Progressive Policies Burden the Yeoman Class


Obamacare's first set of victims was predictable: the self-employed and owners of small businesses. Since the bungled launch of the health insurance enrollment system, hundreds of thousands of self-insured people have either had their policies revoked or may find themselves in that situation in the coming months. More than 10 million self-insured people, many of them self-employed, could meet a similar fate.

Unlike large companies or labor unions, which have sought to delay or duck implementing the Affordable Care Act, what could be called the yeoman class lacks the political might to make much of a dent in Washington policies. Indeed, in the Obama era, with its emphasis on top-down solutions and Chicago-style brokering, Americans who work for themselves probably are more marginalized today than at any time in recent memory.

Virtually every major initiative of this administration – from taxation and regulation to monetary policy and Obamacare – has been promulgated with little concern for the self-employed. Many feel themselves subject to an apparent attempt to transfer middle class incomes to the poor just as ever more wealth concentrates in the “1 percent.” Not surprisingly, 60 percent of business owners surveyed by Gallup expressed opposition to the administration.

The divide between the yeoman and the political community marks a major departure from the norms of American history. After all, people came to America in large part to secure “a piece of the pie,” whether through owning a small business or a farm, goals often unattainable in Europe. Thomas Jefferson, notes historian Kenneth Jackson, “dreamed of the U.S. as a nation of small yeoman farmers who would own their own land and cultivate it.”

The rural yeoman ascendency lasted well into the late 19th century, when the populist movement fell to triumphant industrial capitalism. Yet the drive to disperse property did not end there, but resurfaced in the expansion of urban homeownership, something strongly supported by the New Deal administration. “A nation of homeowners,” President Franklin Roosevelt believed, “of people who own a real share in their land, is unconquerable.” From 1940-60, nonfarm homeownership rose from 43 percent of Americans to more than 58 percent.

Early on, some progressives, particularly among intellectuals, recoiled against the rise of a class of petty landowners. Some of them, historian Christopher Lasch observed, saw “a republic of producers” as necessarily “narrow, provincial and reactionary.” This view is echoed today by Democrats such as former Clinton administration adviser Bill Galston, who dismisses small business as “a building block of the Republican base.” Democrats, he suggests, should instead seek a reconciliation with Big Business and its powerful cadre of lobbyists.

An expanding cohort

Yet, Democrats someday may rue tossing off the yeoman class. Unlike such groups as white racists, defense hawks and social conservatives, all of whose ranks are thinning, the numbers of the self-employed are growing. Independent contractors, according to Jeffrey Eisenach, an economist at George Mason University, have increased by 1 million since 2005; one in five works in such fields as management, business services or finance, where the percentage of people working for themselves rose from 28 percent to 40 percent from 2005-10. Many others work in fields like energy, mining, real estate or construction. Altogether, there are as many as 10 million such independent workers, constituting upward of 7.6 percent of the U.S. labor force and earning more than $626 billion.

This shift to self-employment is occurring even in heavily regulated states like California. Since 2001, the number of self-employed people in the Golden State grew by 15.6 percent, versus a gain of 9.4 percent for the nation. In terms of states' share of self-employed in the workplace, California ranks in the top five; three of the others, Vermont, Maine and Oregon also are blue states.

Why is this the case? Ironically, this may be a reaction to expansive regulatory regimes that tend to both reduce corporate employment and also encourage some individuals “to take their talents” solo into the marketplace without having to deal with, for example, labor laws and environmental regulations.

At the same time, technology allows people to work in an increasingly dispersed manor. The number of telecommuters has soared by 1.7 million workers over the past decade, a 31 percent increase in market share, and now accounts for 4.3 percent of all employment.

Obamacare is only one aspect of government's assault on the yeoman class. Attempts to regulate housing and encourage denser, usually rental, units ultimately works against the interests of home-based small businesses by raising house prices. The extra bedroom that becomes the home office now can be seen as “wasteful” even if – in terms of generating greenhouse gases – working at home is far more efficient than commuting, even by mass transit.

Alienating allies

Over time, these conflicts could threaten the interests of some groups that now reside firmly in the Obama majority coalition. This reflects the changing demographics of small enterprise; the yeomanry is slowly becoming far more diverse. From 1982-2007, for example, African American-owned businesses increased by 523 percent; Asian American-owned businesses grew by 545 percent; Hispanic American-owned businesses by 696 percent; businesses owned by whites increased by 81 percent. Today, minority-owned firms make up 21 percent of the nation's 27 million small businesses.

