The Number of Canadians who are Self-Employed Decreasing Sharply

A worrying trend was highlighted in the media a year ago - the number of entrepreneurs today was 100,000 less than in 2000 despite the population growth of over 10 million since then. It referred to data from Stats Canada and a report by the Business Development Bank of Canada (BDC). The report defined an entrepreneur as a self-employed individual who has paid help (i.e. they hire other individuals).

Expanding this to self-employed individuals instead, the per capita trend is similar but the total values are different. This would include all solo-preneurs, solo contractors (including gig workers) and those that are independent landlords. There, instead of decreasing, the value increased from 2.35 M to 2.68M from 2000 to 2023. As a percentage of the population, this is still a significant decrease over the last 15 years.

The previous research focused on 2000-2022. This chart expands this to 1975-2023 to provide better context. We can see a progressive increase in percentage that is self employed from 1975 until 2000.

As the report stated, the majority of individuals joining on the entrepreneurial journey are in their late twenties to early fourties. As the baby-boomers have progressively been retiring (and thus not running their own businesses anymore), the percentage of the population in the entrepreneurial age has decreased. This can be seen in this working age population percentage chart from OECD where it rises from 65% to 69% from 1975 to 2009, with a fall from 1984 to 1994 in between.

Another potential cause of this decline is the same that is plaguing many facets of society - housing costs. Just as Canadians need much longer to save up for a house, it takes longer to save up enough money to make the jump into entrepreneurship. And then, those savings disappear faster as the price of commercial real estate has also risen faster than inflation.

On the flip side, a lack of entrepreneurs may also have numerous downstream consequences. There is fewer concrete numbers associate with this, but it is known that a lack of entrepreneurs leads to more monopolisitic behaviour from incumbents, leading to potential higher prices and more difficulty for new joiners. In a CBC article last year, it was also noted that the vast majority of net job creation was caused by new small businesses.