November 10, 2025
Nonemployer establishments—businesses without paid employees, that are subject to federal income taxes, and which have annual receipts of $1,000 or more1—are a large and growing presence in the U.S. economy. Consisting mostly of unincorporated self-employed individuals as well as some partnerships and corporations, U.S. nonemployer establishment counts grew every year besides 2008 from 1997 to 2023. Despite representing a minority of the nation’s employment, they now comprise the bulk of American business establishments.
Some nonemployer businesses are operated by individuals who use them to supplement their primary income—for example, rideshare drivers or artisans selling handmade goods through online platforms. However, many nonemployer firms serve as the main source of income for their owners, representing full-time entrepreneurial ventures. Some examples of nonemployer firms could include independent rideshare or food delivery drivers, Airbnb hosts, hairstylists, freelance web developers, and many other types of work throughout all industries.
This article takes a closer look at Michigan’s nonemployer business establishment trends using data supplied from the Census Bureau’s Nonemployer Statistics (NES) program. NES publishes annual datasets containing statistical information on the number of nonemployer business establishments and total receipts. Information on establishments with paid employees— derived from the Census Bureau’s County Business Patterns (CBP) program—helps to provide further context on nonemployer trends. Like NES, CBP generates annual statistics on establishment counts, as well as additional employment and payroll figures.2
As with the rest of the nation, nonemployer establishments have risen rapidly in Michigan over the past several years. From 2013 to 2023—the most recent year for which data is available— nonemployer counts increased from 687,000 to 815,000 establishments, an 18.6 percent jump. This far outpaced gains for Michigan employer establishments, which rose just 5.5 percent, from 217,000 to 230,000. Over-the-decade gains for both Michigan establishment types lagged the nation, however; from 2013 to 2023, U.S. nonemployer establishments soared 32.3 percent, while employer businesses leapt by 11.7 percent.
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Nonemployer Establishment Count, 2013-2023
Source: 2013-2023 Nonemployer Statistics (NES), U.S. Census Bureau
The growth divergence between Michigan nonemployer and employer establishments appears to have widened post-pandemic relative to pre-pandemic trends. In the seven years through 2020, over-the-year growth in nonemployer establishments averaged 1.0 percent, while it was 0.2 percent for employers—a mere 0.8 percentage point difference. By contrast, over-the-year growth from 2021 to 2023 averaged 3.3 percent for nonemployers and 1.3 percent for employers—a 2.0 percentage point growth advantage for nonemployers. This is in line with the nation as a whole; nonemployers held a 1.5 percentage point growth lead pre-pandemic, but this accelerated to 2.4 percentage points post-pandemic.3
Average Over-the-Year Percent Growth in Nonemployer and Employer Establishments
Source: 2013-2023 Nonemployer Statistics (NES), U.S. Census Bureau; 2013-2023 County Business Patterns (CBP), U.S. Census Bureau
Due to the persistent gap between nonemployer and employer growth, the nonemployer share of all Michigan business establishments rose from 76.0 percent in 2013 to 78.0 percent in 2023, a 2.0 percentage point gain. This is in line with trends for the nation. Nonemployers accounted for 78.4 percent of all U.S. businesses in 2023, up from 75.4 percent in 2013 (+3.0 percentage points).
Nonemployer Percent Share of Total Business Establishments, 2013-2023
Source: 2013-2023 Nonemployer Statistics (NES), U.S. Census Bureau; 2013-2023 County Business Patterns (CBP), U.S. Census Bureau
Michigan had 815,000 nonemployer businesses in 2023 spread across 18 industry sectors. There were three industry sectors that accounted for over a third of the state’s nonemployer businesses: Other services (102,000, 12.5 percent); Professional, scientific, and technical services (98,000, 12.0 percent); and Transportation and warehousing (89,000, 11.0 percent). Nationally, the top three industries were identical; Professional, scientific, and technical services ranked first (13.4 percent), followed by Transportation and warehousing (13.3 percent) and Other services (10.5 percent).
Michigan Nonemployer Establishment Count by Industry Sector, 2023
Source: 2023 Nonemployer Statistics (NES), U.S. Census Bureau
Growth in Michigan’s nonemployer establishment counts was widespread across industries over the year in 2023, with 12 of the 18 sectors recording increases (versus 15 nationally). Top state industries by percentage growth from 2022 to 2023 included Educational services (+6.6 percent); Arts, entertainment, and recreation (+4.1 percent); and Accommodation and food services (+4.0 percent). All three logged growth rates greater than three percentage points above the 0.7 percent advance for all sectors in Michigan. Nationally, Accommodation and food services was also in the top three, ranking first by percentage growth (+6.4 percent). However, this was followed by Transportation and warehousing (+5.3 percent) and Utilities (+5.1 percent). This compares to a 2.1 percent increase for all U.S. sectors.
Six Michigan industry sectors contracted in nonemployer establishment counts over the year, with the largest declines in Mining, quarrying, and oil and gas extraction (-11.9 percent); Retail trade (-4.4 percent); and Utilities (-3.8 percent). It should be noted, however, that two of those sectors— Mining, quarrying, and oil and gas extraction and Utilities—had total 2023 nonemployer establishment counts of less than 1,000. Nationally, Mining, quarrying, and oil and gas extraction and Retail trade were also the industries with the largest proportional declines, of -9.3 percent and -4.1 percent, respectively. Agriculture, forestry, fishing, and hunting was the only other industry sector to recede nationwide (-3.0 percent).
Over-the-Year Percent Change in Nonemployer Establishment Count by Industry Sector, 2022-2023
Source: 2022-2023 Nonemployer Statistics (NES), U.S. Census Bureau
The advancement of nonemployer establishments in both the state and nation may have uncertain future economic impacts—such as on traditional payroll growth, income volatility, and labor market flexibility—particularly if these trends continue in the coming years. Further research and continued monitoring can help to reveal what lies ahead.
1$1 or more in annual receipts in the Construction sector.
2County Business Patterns includes employment during the week of March 12, first quarter payroll, and annual payroll.
3Over-the-year growth rates for both establishment types at the state and national level are likely somewhat inflated due to a pandemic recovery “bounceback” effect.
Download a Microsoft Excel file containing nonemployer firm examples by industry.
County Business Patterns. (n.d.). Retrieved from United States Census Bureau
County Business Patterns About this Program. (n.d.). Retrieved from United States Census Bureau
Nonemployer Statistics. (n.d.). Retrieved from United States Census Bureau
Nonemployer Statistics About this Program. (n.d.). Retrieved from United States Census Bureau
Nonemployer Statistics Frequently Asked Questions. (n.d.). Retrieved from United States Census Bureau
Shoemaker, T. (2025, July 30). Number of U.S. Nonemployers Grew Faster Than Employer Businesses Nearly Every Year From 2012 to 2023. Retrieved from United States Census Bureau.
