Self-Employment, Home Businesses, and E-Commerce Trends

Introduction: The Changing Workplace

The lack of stability in the traditional workplace is resulting in a change in the way people do business. Instead of looking to large corporations or government offices for full-time paid work, people are taking matters into their own hands. Self-employment is growing as an opportunity for everyone who needs work. Two popular sub-categories of self-employment are home-based businesses and electronic commerce.

Post-Industrial Shifts in Production and Consumption

The revolution — or transformation — in the institutions of work and economy due to technology came about through a shift in the means of production and of consumption. Means of production refers to the process by which the production of material goods is carried out in a society. In today's world, this process is carried out by people, with the major product being knowledge and/or information, not goods manufactured in factories or by machines. Means of consumption is the process by which a society acquires and uses products. In modern societies this is accomplished through malls, shopping centers, self-employment, and the Internet.

Knowledge has become the main product produced and consumed in our post-industrial society. As the term "post-industrial" implies, the manufacturing of goods through factories or with machines is no longer the driving force of the economy or the major employer of workers. Services and information cannot be produced in factories. As the means of production shifts, the means of consumption shifts as well. Because knowledge and services cannot be transferred through inheritance and can be shared or given without any loss, the means of providing these products differs from the industrial society's means of production. Therefore the means of consumption will be different as well, and has in fact replaced the means of production in overall economic importance.

Growth and Demographics of Self-Employment

With reduced employment opportunities in larger companies and government, many people seeking employment have started looking toward self-employment and small firms as a major source of jobs. While some self-employed workers turn to this type of employment by choice and earn high incomes, most of the increase in self-employment during the 1990s was driven by the lack of alternatives such as paid work and permanent employment. In 1990, the rate of self-employment as a share of total employment was 12.1 per cent and rose to 15.4 per cent in 1995 (Growth of Self Employment, 1997). The growth of self-employment has been attributed to high and rising unemployment rates — especially among older workers and well-educated young people — as well as a lack of suitable work and low wages, among various other reasons.

Self-employed workers, on average, are more likely than paid workers to work on a full-time, full-year basis. Many self-employed workers also work extra-long hours. One in three (32.1%) self-employed men and one in five self-employed women work days of ten hours or longer, six or seven days a week. This compares to 5.3 per cent of paid working men and 1.2 per cent of paid working women. Self-employed workers are thus roughly twice as likely to work long hours as paid workers (Growth of Self Employment, 1997).

Home-Based Businesses

There is an increased draw toward owning one's own business and working primarily from home. Technological advances such as fax machines and the Internet allow people from all over the world to network and market their products and services to a global community, even from their own homes. Even though home-based businesses represent a relatively new trend, a study by Entrepreneur Magazine found that home-based businesses already account for $454 billion in revenue, and their numbers continue to grow. Home-based businesses increased from 26.4 million in 1993 to 40.2 million in 1999 (Leonhardt, 1999).

Millions of people are setting up their own customer service-oriented businesses from their homes. The appeal is strong because home-based self-employment offers all the benefits of owning a business — avoiding job insecurity, maintaining control over decisions, setting one's own schedule, and determining how much time and money to invest — while allowing owners to work in the comfort of their own homes. Home-based businesses also require little overhead, so entrepreneurs do not need to recoup large operating costs. In the United States alone there are over four million documented home-based businesses, but at least fifty million when undocumented operations are included. The rapid growth in Internet use is and will continue to be a major factor spurring the creation of more home-based businesses (Leonhardt, 1999).