in more lucrative industries.

Concluding Remarks
The mystery of the self-employed has eluded policymakers for decades. Dueling narratives of self-employed as establishments or employees have complicated the issue even further. As establishments, the level of newly self-employed within the District has grown continuously since 2007 to become 70 percent of all establishments by 2017. Viewed as  employees alone underestimates the significance of self-employed as an important driver of District economic growth, given the share payroll in 2017 accounted for by self-employed was estimated to be 1%. Contrary to popular thought, the self-employed are not restricted to retail or transportation, but are prominent in well-established skill-based sectors of the District economy. Overall, their contributions are not limited to tip-based income but have amassed to $1.9 billion in sales annually. However, there is no easy solution to the mystery of the self-employed, only more questions. But, the Census data may be the cipher we need to begin unraveling this mystery and answering those questions in the future.

For an interactive experience, check out our blog dashboard companion piece in Tableau, “The Mystery of the District’s Self-Employed”

Which Capital Bikeshare stations see the most traffic?

Since its launch in 2010, the Capital Bikeshare program has witnessed tremendous growth in ridership. From 2011 to 2014, the number of Bikeshare trips that began or ended in the District of Columbia grew 2.6-fold. This remarkable growth has been fueled by the addition of new Bikeshare stations throughout the region and by the attractiveness of the program as an alternative mode of transportation.

Total Number of Trips by Year

A survey recently released by Capital Bikeshare gives us glimpse into how Bikeshare members use the service. The survey found that:

  • 85 percent used the bikes to attend social events;
  • 79 percent used the bikes for personal appointments;
  • 78 percent used the bikes to go shopping or run errands;
  • 77 percent used the bikes to eat at restaurants;
  • 74 percent used the bikes to go to work; and
  • 54 percent used the bikes to exercise.

However, when weighed by the frequency of trips, the most common use of Bikeshare is for going to work. Survey respondents that use Bikeshare to travel to work did so more frequently than for any other purpose. Of these travelers, nearly half use the bike share more than six time per month to travel to work.

Purpose of Bikeshare Trip

This left us wondering if Capital Bikeshare trip data for the District of Columbia supports the results of the survey. We analyzed program data since the start of the program and created an interactive map to visualize station traffic and user habits over time.

(click to interact with the following map)

Capital Bikeshare Arrivals and Departures

Here’s what we found:

  • Within the District, the net Bikeshare traffic flows from the NW quadrant to downtown area and to Georgetown.
  • The average District Bikeshare station experiences approximately 1,079 arrivals, 1,081 departures, and 2,159 total trips each month so on average, arrivals and departures even out across the city.
  • There is great variation in trip volume between stations.  The location with the highest amount of use, Massachusetts Ave & Dupont Circle NW, averaged 9,751 in monthly trips. In comparison, the location with lowest amount of use, Nannie Helen Burroughs Ave & 49th St NE, averaged only nine trips per month.
  • Station trips fluctuate seasonally due to weather conditions. The use begins to increase in April, peaks in the summer, and declines beginning October.

(click to interact with the following table)

Capital Bikeshare Arrivals and Departures Bar

Comparing arrival and departure data by station with the District of Columbia Office of Zoning land use map shows that Bikeshare traffic flows from residential areas to commercial areas. In order to compare stations, we calculated the percentage of total trips that were arrivals and departures for each station. Then we calculated the difference between the arrival rate and the departure rate to see if bikes tend to flow in or out of a station. For example, if 70 percent of all trips logged in a station are arrivals and 30 percent departures, the station’s trip balance would favor arrivals by 40 percent.

Since 2011, stations with the highest percentage of arrivals are generally located in areas of the city that are designated as commercial use and are home to offices, restaurants, nightlife, and entertainment.

Top 10 Arrivals

Conversely, stations with the highest percentage of departures are generally located in areas designated for residential use.

Top 10 Departures

The most balanced stations – those that essentially have an equal percentage of arrivals and departures – are located in a mix of residential, commercial, federal, and institutional areas.

Top 10 Most Balanced

The data we analyzed also captured another Bikeshare phenomenon that has been documented in the past. There is an imbalance between arrivals in departures across the entire system which requires an extensive redistribution program to ensure bike availability. This imbalance is captured in the survey results since 59% of respondents cite access to transportation and the ability to take one-way trips as an important factor in their decision to join the Capital Bikeshare.

What exactly is this data?

Bikeshare station location and trip data were derived from the Capital Bikeshare dashboard. Zoning and land use information was gathered from the District of Columbia Office of Planning land use maps. The survey results referenced in the post are included in the 2014 Capital Bikeshare Member Survey Report.