Self employed median income: the hidden hourly gap.
Self employed median income sits far below the average, according to Levine and Rubinstein. Against comparable salaried workers, the average hourly gap was three per cent, almost nothing. However, the person in the middle is twenty-nine point seven per cent worse off per hour.
What Levine and Rubinstein measured.
Their work on self employed median income compared the unincorporated self-employed with comparable salaried workers. They adjusted for schooling, experience, and measures of ability and temperament. So the entrepreneur income vs salary comparison here is careful, not casual. The average difference came out at three per cent, which looks reassuring at first.
Why self employed median income matters more.
The middle person is twenty-nine point seven per cent worse off, close to a third of hourly pay. A three per cent average beside a thirty per cent median has one cause. A few people at the very top earn enough to drag the average almost level. Therefore self employed median income is the figure closer to your likely result.
The tail and the limits.
So do self employed earn more than employees? The tail is real, and it is why people play. However, by definition it is not where your own hourly earnings would land. Also, the figures come from a sample of white men aged twenty-five and over. That limits how far you should carry them.
Price your hours with self employed median income in mind.
Write your current hourly pay, then reduce it by close to a third.
Ask yourself honestly whether you would accept that hourly figure for the first years.
From the book.
Sit with the distance between them, because it's the whole argument of chapter 1 arriving with the arithmetic attached. A three per cent average sitting next to a thirty per cent median can only happen in one way, which is that a small number of people at the very top are earning enough to drag the whole average almost level, while the typical person quietly loses nearly a third of what they made an hour before.
I Want to Start a Business but I Can't Quit My Job, chapter 13: Staying is allowed, and it can be the win
Questions about self employed median income.
What is the self employed median income gap per hour?
The typical person is twenty-nine point seven per cent worse off per hour than comparable salaried workers.
Why is the average so different from the median?
Because a small number at the very top earn enough to drag the average almost level.
Does this apply to everyone?
Not necessarily, since the sample was white men aged twenty-five and over. That is a serious limit on how far to carry it.
Read the whole chapter.
This lesson covers one section of chapter 13, “Staying is allowed, and it can be the win”. The book goes further, with the full evidence, the stories and every exercise.
Lessons in this chapter.
- 01 How to ask your boss for changes: the odds favour you.
- 02 William Morris useful work: the three hopes test.
- 03 Four day week trial results: promise and limits.
- 04 Flexible working request letter: number, date, review.
- 05 Job crafting: add the good, claim the training money.
- 06 Self employed median income: the hidden hourly gap.
- 07 Flexibility stigma at work: the real cost of staying.
- 08 Part time request denied: what Rasmus Dall did next.