Cash-poor, asset-rich: are the self-employed better or worse off? - RSA

Cash-poor, asset-rich: are the self-employed better or worse off?

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  • Picture of Benedict Dellot
    Benedict Dellot
    Former Head of the RSA Future Work Centre and Associate Director
  • Economics and Finance
  • Enterprise

Last week I argued that the concerns over shrinking self-employed earnings may be a little exaggerated. Coincidentally, at the same time the blogger Flip Chart Rick convincingly proposed the opposite: that we aren’t half as worried as we should be.

Clearly the jury is still out. So while we’re in the debating mood it might be worth adding another layer to the debate – that of wealth and asset ownership.

As part of our new project with the Joseph Rowntree Foundation, we’ve been looking at the data on earnings, wealth and debt. And while some of the findings are unsurprising, there are a few curveballs in there too.

Here are a few initial observations to chew over:

#1 – The full-time self-employed earn around 20 per cent less than their employed counterparts, and their income has fallen by 10 per cent in real terms since 2000


#2 – Households with only self-employed workers are twice as likely than average to be in poverty, but households with a mix of employed and self-employed are no more likely to be at risk



#3 – Households where all workers are self-employed are the group most likely to own their own property outright (remember: this is also the cohort where a third are officially below the poverty line)



#4 – Households with self-employed workers have a great deal more financial wealth than those without



These findings present an odd picture. While the self-employed clearly earn less than the employed (though we may disagree about the extent), they appear to be better off when it comes to the amount of wealth they own – whether that is property, savings, stocks or shares.

The question is: does the nature of self-employed work encourage and enable people to save and stow away cash, or are the already wealthy simply more willing and able to work for themselves (and to survive on low incomes)?


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  • Interesting data. My own research into self-employment (qualitative so not statistically relevant) suggests that Morgen Witzel's comment is along the right lines. The picture is (always) more complex. Firstly aspirations are different depending on whether a person is forced or chooses self-employment. And different stages in life suggest different needs both in terms of income and quality of life.

  • You might also want to look at the average age of the self employed. If they have an older profile, this could explain (some of) the higher asset amounts.

  • The problem with these discussions is that there is no single definition of self-employed. There are people who have done well at work and now are self-employed to bring a little income but mostly to do things they enjoy. There are people who are forced into self-employment because they cannot secure paid work. There are people like me who have been self-employed for decades, know that we are financially worse off, but have no interest in joining the corporate rat race. Each group wants different things out of life. If their goals are being met and their mental and emotional needs satisfied, then they are doing well. If not, then they are not.

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