The XX Factor

Etsy Touts the Economic Power of Its Small Business Owners—Even If They Make $100 a Year

Today, Etsy released a report on the economic impact of its vast online network of small-business crafters, whose screen-printed tees, hand-crafted bowls, and resold vintage gear generated over $895 million in sales last year. “We’ve been hearing for some time now that the middle class is shrinking in the U.S. and that our representatives in government want to focus on creating good-paying jobs,” Etsy writes in the release. “But by focusing only on traditional full-time employment, they are neglecting the steadily growing community of micro-business entrepreneurs—like Etsy sellers—right in their backyard.” The company argues that instead of focusing on growing more traditional businesses, policymakers “should expand workforce development and unemployment programs to incorporate micro-business development and training” to help prop up “this more informal, Internet-powered sector.”

Etsy sellers may be collectively swapping $895 million annually, but most of them aren’t seeing much of that cash, and they’re not passing it on to any employees, either. The report, based on an online survey conducted last year with 94,000 sellers who had made a sale in the previous 12 months, found that Etsy sellers, who are mostly women, “report higher levels of education and lower household income than the general population.” The majority of respondents— 52 percent—are college educated, yet average median income for Etsy sellers is just $44,900, 10 percent lower than the national average. Twenty-six percent of Etsy sellers earn under $25,000 in annual household income. 

Etsy says its crafters are “thinking and acting like entrepreneurs,” but they’re not thinking or acting like very effective ones. Seventy-four percent of Etsy sellers consider their shop a “business,” including 65 percent of sellers who made less than $100 last year. And while 91 percent of Etsy sellers said they “wish to grow their sales,” the vast majority of them can’t actually grow the economy. Eighty-three percent of Etsy sellers run their business alone; of the 17 percent who do “have help,” three-quarters of them “recruit an unpaid family member or friend.” Few Etsy sellers aspire to be “as big as possible” in five years; 61 percent want their shops to be “a size I can manage myself.” And government assistance is unlikely to change that. Etsy sellers who do want to expand their businesses say that their number one challenge is “lack of time.” But the second is “lack of customer demand.”

Etsy says that means that its “sellers embrace self-reliance and small-scale growth,” and that the “fact that so many Etsy sellers have successfully launched shops without outside investment reflects the low-cost nature of their businesses.” Of course, success is a relative term. Etsy emphasizes that, in terms of seller motivations, “personal reasons outweigh business and income considerations.” More people start up Etsy shops to express their creativity than to generate income. That’s fine, but it doesn’t explain why the U.S. government ought to encourage more people to take up knitting in return for fun times and minuscule paychecks (particularly when many of them are recruiting other people to work for free). Etsy bizarrely knocks the government focus on creating “good-paying jobs,” instead suggesting they invest more in poorly-paying hobbies.

As the owner of a small-business-of-one myself, I don’t begrudge Etsy sellers for wanting to follow their dreams, regardless of the returns. And I agree with the company that in the face of dwindling job prospects and the rise in the freelance economy, the government should take steps to lift the tax burden on low-income individuals and make it easier for everyone to access sufficient healthcare and childcare outside the bounds of full-time employment. But many Americans who need those protections aren’t intentionally opting out for “personal reasons”—they’re being priced out of higher education, working part-time jobs with few benefits, and taking a paycheck where they can, regardless of how warm and fuzzy it makes them feel. Of course, Etsy’s recommendations could help the economy in one way—it would make Etsy’s own big business even bigger.