SELF-EMPLOYMENT

Self-employment has greater importance among older workers. The self-employed in 1994, for example, numbered 1.5 million at ages 55 to 64 and 1 million at ages 65 and older (Bregger, Table 4). Although a tenth of workers in the labor force was self-employed in the 1979 to 1996 period, the self-employment rate at ages 55 to 64 was about two and one-half times that at ages 25 to 34 (Manser and Picot, p.4 and Table 2). The self-employment rate in the labor force was about 18 percent at ages 55 to 64 years and about 25 to 29 percent at age 65 years and older.

Increasing percentages of self-employed older workers result from either the self-employed retiring later than employed workers or from workers shifting from wage and salary work into self-employment after retirement from a long-term, career job. Bruce, Holtz-Eakin, and Quinn examined the job shifting between 1992 and 1996 among persons born from 1931 to 1941 using the Health and Retirement Survey data. A net increase in self-employment occurred because more wage and salary workers shifted to self-employment than self-employed workers shifted to wage and salary jobs. Further, the self-employed in 1992 were more likely than wage and salary workers to be employed in 1996. Finally, 30 percent of the re-entrants into the labor force between 1992 and 1996 entered self-employment. Analyzing who was more or less likely to make these changes, the investigators found that women and African Americans were less likely to make the transition from wage and salary work to self-employment. Interestingly enough, the portability of health benefits from wage and salary jobs appears unrelated to the decisions to continue working or to move into self-employment jobs.

Are older workers attracted to self-employment or ‘‘pushed out’’ of wage and salary jobs at older ages? The answer is conjectural but several influences affect older workers. Some are attracted to self-employment by the flexibility and control over hours of work and wages. While wage-and-salary workers commonly work in full-time, full-year jobs, the self-employed are more likely working in part-time and/or part-year jobs (Devine). Part-time work would be particularly attractive to older workers because of limits set by Social Security legislation over the taxable earnings allowable while collecting benefits. Social Security limits the taxable earnings of some working beneficiaries, reflecting its goal of replacing lost income from retirement. Social Security legislation allows working beneficiaries at ages 62 to 64 to keep full benefits with earnings up to a threshold ($10,680 in 2001) and then reduces benefits $1 for each $2 of earnings over the threshold. Legislation in March 2000 eliminated a similar restriction on working beneficiaries at ages 65 to 69. Consequently, workers in full-time, full-year jobs would be unable to receive full Social Security benefits, while those who flexibly control their work hours could receive full benefits working part-time.

Consistent with the importance of reducing hours, about 84 percent of men and 74 percent of women reported reduced hours between their preretirement jobs and their postretirement jobs shortly after starting Social Security benefits in mid-1980 to 1981 (Iams 1987). In the decade after starting Social Security benefits, about one-third of retired men and one-fourth of retired women worked, with a much higher percentage self-employed on their ‘‘retirement job’’ than on their longest job before retirement (Iams 1995; Social Security Administration).

Although self-employment attracts many older workers, some may be ‘‘pushed’’ toward self-employment. Influences such as health and job loss could push wage-and-salary workers toward self-employment, and a major push probably would be pension plans, which seldom permit beneficiaries to continue working on the pension-covered job (Bureau of Labor Statistics 1999). Defined contribution plans may require that a person leave employment in order to receive an annuity or a lump sum payment from the pension plan. Defined benefit plans commonly require job termination for benefit receipt, and penalize part-time work prior to retirement by indexing the pension to the highest few years of earnings. Years of prior full-time earnings would determine benefits, and inflation would erode the value of the highest earnings for pension calculation of those who reduced to part-time work prior to retirement.

Who are the self-employed? Unfortunately, information on jobs of the self-employed must come from information for the total labor force rather than from information on older workers alone (Manser and Picot; Bruegger; Devine). This reflects small sample sizes in data and an infrequent focus on older self-employed workers. In 1975 and 1990, self-employed jobs were more likely held by men, non-Hispanics, the married, and the more educated (Devine, Table 4). Although men were more likely than women to be self-employed, the rate of self-employment among women increased after 1975 while remaining relatively constant among men (Devine). There are substantial differences in the self-employment rate among sixty ethnic/racial groups using 1990 census data (Fairlie and Meyer). Ethnic groups with higher earnings than average seem more likely to enter self-employment.

