This article examines the crucial yet often underappreciated role of 1099 contractors, contingent workers, and micro and small enterprises that fuel the nation’s economy.

The U.S. economy is a complex mosaic of businesses of all sizes, from large national and multinational corporations to small enterprises managed by a single owner. At the heart of our economy is what I would like to call the “Long Tail of U.S. Businesses”—an expansive and diverse group of 1099 independent contractors, contingent workers, micro-businesses, and small enterprises who collectively are the quiet gears that drive the engine of our economy.

Despite their vast potential and significant contributions, small enterprises face an enormous uphill battle. According to LendingTree, 23.2% of private sector businesses in the U.S. fail within the first year, and after five years, 48.0% falter. Some can attribute this to market changes or lousy luck. Still, systemic inefficiencies, complex regulations, limited access to information, and affordable insurance options decrease their chances of sustained viability.

Applicable data from the U.S. Small Business Administration Office of Advocacy (2024) provides insight into the makeup of our micro and small businesses. Businesses are broken down into two distinct groups – employer and nonemployer. Employer businesses have one or more employees other than the business owner, and non-employer companies have no employees other than the business owner.  There are 34.7 million small businesses, of which 28.5 million have no employees, 5.6 million have 1 – 19 employees other than the owner, and 607 thousand have between 20 – 499 employees.  Combined, these micro and small businesses employ about 45.9% of American workers, approximately 59 million people, contributing 43.5% to the U.S. GDP.  As of the latest data, the U.S. GDP is roughly $26.8 trillion. So, that is about $11.66 trillion. 

In 2027, 86.5 million people will be freelancing in the United States, making up 50.9% of the workforce. Some estimates are as high as 100 million people working as freelancers and involved in some form of the gig economy. In 2023, the U.S. projected gross volume of the gig economy was estimated to be about $455.2 billion.

A 1099 worker is an independent contractor who provides services to a business under a simple contract or agreement. They are not considered employees and typically receive a 1099 form for tax purposes, which reports their income. According to the Bureau of Labor Statistics (BLS), as of July 2023, there were 11.9 million independent contractors in the U.S., representing 7.4% of total employment. These entrepreneurs manage their taxes and don’t receive employee benefits. They control their work, set their hours, and often serve multiple clients.

The contingent workforce is not just a trend—it’s a strategic tool for businesses that helps them navigate an ever-changing landscape. Together, 1099 independent contractors and contingent workers represent the essence of agility and innovation. These entrepreneurs work with startups, microbusinesses, small businesses, and large businesses. Whether they adopt the latest technology, address niche market demands, or uncover creative solutions to common problems, their flexibility positions them as market pioneers in some cases. In all cases, they are considered assets to the ever-changing landscape that constantly requires reinvention. 

As a small business owner, Individual Entrepreneur or 1099 Worker/Independent Contractor in any format, you represent the fuel of the U.S. economy which remains the envy of the world. While giants in technology and multinational corporations often capture the public’s attention, it’s small businesses that form the crux of the American economy. As we step into another new year, the opportunities and possibilities associated with a small or individual business will continue to evolve, reflecting not only their enduring role in job creation but also their significant contributions to innovation, economic dynamism and the country’s overall prosperity.

If you are one of many who are contemplating starting something whereas you have more control of how and when you work, you will be joining a growing group of entrepreneurs who operate in many different formats. The new models of entrepreneurship are continuously being invented. The gig economy, its growth and popularity, has certainly added to what fuels the U.S. Economy.