Earnings of employees and the self-employed

Business owners with employees generally report the highest earnings

• On average, those who were self-employed in their main job in 2002 earned only slightly less than employees ($38,200 versus $40,800). However, although they made up only one-third of all self-employed, business owners with employees—also known as employers—reported much higher earnings ($58,800) than those without employees ($26,400). Employers also declared the most significant average earnings increase over the period 1987 to 2002—up 18%, compared with 0.5% among the self-employed without employees and 4.7% among employees.
• The self-employed are more likely than employees to have either very low or very high annual earnings. In 2002, 57% of the self-employed made less than $20,000, compared with 27% of employees; at the other end of the scale, 6% of business owners made $100,000 or more that year (11% for business owners with employees), while only 1% of employees earned this amount.
• Self-employed men are more likely to have employees on the payroll than their female counterparts (41% versus 28%). They are also more likely to put in longer hours; for example, in 2002, close to half of all men who were self-employed usually worked over 40 hours a week in their business, as opposed to only a quarter of the women. This may partly explain the substantial average earnings difference between male ($43,100) and female ($29,300) business owners.

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