What kind of jobs do the self-employed generally have? The self-employed were more likely among workers in agriculture, construction, retail and wholesale trades, financial, and other service industries (Manser and Picot, Table 2). The self-employed in 1996 also were more likely among managers, sales workers, precision production or craft workers, and farming or related occupations (Manser and Picot, Table 2). Looking at recent Social Security beneficiaries, the jobs of the self-employed varied by gender (Iams 1987). Beneficiary women most commonly were working in sales; as general managers, hairdressers, or cosmetologists; and as bookkeepers or accountants. About a quarter of the beneficiary men were working as managers and professional employees, primarily managers, lawyers, accountants and auditors, and clergy, while another quarter were in sales and about a quarter also worked as farmers and grounds keepers or gardeners. These self-employed beneficiaries averaged lower median hourly wages than the beneficiaries working in wage and salary jobs.

Self-employment may be an effective method for increased earnings over time. Holtz-Eakin, Weathers and Rosen (2000) found self-employment increased earnings from 1969 to 1990 when looking at five-year intervals with the Panel Study of Income Dynamics. They found that a higher percentage moved up from lower income levels in a five-year interval than wage and salary workers when they were self-employed or when they became self-employed. This occurred for both men and women and for African Americans and non-African Americans. However, the self-employed in upper income levels were more likely to experience downward mobility relative to wage and salary workers.

Income varies between two clusters of self-employed workers: those legally incorporated as a small business with an owner and those who are sole proprietors or in a partnership (the unincorporated self-employed). The unincorporated self-employed receive lower income than wage and salary workers (Devine, Table 9 and Table 10). For example, unincorporated, self-employed men receive 85 to 90 percent and women receive only 54 to 59 percent of the median hourly income relative to wage and salary workers. In contrast, the self-employed with incorporated businesses received 25 to 49 percent higher hourly income than wage and salary workers depending on gender and year. The self-employed owners of incorporated businesses are disproportionately men and full-time workers (Devine, Table 9 and Table 10). A gender differences remains even after considering full-time work and incorporated self-employment, because self-employed women had far lower median earnings than men in both incorporated and unincorporated jobs of part-time and of full-time workers. The advantages of incorporation may have increased over time as evidenced by an increasing percentage of incorporation among the self-employed—from 24 percent in 1975 to 31 percent in 1990 for men, and from 8 percent to 18 percent, respectively, for women.

One possible reason for the rapid increase in incorporation of the self-employed could be the legal advantages of business ownership, such as provision of health and pension benefits. While employers provide health and retirement benefits through costs partly supported by tax advantages, the self-employed have to pay these costs themselves if they are unincorporated. The self-employed were less likely to have health insurance coverage in 1990 than the wage and salary workers, taking into account gender and full-time/part-time hours of work (Devine, Table 11). Among the self-employed, the incorporated self-employed were more likely to have health insurance than the unincorporated self-employed. About 90 percent of incorporated self-employed had coverage although only a quarter of women and half of men had jobs that provided coverage rather than coverage from other family members. In contrast, the majority of unincorporated self-employed had health coverage but seldom from their own job—23 percent of men and 9 percent of women had insurance through a job. The majority of men and women wage and salary workers have pension coverage provided by an employer. The self-employed can have retirement coverage by saving tax advantaged funds in Individual Retirement Accounts or Keogh plan accounts. In 1993, about 16 percent of the self-employed ages 30 to 54 had any pension or Keogh account coverage compared with 60 percent of wage and salary workers (Iams 1995, Table 1).

Given the marked economic advantages displayed by the incorporated self-employed, it is no surprise that those with assets in businesses are concentrated among the upper ten percent of the wealth distribution in America (Kennikell and Sunden 1997, Table 4 and Table 5). Among those aged sixty-five and older, the upper wealth decile owns 82 percent of all business assets and the upper 0.5 percent own 44.5 percent of business assets.

See also Autonomy; Employee Health Insurance; Employment of Older Workers; Individual Retirement Accounts; Job Performance; Pensions, Plan Types and Policy Approaches; Retirement Planning; Workforce Challenges.

Howard M. Iams

BIBLIOGRAPHY

Bruce, D.; Holtz-Eakin, D.; and Quinn, J. Self-Employment and Labor Market Transitions at Older Ages. Boston, Mass.: Boston College Center for Retirement Research, 2000.

Bruegger, J. E. ‘‘Measuring Self-Employment in the United States.’’ Monthly Labor Review 119, no. 1–2 (January/February 1996): 3–9.

Bureau of Labor Statistics. ‘‘Employee Benefits in Medium and Large Private Establishments, 1997.’’ Bulletin 2517 (September 1999).

Devine, T. J. ‘‘Characteristics of Self-Employed Women in the United States.’’ Monthly Labor Review 117, no. 3 (1994): 20–34.

