Some reluctant self-employed people are having a hard time. Carlos Giron, a public relations strategist, has been freelancing since 2008 when he lost his six-figure job in Washington, D.C. Now living in New York, he's been unable to land a job with a firm. He's applied for a loan to start a company "properly" – with a rented office, administrative staff, and marketing budget – but no bank has been willing to finance him.
"My preference would be to find full-time employment," Mr. Giron says. "My second option would be to start my own business. But I don't feel confident enough, and I don't have the resources, to start my own business in the way that I would like to. [So] I'm in a very uncomfortable middle ground."
One trend evident among America's newest entrepreneurs: They're reducing risk. Recessions tend to generate lots of new one- and two-employee companies, according to the Ewing Marion Kauffman Foundation, based in Kansas City. Mo., which funds research on entrepreneurship. In 2009, new business starts reached a 14-year high but created fewer jobs than start-ups had in prior years.
"These could be profitable young businesses that are just going to try to grow responsibly and slowly, rather than risk everything," says Tim Kane, a senior fellow at the Kauffman Foundation. "It's all rational, but it does tell you that this time is different."
Some groups are adapting more easily to self-employment than others. Recent college graduates, especially in industries such as media that use lots of contractors, often assume they'll make their living by freelancing and cope with the labor market's vagaries, according to Sara Horowitz, executive director of Freelancers Union, a New York-based association that supports independent workers.