Self-Employment May Be a Promising Avenue to Economic Independence for People with Disabilities

A study funded by the National Institute on Disability, Independent Living, and Rehabilitation Research (NIDILRR).

People with disabilities may encounter barriers to obtaining competitive employment, meaning full- or part-time work in an integrated setting that pays at least a minimum wage. These barriers may include inaccessible work sites, a lack of transportation, and health challenges that make it difficult to keep a traditional work schedule. Self-employment is an alternative that can reduce these challenges by giving people with disabilities more control over their work setting and schedule. Self-employment may be especially attractive for people living in rural areas, where transportation and competitive employment options may be limited. However, few people who receive vocational rehabilitation (VR) services become self-employed. VR counselors may view self-employment as too risky, or agencies may not have the resources in place to help consumers start up their own small businesses.

In a recent NIDILRR-funded study, researchers looked at self-employment rates among VR consumers in different parts of the United States. The researchers wanted to find out if consumers living in rural areas had higher self-employment rates than those in more urban areas, and whether consumers with different types of disabilities had different self-employment rates. The researchers also compared the VR service costs, as well as hourly and weekly wages, between consumers who became self-employed and those who found competitive employment.

Researchers at the Rehabilitation Research and Training Center on Disability in Rural Communities looked at data from 230,931 VR consumers age 16 or older who completed VR services and became employed in 2008 or 2009. Letters were sent to agencies in 44 states requesting data, and 47 VR agencies provided data. The consumers came from a combination of urban and rural counties. The researchers looked at the percentage of consumers who became self-employed freelancers or small business owners after completing VR in each county. Counties were categorized as either urban, large rural, small rural, or isolated rural, depending on how close they were to a city and how many of the county’s residents commuted into a city. The researchers also compared self-employment rates for consumers with vision, hearing, physical, cognitive, mental health, or learning disabilities. Finally, the researchers compared cost of VR services between consumers who became self-employed and those who obtained traditional competitive jobs. They also compared the hourly wages, hours worked per week, and weekly earnings of consumers in both employment groups as they started their new jobs.

The researchers found that:

• On average, only 2.1% of VR consumers became self-employed.
• Self-employment rates were lowest for consumers in urban counties (1.4%) and highest for consumers in isolated rural counties (5.2%). Rates in large rural and small rural counties fell in between (3.5% and 3.7%).
• Comparing among different types of disability, consumers with cognitive and learning disabilities had the lowest self-employment rates (.4% and .6%), while consumers with visual and physical disabilities had the highest self-employment rates (6.6% and 3.7%). In addition, agencies serving only consumers with visual disabilities had much higher self-employment rates on average than agencies serving consumers with other types of disabilities.
• On average, agencies spent about twice as much per person on consumers who became self-employed as on consumers who became competitively employed.
• However, consumers who became self-employed earned about $1.30 more per hour, on average, at the start of their jobs than consumers who became competitively employed. Consumers who became self-employed were also able to work about 3 hours less per week, on average, and still earn weekly pay equivalent to their competitively-employed peers.

The authors noted that these data were collected during the Great Recession of 2008-2009, so employment trends may have been lower than they are now. In addition, although the data set showed that VR agencies spent more money on self-employed consumers than on competitively employed ones,   the data did not detail what materials or services were purchased for each consumer type. Finally, the data set did not include details about the types of small businesses that consumers created. Future research may be useful in identifying which types of small businesses are most cost-effective for consumers.

According to the authors, self-employment may offer people with disabilities an opportunity for economic independence despite barriers to traditional employment. While self-employment was under-utilized by VR, it was utilized more often by consumers who may benefit most, such as consumers living in rural areas and those with physical disabilities who may be more greatly impacted by inaccessible workplaces. Despite higher initial start-up costs, self-employment may offer earning potential comparable to, and even slightly higher than, competitive employment. VR agencies may wish to develop policies and partnerships with small business development agencies that increase their capacity to assist consumers with achieving self-employment goals.

To Learn More

The Rehabilitation Research and Training Center (RRTC) on Disability in Rural Communities offers a free online course, Steps for Vocational Rehabilitation Counselors: Helping a Consumer Start a Business: http://selfemploymenttraining.ruralinstitute.umt.edu/

The RRTC on Community Living for Individuals with Intellectual and Developmental Disabilities looked at self-employment as part of its Impact: Feature Issue on Supporting New Career Paths for People with Intellectual and Developmental Disabilities: https://ici.umn.edu/index.php?products/view/467

Your local Small Business Administration office can help with planning, starting, and managing a small business: http://www.sba.gov

To Learn More About this Study

Ipsen, C., and Swicegood, G. (2017) Rural and urban vocational rehabilitation self-employment outcomes. Journal of Vocational Rehabilitation, 46, 97-105. This article is available from the NARIC collection under Accession Number J75341.