Fairlie, R. W., and Meyer, B. D.. ‘‘Ethnic and Racial Self-Employment Differences and Possible Explanations.’’ Journal of Human Resources 31, no. 4 (1996): 757–794.

Holtz-Eakin, D.; Rosen, H. S.; and Weathers, R. ‘‘Horatio Alger Meets the Mobility Tables.’’ Small Business Economics 14, no. 4 (2000): 243–274.

Iams, H. M. ‘‘Jobs of Persons Working After Receiving Retired-Worker Benefits.’’ Social Security Bulletin. 50, no. 11 (1987): 4–15.

Iams, H. M. ‘‘The 1993 SIPP and CPS Pension Surveys.’’ Social Security Bulletin. 58, no. 4 (1995): 125–130.

Kennickell, A. B., and Sunden, A. E. ‘‘Pensions, Social Security, and the Distribution of Wealth.’’ Washington, D.C.: Board of Governors of the Federal Reserve, 1997.

Manser, M. E., and Picott, G. ‘‘The Role of Self-Employment in U.S. and Canadian Job Growth.’’ Monthly Labor Review 122, no. 4 (1999): 10–25.

Social Security Administration. ‘‘Statistical Notes from the New Beneficiary Data System.’’ Social Security Bulletin. 57, no. 1 (1994): 60–71.

Self-Employment

Self-employment has always been a fundamental feature of American life, not just in colonial times and during early U.S. history—during which, of course, the predominant form of work was agriculture—but also in the most recent period of modern times since World War II. Data on self-employment are collected by the U.S. Bureau of Labor Statistics (BLS) as part of the Current Population Survey. The most recent such data are for the year 2003. In the period 1948 through 2003, those self-employed in non-agricultural industries have represented around 7 percent of total employment. The highest levels came in the early decades of this period, with 1948 being the highest year: 12 percent of all those working outside agriculture were working for themselves. The lowest level was reached in 2002 (6.7 percent), and, generally the trend has been downward. In 2003, 9.3 million individuals were self-employed and represented 6.9 percent of non-agricultural employment. Self-employment rates fluctuate up and down. They tend to rise during reces-sions—but sometimes also rise with the rising economy. Self-employment is highest in the agricultural sector where, in 1948, 61.1 percent of all workers were self-employed. In 2003, 951,000 agricultural workers, 41.8 percent of all those engaged in agriculture, worked for themselves.

LEGAL DEFINITIONS

Individuals who choose self-employment must be aware of the rules governing the treatment of free-lance employees (also known as independent contractors). Classification of someone as an employee or a self-employee is somewhat ambiguous and depends on several factors, including the degree of independence, the freedom to hire others to do the work taken on, the freedom to work for others, and the assumption of risks. Independent contractors typically accept no fringe benefits and pay Social Security, Medicare, and income tax installments directly. Employees have more statutory rights, benefits, and protections than subcontractors, who must generally provide these for themselves. But independent contractors have advantages in terms of freedom, flexibility, and tax deductions.

The IRS applies a 20-part test in order to determine whether a certain worker should be classified as an employee or an independent contractor. The main issue underpinning the test is who sets the work rules: employees must follow rules set by their bosses, while independent contractors set their own rules. For example, an individual who sets his own hours, receives payment by the job, and divides his time between work for several different employers would probably be classified as an independent contractor. Other criteria involve who provides the tools and materials needed to complete the work. For example, an individual who works at an employer's facility and uses the employer's equipment would be considered an employee, while one who works at a separate location and provides her own equipment would be classified as an independent contractor. Finally, an independent contractor usually pays his own expenses of doing business and takes the risk of not receiving payment when work is not completed in accordance with a contract, while an employee is usually reimbursed for business-related expenses by the employer and receives a paycheck whether his work is completed or not.

An individual's status as a self-employed, independent contractor can be reinforced by having multiple clients, being paid by the amount of work done rather than by the hour, or obtaining an employer identification number from the IRS. Working under a business name also helps reinforce this status. Printing invoices, business cards, and stationery can also help identify someone as a self-employed person. In general, the person must demonstrate that he or she is in business for the purpose of making a profit.

