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 2003 earned less than employees ($37,600 versus $42,000). Although they made up only one-third of all self-employed, business owners with employees reported much higher earnings ($59,700) than those without employees ($25,100). The gap between employers and other self-employed has grown since 1987—earnings for self-employed people with employees have increased, while it has fallen for other self-employed.
• The self-employed are more likely than employees to have either very low or very high annual earnings. In 2003, 47% of the self-employed made less than $20,000, compared with 24% of employees. At the other end of the earnings scale, 7% of self-employed made $100,000 or more while only 4% of employees earned this amount.
• Self-employed men are more likely to have employees on the payroll than their female counterparts (41% versus 27%). They are also more likely to put in longer hours; for example, in 2003, 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 ($42,100) and female ($29,000) business owners.

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