In 2025, nearly 30 million people in the United States were running businesses with no employees, contributing an estimated $1.7 trillion to economic output, close to 7% of GDP.
What makes it more interesting is what was happening at the same time, hiring slowed, payroll jobs became harder to find, and firms across sectors worked intentionally to stay small.
This initially looks contradictory; if firms are shrinking and employment is weak, why does output not seem to be collapsing with it? That issue sits in the middle of today’s labour and productivity debate.
I think we are watching a gradual structural transition in how economic activity is organised.
For decades, growth was similar, as firms expanded by hiring, productivity came from scale, specialisation, and large teams, and employment was the channel through which most people participated in growth.
That logic no longer holds as well as it once did.
Across advanced economies, companies are being careful, with payroll employment in the UK falling over the past year, while unemployment has drifted higher. Wage growth has cooled, but business activity has not frozen. Instead, work has been reorganised.
Rather than adding staff, firms rely more on external workers such as consultants, freelancers, sole traders, and contractors. Many of these workers are, in effect, one-person firms. They sell skills and output, not labour hours within a hierarchy.
This is important because it changes what a “firm” looks like.
Self-employment is not new, but what is different now is its role. In the UK, there are roughly 4.3 million self-employed people, about one in eight workers. A large share are highly skilled professionals providing services that would once have sat inside organisations. They include design, legal work, finance, software, media, and strategy.
These individuals are not peripheral but sit inside supply chains, even if they are not on payrolls. Output still happens. It is simply produced differently.
When people talk about the “solo enterprise”, they usually imagine lifestyle businesses. That misses the point. Many of these one-person firms exist because companies have chosen not to hire, not because demand has vanished.
This is where productivity becomes harder to read.
Traditional productivity statistics focus on output per worker within firms. But what happens when output is produced by networks of external workers rather than employees? What happens when a single individual coordinates tools, platforms and outsourced labour to provide results that once required a team?
At the level of the individual, productivity can look high. At the level of national statistics, it can disappear.
This helps explain why we see a gap between lived experience and macro data. People sense that work is intense, output is high, and expectations have risen, but measured productivity growth is still weak. Part of the answer lies in mismeasurement, rather than mysticism.
There is also a labour market aspect here, and it is not uniformly positive.
For some, solo enterprise is a choice. It provides autonomy, flexibility and, in the upper tail, high income. In the US, the number of independent professionals earning high six-figure incomes has increased over recent years.
For others, it is a response to limitation. When firms stop hiring, people do not stop working. They repackage themselves. Income becomes volatile. Security weakens. Benefits disappear.
The same structure that allows output to continue without headcount also takes the risk away from firms and onto individuals.
This redistribution of risk is easy to miss if we focus only on aggregate numbers. GDP does not tell us how predictable income is. Employment rates do not tell us how many people are stitching together work from multiple sources.
From a macro perspective, this creates awkward questions. Tax systems are still built around payroll work. Social protection still assumes stable employment. Labour statistics still find it hard to capture independent and project-based work accurately.
Even the UK’s statistical authorities have acknowledged stubborn problems in labour market measurement, with fixes not expected until late 2026.
We are trying to measure a changing economy with tools designed for an older one.
So are we entering a period where companies shrink while output grows?
In parts of the economy, yes. Especially in services, knowledge work and digital production, output is no longer tightly linked to headcount. Scale has become lighter, coordination has become cheaper, and firms optimise for flexibility, rather than size.
But this is not a free lunch. Growth without hiring affects who bears risk, how income is distributed and how work is experienced. It also forces policymakers to confront the situation where employment is no more the sole or even primary channel through which economic value is created.
The issue of the solo enterprise is not a trend to celebrate or dismiss. The structure of work is changing, and our economic language is finding it difficult to keep up.