CHARACTERISTICS

Of those self-employed in industry (versus agriculture), slightly over half (51.5 percent) were working as incorporated entities. The self-employed are predominantly older. Among those unincorporated, those aged 24-44 represented 42 percent and those aged 44 and older 54.5 percent of this segment of the self-employed. Among those incorporated, the older were even more numerous, representing 58.5 percent of those over 44 and 42 percent of those in the 24-44 bracket. In the wages and salary-earning population as a whole the 24-44 group was 48.1 percent and those over 44 were 36.5 percent. The self-employed are overwhelmingly white (88.2 percent of unincorporated, 90.1 percent of those incorporated) and U.S. born (87 percent in both categories). The educational attainment of the incorporated self-employed was high in 2003. Of these individuals, on average, 72 percent had some college on up to advanced degrees; among the unincorporated 58 percent had such attainment, slightly below the wages and salary-earning population, of which 60 percent had some college or higher attainment. Males are more present in both categories, representing 62 percent of the unincorporated and 73 percent of the incorporated self-employed.

Beyond such demographic measurements, the motivation for self-employment is more difficult to determine. Motivations routinely mentioned by commentators no doubt rest on experience and observation—namely that some women choose self-employment to be more available to care for a member of the household. Some of the elderly continue working on their own as they reach retirement age—and beyond. A certain segment of the self-employed population is motivated by enterprise. Many, however, do not choose this type of work but do it as a way of coping with inability to find good jobs, especially in middle age. And of these some succeed well enough to found organizations and thus, after a period, migrate back into employment—but in companies that they now own. Fluctuations in self-employment data may in part be explained as an indirect effect of new business formation: these begin as single-person businesses but then become providers of wages and salaries—for the owners as for others.

SELF-EMPLOYMENT AND THE VERY SMALL BUSINESS

Elsewhere in this volume (see Small Business ) are presented data on the so-called nonemployer businesses, labeled "the micros." In 2003, there were some 18.6 million such businesses grossing $830 billion in revenues, equivalent to $44,623 per entity. This number was twice as high as the 9.3 million self-employed persons in 2003—but also includes them. The self-employed, thus, are roughly half of the population of "micro" of business, the seedlings from which larger entities often emerge. But obviously many nonemployer businesses are also operated "on the side" by people employed in ordinary jobs but doing some trading, producing, and service providing in their spare time: moonlighting, in other words. In 2001, 7.8 million people reported working at multiple jobs. Of these, 4.6 percent (359,000) told the BLS that they were doing this in order to build a business or to get experience—preparing, perhaps, to launch their own operations. Nonemployer businesses grew by 20.8 percent between 1997 and 2003; during the same period, total employment increased 7.3 percent and self-employment by 3.1 percent, losing share, in other words. Thus it is plain that the growth of seedling businesses is far less attributable to self-employment than to entrepreneurial activity.

CONSIDERATIONS IN SELF-EMPLOYMENT

Self-employed individuals as a whole tend to work longer (an additional 17.5 hours per week, according to one study) and harder than their colleagues who are organizationally employed. Moreover, self-employed people often operate under uncertain payment schedules and must make outlays from personal earnings for insurance and retirement. In addition, their salaries and assets are dependent on their work contributions in a more intimate way than are those of their colleagues. The entrepreneurial role is also often more physically and psychologically stressful due to the investments in energy the jobs demand.

Isolation and Networking

Isolation often proves to be an important source of psychological strain for self-employed individuals. The environment of the typical self-employed individual is quite different from the corporate environment where many professionals gain their experience. This is one reason contact with supportive colleagues becomes crucial. Mentors can provide advice regarding business aspects of a new business owner's operation. Trade and professional organizations can be an excellent way to establish contacts with peers. Tenacity in networking has been cited as a key to survival for business owners, some of whom maintain databases of thousands of contacts. These contacts are also vital in referring clients and providing market information. The role of the contact is made more important as the self-employed individual typically has no staff for marketing support.

It is difficult to exaggerate the importance of referrals to the typical independent professional. Since relationships are so vital, one must exercise the utmost delicacy in terminating employment with one's former employer or turning down a job. One's former employer can even become a good client, besides providing valuable referrals. When turning down clients, the self-employed person can protect those relationships by making referrals or even subcontracting to other colleagues in their network. Provided the work done is of quality, this can strengthen one's reputation as a purveyor of talent—whether one's own or an associate's. When the client calls back with a more appropriate assignment, the contractor has the choice of the business.

As they begin their enterprises, many self-employed individuals feel compelled to accept a variety of assignments due to sheer scarcity of work. However, specialization can help ensure their long-term survival. For one thing, corporate clients can often find a generalist's abilities in-house. Also, specialization may allow professionals to broaden their client base geographically, thus freeing their fortunes from fluctuations in the local economy. These factors can enable the specialist to earn higher fees and work more consistently. Paradoxically, one's work as a specialist can garner referrals outside one's specialty, so specialization might not be as limiting as a strict definition would imply. The self-employed should be cautioned against changing their specialties too often, as this can confuse clients and make their own operations inefficient.

