Here are some charts from Reader Tim Wallace that help explain my report a few days ago that 23% of Small Business Owners (Approximately 6.21 million) Report "No Pay for a Year"; New Zealand, Singapore, US, Best Places to Start and Run a Business



The first chart below shows actual employment of covered workers compared to the civilian population and labor force. Covered employees are those eligible for unemployment benefits (working or not). Some are currently collecting those benefits.



In the following charts, "covered employment" or "net employment" refers to those with benefits and currently working.



Population, Labor Force, Covered Employment







click on any chart for sharper image



Self-employed workers and contractors are not eligible for unemployment benefits even though they have to contribute to state unemployment insurance schemes. It believe it is government-sponsored fraud to have to pay unemployment insurance when there is no chance of ever collecting it.



The next chart shows state level employment data. Net covered employees (those currently with a job covered with unemployment benefits) was calculated by subtracting continuing unemployment claims from the pool of all covered workers.



Covered Employees, Net Covered Employees, Continuing Claims







The next chart compares BLS employment numbers to net covered employees (those actually working).



BLS Employment , Covered Employment, Non-Covered Employment







Notice the widening gap between covered employment and employment as reported by the BLS. In 2008 and again in 2010 the difference between BLS employment and Covered Employment as noted by the green line (right axis) was about 15 million.



This month the difference is nearly 19 million. The table below shows the precise numbers.





Year Covered Employees BLS Employment Non-Covered Employment 2003 123,193,833 137,687,000 14,493,167 2004 123,717,669 138,867,000 15,149,331 2005 124,663,546 141,591,000 16,927,454 2006 127,217,409 144,041,000 16,823,591 2007 129,399,094 145,864,000 16,464,906 2008 130,553,967 145,927,000 15,373,033 2009 127,539,427 140,363,000 12,823,573 2010 124,096,266 139,497,000 15,400,734 2011 122,146,266 140,028,000 17,881,734 2012 123,996,700 142,727,000 18,730,300

Year "Non-Covered Employment" 2003 10.5% 2004 10.9% 2005 12.0% 2006 11.7% 2007 11.3% 2008 10.5% 2009 9.1% 2010 11.0% 2011 12.8% 2012 13.1%

Bear in mind, that making money or receiving a paycheck is irrelevant to the BLS when they compute the unemployment rate. If you work as little as 1 hour, whether you collect a paycheck or not, you are considered employed.



In addition to the 6.21 million business owners with no paycheck, factor in those selling trinkets on EBay out of desperation and collecting a few dimes in the process.



Also factor in all those starting multi-level marketing schemes and calling it a business. How many get sucked into that losing proposition every year? Yet, to the BLS, it's a job if you worked any hours.



The ease of starting a business in the US is a great thing. Unfortunately, making money in a small business startup is not so easy.



Historic trends suggest half of small businesses will fail within 5 years, and I highly suspect future trends will be much worse.