Immigrants, a largely Democratic-leaning constituency, constitute a growing part of the entrepreneurial landscape. The immigrant share of all new businesses, notes the Kauffman Foundation, grew from 13.4 percent in 1996 to 29.5 percent in 2010. They also constitute roughly a quarter of founders of high-tech start ups, and have done so for most of the past generation.

Women, another Obama-leaning group, have also expanded their footprint; over the past 15 years, the number of women-owned firms has grown by one and a half times the rate of other small enterprises. These companies account for almost 30 percent of all enterprises; from 1997-2012, the number of women-owned U.S. firms increased by 54 percent, versus an overall growth rate for all firms of 37 percent.

Eventually, the potential yeoman backlash may also spill over to millennials, another key Obama constituency. As a generation, their desire for homeownership and economic self-reliance runs headlong into both the tepid economic recovery and regulatory policies. Over time, as they age, their interests could diverge from the expanding welfare state, whose primary mission appears to be to transfer wealth not only from the middle class to the poor but from younger to older Americans.

As millennials age, many will seek to buy homes, start businesses and families. In contrast to their common, often-naïve embrace of the idea of bigger government, developed in their student years, experiences as potential homeowners and parents, as well as business owners, might make them skeptical of “top down” solutions imposed by largely baby boomer ideologues.

Reply from the Right?

Yet, this will be no cakewalk for conservatives. It is not enough to simply dismiss Obamacare, or other regulations, without endorsing some of the measures' positive attributes, such as assuring one's children or protecting the rights of those with “pre-existing conditions.” The yeomanry may want less-Draconian legislation, but they may not be so anxious to leave their health care utterly exposed to unfettered market forces.

Democrats, in fact, could make a run at this constituency, particularly if the Republicans continue a political approach that alienates, in particular, a more diverse yeomanry – gays, many women and ethnic minorities, immigrants and creative professionals. Here, in fact, it might be better to be more radical than less, proposing something more like a Canadian “single payer” health system that would separate employment status from health care. Democrats also could also support some form of minimum coverage designed for the growing numbers of Americans who work for themselves.

Ultimately, over time, the yeoman constituency, although poorly organized and without a programmatic agenda, is one that needs to be addressed, if for no other reason than they constitute a growing portion of the workforce. The party, or movement, that successfully does this will have a great opportunity to seize the political future.

This story originally appeared at The Orange County Register.

Joel Kotkin is executive editor of and Distinguished Presidential Fellow in Urban Futures at Chapman University, and a member of the editorial board of the Orange County Register. He is author of The City: A Global History and The Next Hundred Million: America in 2050. His most recent study, The Rise of Postfamilialism, has been widely discussed and distributed internationally. He lives in Los Angeles, CA.

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"Self employment" in tough economic times

I believe that a trend to "self-employment" in tough economic times is accompanied by extremely low average self-employment incomes. Does anyone have recent data for different US States, especially the ones with "a surge in self employment"?

Reference to microbusinesses as "a key source of employment"

Joel Kotkin,

Thanks for the interesting essay.

Note the recent Aspen Institute conclave November 25 on microenterprises, focused on job creation. Write up is at with pointers to background papers and a video recording of expert panels. Obama Administration officials were there.

Quoting from the cited web page:

"Key highlights from the event include:
*Microbusinesses are responsible for an estimated 41 million jobs in the U.S., including direct, indirect, and induced employment effects.
*Both our federal tax code and local business licensing requirements inhibit many microbusinesses from formalizing and growing.
*There are opportunities to better leverage existing policies--including the Community Development Block Grant program, state Capital Access Programs, and the Workforce Investment Act--to support microbusiness formation and growth.

"As panelist Connie Evans noted, 'Part of the policy challenge lies in data that helps policy makers to understand the role that microbusinesses play in our economy. They need to understand the labor market and economic trends of the 21st century, and realize that microbusinesses are and will increasingly be a key source of employment.'"

Inhibitions to formation of microbusiness clusters

Another phenomenon that needs to be noted, is that urban planning and zoning policies can prevent clusters of important new microbusinesses from forming. Silicon Valley is the ultimate example. If current Californian policies had been in place in the 1970's, there would have been no Silicon Valley. The ability to develop cheap exurban land for "commercial" use (and residential for workforces) was vital.

This is non-controversial among UK urban economists who regard it as impossible for anything like Silicon Valley to evolve anywhere in the UK. This is one of a number of factors that is the reason why the UK's urban planning system is "THE" cause of its productivity gap.

Crappy argument

My tiny business had our individual policies cancelled.
The solution was to call our insurance company (in our case, Kaiser) and order a new Obamacare-compliant policy starting in January.
The price is similar (a bit higher). The plan is similar.
Not a burden and not a problem. Annoying, yes.