Tax Implications

Self-employment entails both tax advantages and disadvantages. In terms of advantages, individuals who are classified as independent contractors can deduct work-related expenses for tax purposes. In addition, independent contractors often qualify for tax deductions for using part of their home as an office and for salaries paid to other people, while employees usually do not. Independent contractors also can claim significant deductions for medical insurance, transportation, office supplies, and a host of other operating costs.

The main tax disadvantage for self-employed persons is that they must pay the full amount of Social Security and Medicare taxes themselves and make quarterly estimated tax payments to the federal government. For those who are organizationally employed, the employer withholds income taxes and pays half of their Social Security and Medicare taxes. Although the payment of Social Security and Medicare increases the tax burden of self-employed individuals, these amounts are based on net, rather than gross, earnings. For this reason, it is essential for small business owners to keep an accurate record of expenses. Self-employed individuals also file quarterly taxes.

INCREASING THE CHANCE OF SUCCESS IN SELF-EMPLOYMENT

Self-employment, whether by choice or necessity, does not guarantee success. In fact, nearly two out of every three new businesses fail within five years. But the chances of success can be improved with careful planning, prior savings, and a sound marketing strategy. It may also be helpful to make the transition to full-time self-employment gradually. As already mentioned, one option is to "moonlight" on the new job first. Those planning home-based businesses should also take time to prepare family members for the changes that will take place.

Some prospective new business owners also try to establish one stable client relationship that will provide steady income during the search for additional clients. A particularly attractive option may be an individual's former employer, who will already be familiar with the would-be entrepreneur's reputation and abilities. For this relationship to succeed, however, it is important that the individual use an honest and professional approach when severing ties with their employer. Of course, your employer may not react warmly to such an arrangement if your new business is a potential threat to its own financial fortunes.

Although one stable client relationship can help establish a new business, it is also important that the self-employed person develop a marketing strategy to find new clients and grow. Many new business owners become so busy serving their existing clients that they do not devote sufficient time to marketing. Sending out brochures, networking, and joining professional organizations are a few possible marketing strategies.

Finally, self-employed individuals should take an organized approach to all business activities in order to increase their chances of success. A business plan, however rudimentary, is often helpful to set the path ahead with some consciousness and formality. A plan can help a self-employed person evaluate strategies, plan expenditures, and motivate him or herself. It is also important to keep careful records of income and expenses, set aside money for taxes, and insist upon contracts for all work performed.

see also Self-Employment Contributions Act (SECA); Small Business

BIBLIOGRAPHY

Hipple, Steve. "Self-Employment in the United States: An update."Monthly Labor Review. U.S. Department of Labor. 23 July 2004.

Karoly, Lynn A., and Julie Zissimompoulos. "Self-Employment Among Older U.S. Workers." Monthly Labor Review Online. U.S. Department of Labor. Available from http://www.bls.gov/opub/mlr/2004/07/art3exc.htm. July 2004.

"Moonlighting in 2001." Monthly Labor Review. U.S. Department of Labor. 16 October 2002.

U.S. Bureau of Labor Statistics. "Work at Home in 2004." Press Release. 22 September 2005.

U.S. Census Bureau News. "Small Business Week 2006." Press Release. 27 March 2006.

                                 Hillstrom, Northern Lights

                                   updated by Magee, ECDI

Self-Employment

BIBLIOGRAPHY

An individual who is self-employed works for himself or herself rather than as an employee of another individual or organization, obtaining an income through ownership of a business or professional practice in which he or she contributes much of the labor needed to produce or distribute a good or service. According to the Organization for Economic Cooperation and Development, the selfemployed include employers, own-account workers, members of producers’ cooperatives, and unpaid family members. However, the designation “self-employed person” does not usually apply to those who are in a position to hire a large workforce (that is, to upper-management personnel who have a significant stake in the assets of the firm in which they are nominally self-employed). Such individuals are more appropriately referred to as “capitalists,” who derive their income primarily from ownership and investment rather than from the performance of labor. Since 1967 the Current Population Survey conducted by the U.S. federal government has asked selfdescribed self-employed individuals whether the businesses they operate are incorporated. Those who answer affirmatively are deemed to be salaried employees; those who answer in the negative are defined as self-employed.

A self-employed person operating a small-scale, unincorporated business such as a family farm, a retail outlet, a service-contracting firm, or a professional practice may rely on the labor of assistants, whether waged or unwaged, in producing or providing a good or service, but most of the value added is contributed by the self-employed person. The self-employed include many farmers and professionals (e.g., medical doctors, dentists, lawyers, architects) as well as “freelance” workers such as writers, consultants, musicians, and artists who sell the products of their labor (rather than their ability to work) on the market, or who work on an “individual assignment” basis.

