SELF-EMPLOYED SPURRING GROWTH

A UNL bureau says the hottest businesses are those with one employee.
By John Taylor
World-Herald Bureau

LINCOLN -The largest and fastest-growing types of businesses in Nebraska aren't what you might expect. If you were thinking of, say, companies tied to the computer industry, forget it. The hottest and most numerous businesses are those that have only one employee, according to a study by the University of Nebraska-Lincoln Bureau of Business Research.

To the Internal Revenue Service, they are known as "nonemployer businesses," meaning literally that they are businesses having only one employee who does not hire anyone else. They may be real estate agents, truck drivers or life insurance agents, or simply the neighbor who removes the snow from your driveway for a fee. They may work part-time or full-time and may in fact be moonlighters, but all are required by the IRS to file income tax forms declaring their receipts. (Those who don't file the returns make up part of the so-called underground economy - involving people who conduct illegal activities, such as drug dealing, or simply those who earn income but don't report it.)

While about 49,000 Nebraska businesses operate out of a physical plant or building with paid employees, a far greater number of self-employed people and other lone wolves are doing business in the state, according to the findings of researchers William Scheideler and Stuart Severns.

The UNL study found that there were 103,272 nonemployer businesses in Nebraska in 2000, the latest period for which Census Bureau statistics are available. That represented a 4 percent increase from the 99,298 non-employer businesses in the state in 1997. Nebraska ranked 40th in the nation in growth rate. Nationally, during that same period, the number of nonemployer businesses increased 7.1 percent. During that same period, 1997 to 2000, Nebraska businesses with more than one employee grew 2.1 percent.

Nonemployer businesses reported $3.4 billion in income in 2000, an increase of 16.1 percent from 1997. Although nonemployer businesses represented 68 percent of all businesses in the state, that $3.4 billion was only about 3 percent of all business receipts the report says.

"Even though we're not talking about a lot of money in the economy," said Scheideler, "we are talking about a lot of folks out there."

As the report noted, the nonemployer businesses provided at least part-time work ofr more than 100,000 Nebraskans, or about 12 percent of the state's workers. Nonemployer businesses may provide fertile ground for entrepreneurs or safe havens for struggling businesspeople who may have had to eliminate all workers in a regular business, the report says.

Other findings of the bureau study:

· Nearly half, 50,485, of the self-employed businesspeople were in metropolitan counties - Cass, Dakota, Douglas, Sarpy, Lancaster and Washington.

· The average annual income of a self-employed businessperson in the metro counties was $36,9231. For nonmetro counties with a large trade center (cities of 7,500 population or more) the receipts in 2000 averaged $30,040; for nonmetro counties with no trade center (with cities of at least 2,500), receipts averaged $28,262.