You can walk down any Main Street in America and see the small businesses policymakers so often call the “backbone of the economy.” Storefronts, shops, and local employers remain a visible reminder of entrepreneurial spirit. Yet what remains invisible, both on the street and in Washington, are the millions of businesses with no sign, no employees, and no formal seat at the table when economic decisions are made.
These are the non-employer firms, the freelancers, gig workers, independent contractors, and solo entrepreneurs who now comprise nearly 80 percent of all U.S. businesses (U.S. Census Bureau, 2023). Their presence is quieter but no less consequential. Together, they account for over 28 million businesses generating more than $1.3 trillion in annual revenue. Yet despite their scale, these solo businesses often exist in a policy vacuum, largely absent from the programs and protections designed to support American entrepreneurship.
The Quiet Surge of Solo Entrepreneurs
For decades, public policy has equated small business success with employer firms. The structures of the Small Business Administration, tax incentives, and economic development programs reflect that view. But while policymakers have been focused on payroll growth and formal hiring, a different kind of entrepreneurship has been quietly reshaping the labor market.
The COVID-19 pandemic accelerated this shift. Faced with layoffs, public health restrictions, and a radically changing economy, millions of Americans turned to solo entrepreneurship. Between 2020 and 2024, the country experienced an unprecedented surge in business formation, with more than 17 million new applications filed (U.S. Census Bureau, 2024a). A significant share of these were non-employer firms, businesses of one, launched from kitchen tables, spare bedrooms, and mobile devices.
What is notable is that the wave has not receded. Even as inflation, rising interest rates, and the specter of recession have dominated economic headlines, solo business formation remains historically high. In May 2025 alone, more than 430,000 new business applications were filed nationwide, with nearly 30,000 of those projected to become employer firms within the year (U.S. Census Bureau, 2025). But millions of Americans are building businesses that are never intended to hire beyond the founder. Their choice, or in some cases, their necessity, reflects deeper structural changes in how Americans work.
The Blind Spot in Public Policy
The policy framework surrounding small business development has not kept pace with these shifts. At the federal level, access to credit, technical assistance, and business development programs often hinge on formal payroll records. The Small Business Administration’s flagship initiatives, designed with growth-oriented employers in mind, leave millions of solo entrepreneurs excluded from meaningful support (U.S. Government Accountability Office, 2023).
Even basic legal protections remain uneven. Ongoing battles over gig worker classification reflect the tension between preserving flexibility and ensuring economic security. Meanwhile, the complexity of the tax code continues to place a disproportionate burden on sole proprietors, many of whom lack the resources to navigate costly compliance requirements.
Beyond the mechanics of regulation, there is a more fundamental problem: economic data itself often fails to account for the scale and contributions of non-employer businesses. As a result, policymakers and economists routinely underestimate both the vulnerabilities and the potential of this segment of the workforce.
Overlooked, Yet Essential
The consequences of this policy blind spot are far from theoretical. Millions of solo entrepreneurs operate without affordable health insurance, retirement savings options, or paid leave. Income volatility is commonplace. For those seeking to grow beyond a business of one, the pathways to scale are often obstructed by limited access to capital and insufficient technical assistance.
The blind spot is not just economic, it is structural. Research shows that women, people of color, and immigrants are overrepresented in the non-employer sector (Urban Institute, 2024). In fact, non-employer businesses are disproportionately female-owned, reflecting both the opportunities and limitations facing women in the labor market. For many women, particularly caregivers or those navigating systemic barriers to traditional employment, solo entrepreneurship offers flexibility unavailable elsewhere. Yet that flexibility often comes at the cost of security, with fewer benefits, less access to capital, and limited policy recognition.
Their exclusion from business support systems deepens existing disparities, making it harder for entrepreneurship to serve as a genuine engine of upward mobility.
Building a Modern Policy Framework
If non-employer firms are recognized as a defining feature of the 21st-century economy, and the data leaves little doubt that they are, then the policies designed to support entrepreneurship must evolve.
That begins with expanding Small Business Administration programs to serve solo entrepreneurs directly. These businesses are not peripheral to the economy, they are central to its structure. Yet too often, they are excluded from the very programs designed to foster business development.
Likewise, simplifying tax and reporting structures for the smallest businesses would reduce the administrative burden that discourages many sole proprietors from formalizing or growing their operations.
Labor protections also require attention. The challenge is not to strip away flexibility but to reform labor frameworks to balance independence with basic economic security. Millions of solo entrepreneurs operate in legal gray areas, where they lack both the stability of traditional employment and the freedom of true business ownership.
Health care and retirement remain largely out of reach for many independent workers. Addressing this requires investment in accessible benefits platforms, such as portable retirement and health care options that follow the worker rather than the job.
Accurate policy begins with accurate data. Improving federal and state data collection to reflect the scale and needs of non-employer businesses is essential to designing effective support systems and understanding the true shape of the modern workforce.
Finally, economic opportunity depends on access to capital. Yet traditional lending structures often exclude solo entrepreneurs. Addressing this requires a deliberate effort to prioritize access to capital through microloan programs tailored to solo operators, unlocking potential currently constrained by institutional neglect.
The New Front Line of Entrepreneurship
The rise of non-employer firms is not simply an economic curiosity. It reflects enduring American values, independence, self-reliance, and the belief that individuals can build their own economic future. Yet it also exposes cracks in the old social contract, as more Americans find themselves pursuing entrepreneurship not as a choice, but as the only viable path in a labor market that no longer guarantees stability.
Millions of businesses of one are shaping the future of work in this country. They are the new front line of entrepreneurship. Recognizing their presence, understanding their needs, and building policies that reflect their realities is not just good economics, it is a necessary step toward a more resilient and inclusive American economy.
References
U.S. Census Bureau. (2023). Nonemployer statistics by receipts size class for the U.S., states, metropolitan areas, and counties. https://www.census.gov/data/tables/2023/econ/nonemployer-statistics/2021-nonemployer-statistics.html
U.S. Census Bureau. (2024a). Business formation statistics: Monthly data release. https://www.census.gov/econ/bfs/
U.S. Census Bureau. (2025). Business formation statistics: May 2025 release. https://www.census.gov/econ/bfs/
U.S. Government Accountability Office. (2023). Small Business Administration: Actions needed to improve capital access for sole proprietors. https://www.gao.gov/products/gao-23-105615
Urban Institute. (2024). The overlooked workforce: Independent workers and the future of inclusive entrepreneurship. https://www.urban.org/research/publication/overlooked-workforce