The developed capitalist world has seen a secular decline in the number of self-employed since the end of World War II (1939–1945). In 2005 the self-employed constituted 7.5, 12.4, and 14.7 percent of the labor force in the United States, Germany, and Japan, respectively. In the United States, as in most other industrialized countries, the downward trend in the self-employment rate is overwhelmingly attributable to the decline of small-scale agriculture and the movement of much of the self-employed farm population to waged and salaried employment, usually in nonagricultural sectors. However, the trend also reflects a more general decline of small and medium-sized businesses and the concomitant concentration of capital in large corporations. Changing tax laws have encouraged many small business proprietors to incorporate, with the consequence that they have been redefined as salaried employees. New corporate practices, such as franchising, have also had an impact on the measurement of self-employment.

Corporate downsizing, cutbacks in social assistance to the economically indigent, and efforts to reduce the size of the public sector since the profitability crises of the 1970s have contributed to a slowing or even a partial reversal of the long-term trend toward a decline in self-employment. Although sometimes presented as a revival of “entrepreneurial spirit,” an increase in small-business activity may actually reflect the disappearance of “good” corporate or public-sector jobs for highly skilled, formerly salaried employees or for semiskilled or unskilled wage earners. During periods of high unemployment and underemployment, a spike in self-employment is likely to occur. In the 1990s, for example, Canada led the industrial nations in a “shift to self-employment” (with self-employment accounting for 18% of all employment by 1998) over a period in which unemployment and underemployment reached near-record levels (Lowe 2000).

Three additional empirical facts about self-employment deserve to be highlighted. First, self-employment is highest among those who are the most and the least educated, with the well educated typically receiving above-average earnings and the poorly educated belowaverage earnings, relative to employed workers. Second, the gender gap in earnings is greater between self-employed men and women than it is between their employed counterparts. And finally, the self-employed tend to put in longer hours for their earnings than do the employed, raising quality of life concerns that are magnified by their need to independently finance—or go without—the “benefits” (e.g., pensions, health care insurance, etc.) that are received by many employed workers.

At the ideological level, the persistence of self-employment (and small business in general) in the developed capitalist countries contributes significantly to obscuring the central dynamic of modern capitalism: the division, interdependence, and conflict between capital and wage labor. The self-employed, in Marxist terms, constitute a “petty bourgeoisie” within a global economy whose productive assets are decisively concentrated in the hands of several hundred huge transnational corporations that employ a tiny fraction of the world’s workforce. As such, self-employed persons are compelled to “exploit themselves” or face economic ruin. At the same time, their atomized existence, precarious competitive position, and sometime dependence on wage labor predispose them to embrace the ideological nostrums of “free enterprise” and “self-responsibility” to an extreme degree, to view the labor movement with suspicion or outright hostility, and to oppose more generous welfare-state policies.

In 2005 the self-employed constituted 34.9, 35.7, and 45.8 percent of the labor force in Brazil, Mexico, and Turkey, respectively. In the countries of the global South, the destruction of traditional subsistence agriculture and “independent commodity production” by exportled, neoliberal development has produced a new class of impoverished urban “entrepreneurs” struggling to survive with the most meager of economic assets. This phenomenon, which has taken on massive proportions in the barrios and shantytowns surrounding major Latin American cities, is a striking reminder that “self-employment” is very often a manifestation of chronic unemployment and underemployment, of which about one-third of the global labor force (1 billion people) were the victims in the year 2000.

SEE ALSO Bourgeoisie, Petty; Education, USA; Employment; Globalization, Social and Economic Aspects of; Middle Class

BIBLIOGRAPHY

David, Mike. 2004. Planet of Slums. New Left Review 26 (March–April): 5–34.

Lowe, Graham S. 2000. The Quality of Work: A People-Centred Agenda. Toronto: Oxford University Press.

Organization for Economic Cooperation and Development. 2006. Labor Force Statistics. Paris: Author.

Yates, Michael D. 2003. Naming the System: Inequality and Work in the Global Economy. New York: Monthly Review Press.

Murray Smith

Birdseed

Background

Birdseed is a mixture of seeds, nuts, fruits, and vegetables provided to birds for sustenance. It is produced in a two-stage process that involves preparing the component ingredients then combining them in a mixing kettle.

