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)?
Pension coverage for the self-employed is pitiful, with just a fifth signed up to a private scheme. Could nudging be part of the answer?
Barely a week goes by without another news story charting the fall of self-employed earnings. But how much do the headlines match reality?