Statistics show that the United States is a nation of bird lovers. In fact, feeding and watching birds has become one of America's favorite pastimes. According to the United States Fish and Wildlife Service (USFWS) one third of the United States population feeds wild birds. In a survey done by the American Pet Products Manufacturers Association (APPMA) it is reported that 6.9 million households in the United States have birds as pets. This fascination with birds has led to a birdseed industry that dispenses over 500,000 tons of birdseed per year.

History

Humans have a long history of interaction with the avian world. As far back as the Egyptian pharaohs and the ancient Romans, people captured and kept birds for both aesthetic and practical reasons. Certainly, modern society continues to depend on birds for food, entertainment, and companionship. In light of this, then, it is not surprising that the United States Congress enacted the Wild Bird Conservation Act of 1992 in an effort to preserve exotic and endangered birds around the world.

Even with such a rich history of interaction between humans and birds, birdseed manufacturing did not get its start until the middle part of the nineteenth century. Many of today's American birdseed manufacturers have similar roots; they were small town agricultural grain companies with retail stores. In the 1940s, Simon Wagner of Wagner Brothers Feed Company and Bill Engler Sr. of Knauf & Tesch (the company is now known as Kaytee, one of the largest pet food manufacturers in the country) collaborated on creating a market for wild birdseed. Up to that point such a market had never existed. Creating birdseed was a natural extension for these feed companies considering they were already making products that contained the same ingredients. Wagner and Engler were able to establish a market for their birdseed relatively quickly. Wagner attributes the early success to the growth of suburbia after World War II, which led to new homeowners' interest in their yards and the animals that visited them.

Raw Materials

The most commonly used birdseed ingredients are sunflowers, corn, millet, fruits (such as raisins and cherries), and peanuts. Many of these crops come from Nebraska, Kansas, North Dakota, and South Dakota.

One of the primary ingredients in birdseed is sunflower seeds. These are four sided, flat seeds that are about 0.25 in (0.64 cm) and 0.13 in (0.32 cm) wide. The seed coat is black with gray stripes. The outer coat protects the inner kernel which is composed of about 20% protein and 30% lipids. It also contains a significant level of iron and fiber. Other seeds that may be used include cottonseed, pumpkin, safflower, hemp, or palm kernel seeds.

Cereal grains are another type of ingredient used in birdseed compositions. Of these corn is one of the most important. About 800 kernels are produced for each ear of corn harvested. An average center kernel measures about 0.15 × 0.31 in (4 × 8 mm) thick and 0.5 in (12 mm) long. Corn kernels are made up of about 60% starch and 4%oil. Millet is another grain used. It is smaller than corn with a length of about 0.15 in (4 mm) and a width of 0.11 in (3 mm). It contains about 11% protein, 3% fat, and 8%fiber. Its small size makes it an ideal birdseed ingredient, especially for smaller birds.

Peanuts are a groundnut grown on an upright plant. Its flowers are fertilized above ground and then are pushed into the ground to develop the seeding pods. A pod will contain anywhere from one to three nuts. Peanuts are good components for birdseed because they contain over 25% protein. Additionally, they have about 50% oil which increases their taste appeal for birds. Manufacturers must be particularly careful of any birdseed mixes that contain peanuts because peanuts can harbor the pergillus mold. This mold can do serious liver damage to birds.

Fruits are another component material added to birdseed mixtures. They have a high sugar content that makes them appealing to certain bird species. The most commonly used fruits are cherries and raisins. Cherries are pitted before they are used and then dehydrated. Raisins are produced from grapes using a drying process. They can be either sun-dried or physically dried by forced-air dryers.

In general, pet bird food is a more complex mixture including exotic nuts and fruits. This is because pet birds get all their nutrition from the bird feed that is given to them by their owners; unlike wild birds that have access to and utilize other food sources. Another interesting additive to some wild birdseed is ground hot peppers. It turns out that birds do not mind the hot pepper taste but squirrels have a distinct aversion to it. This prevents squirrels from eating birdseed laid out for wild birds. Other ingredients such as algae extract can be added to improve the tone and color of a bird's feathers.

The Manufacturing
Process

Making birdseed is a relatively simple manufacturing process. The first phase of production involves the procurement of seeds, grains, and fruit that make up the various mixes from processors. The second phase involves blending and packaging these materials then shipping them to consumers.

Seed procurement

• 1 The process of producing birdseed begins with the procurement of raw materials. This is an important phase of production because pure and fresh ingredients are crucial to the quality of the end product. Birdseed manufacturers purchase their raw materials from processors who obtain their grain from the actual growers or grain brokers.
• 2 The processors clean the component seeds to get them to 98% purity. Once the raw materials are in the plant, they must be cleaned further. The cleaning process consists of sorting unwanted debris and waste products from the birdseed ingredients. Typically the raw materials are put through a three-step air cleaning system that sorts the quality foodstuff from the waste (also known as Chilton). The air sorter separates the lighter debris such as sunflower hulls and stems from the raw materials used in the birdseed mixes. Many manufacturers use the Chilton to make other animal feed such as pellets for companion birds. Additional waste products may be sold to local farmers for use in their animal feed. Dirt and rocks can also be removed with a similar process. Processors may also provide drying services and some seed treatments to prevent fungal growth.
• 3 Once the seed is cleaned and treated, it is filled into bags, drums, or even trucks and delivered to the birdseed manufacturer within one week. Larger manufacturers are often geographically located near processing companies that clean and store the crops used to make birdseed.
• 4 Next, the cleaned seeds are blended. Recipes vary depending on the mix, but all ingredients are automatically measured and blended in large, stainless steel containers. In an effort to keep the mixes blended and consistent from package to package, the ingredients are continually mixed until they are deposited into their appropriate packaging. Occasionally, scents, oils (such as anise or orange oil), or colors are added to the blends to enhance consumer appeal.

Packaging

• 5 Proper packaging is crucial to the quality of the birdseed because rodents, mites, or other pests can contaminate seeds which in turn can be spread to birds. Packaging equipment weighs and fills pre-made packages composed of a variety of materials from paper to polyester films. The packaging provides a physical barrier between the feed and potential pests. As a general rule, companion birdseed typically gets more barrier packaging than wild birdseed.
• 6 To minimize infestations by any pests that may have inadvertently gotten inside the bags after packaging, each bag is flushed with nitrogen. The moisture and oil content of the grain also has an impact on the potential for infestations. Seeds with high oil and moisture content, like sunflowers, require more treatment to prevent infestations or rancidity. Another tactic for cutting down on infestation is to use airtight bins to house the birdseed ingredients prior to it being processed.

Quality Control

To ensure that a high quality product is made, birdseed manufacturers visually inspect the raw materials and finished products during each phase of production. Quality control begins with the raw material growers. For example, the plants are frequently examined while they are growing to make sure they are free from disease and growing properly. If diseased plants are found, they may be isolated and removed before harvest. When the birdseed manufacturers receive component raw materials inspections begin immediately. These ingredients are subjected to a variety of laboratory tests to ensure that specifications related to seed size, nutritional value, and microorganism contamination are met. After batches of birdseed are mixed, the finished product is checked to see that the correct proportions of ingredients were put in each batch.

The Future

Perhaps the biggest issue facing birdseed manufacturers in regards to pet birds is the trend in avian nutrition to move away from birdseed as the main source of nutrition toward pelleted food. Pelleted food is touted as being "complete nutrition" and, according to manufacturers, no additional supplementation is necessary. Manufacturers recommend using birdseed as a treat or behavior modification tool instead of the bird's mainstay. The advantage of pelleted food over birdseed is that it provides a bird with all the necessary vitamins and nutrients required for optimum health. Of course, the drawback to pelleted food is that some birds refuse to eat it. Birdseed is inherently deficient in some important nutrients like protein and some minerals and high in fat (up to 50% fat in some seed). In the future, birdseed manufacturers will try to formulate more mixtures with a more complete nutritional profile.

Another trend in the industry is to make the industry as a whole more proactive and homogeneous. Overall, the bird feed industry is relatively fragmented with cottage-based industries to massive corporations all producing birdseed. As a result, different states have different regulations and expectations for quality control. Industry trade associations have been attempting to deal with the quality control issue on many levels including an attempt to standardize regulations and expectations from state-to-state. Additionally, efforts are underway to educate the entire industry on issues affecting it, such as noxious weed control in crops.

Where to Learn More

Books

Alderton, David. The Cage Bird Question and Answer Manual. Barron's Publishing, 2000.

Armstrong, Holly, et al. Gourmet Bird Food Recipes. San Leandro, CA: Bristol Publishing, 2001.

Gallerstein, Gary A. The Complete Bird Owner's Handbook. Macmillan Publishing, 1994.

Periodicals

Allen, Carolyn. "We Have Roots: Early History of the Wild Bird Seed Marketplace." Birding Business (Summer 2001).

Rouhi, A. M. "Chili Pepper Studies Paying Off With Hot Birdseed and Better Analgesics. Chemical and Engineering News (4 March 1996).

Other

American Pet Products Manufacturers Association Web Page. December 2001. <http://www.appma.org>.

Kaytee Products Web Page. December 2001. <http://www.kaytee.com>.

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