Ask the grumpies: Demographic stats for the self-employed

Big little wolf asks:

As one of the “self-employed” who takes every damn project and task I can to never make  ends meet (overqualified, overeducated, over 50, and god knows… overtired)… I work tons of hours for a frighteningly small and erratic amount of revenues, and of course, without an employment relationship, no benefits.

I know a number of women, personally, who are in exactly the same boat. Ousted from corporate jobs in our 40s or at 50, often simultaneously ousted from marriages and unable to collect the child support monies due… it’s a spiral into debt and downward. Naturally, with kids involved, you take care of their needs before your own, including health. More spiral downward.

All the more reason to keep bringing up the issues, and presenting the dollars and cents (and sense) of addressing the problems rather than searching for bandaids.
Off my soapbox.

What I’d love to know:

Those that fall through the BLS employment statistics (because we don’t and cannot collect unemployment as contractors / independents) [the self-employed].
Age groups.
Average median earnings.
Comparison of men to women (numbers in age groups, and comparison of earnings).
Ideally, marital status (single, married, divorced, widowed) would be fantastic. I imagine that’s an entire project.

These stats are pretty easy to get if you’re good with Stata, SPSS, or SAS because the government is pretty awesome.  My dataset of choice for these kinds of demographics is the Current Population Survey or CPS, but sometimes I will use the Census (now the American Community Survey or ACS).  My dealer of choice is IPUMS, the Minnesota Population Center.  Back in the old days, I used to have to use Unicon and it cost money$ or I would have to get the incredibly raw (but free) data from various places that store the raw data.  The raw stuff is not pretty.  So shout out to our Midwestern data cleaning homies up North.  (Miriam King, Steven Ruggles, J. Trent Alexander, Sarah Flood, Katie Genadek, Matthew B. Schroeder, Brandon Trampe, and Rebecca Vick. Integrated Public Use Microdata Series, Current Population Survey: Version 3.0. [Machine-readable database]. Minneapolis: University of Minnesota, 2010.)  What I’m giving you today is all from the March 2012 CPS.

One limitation to the self-employed variable in most of these datasets is that self-employed is going to pick up people whose primary job is self-employment and who self-report as being self-employed.  It won’t get people with side jobs if they work 40 hours/week.  Another limitation is that the hourly wage data aren’t reported for the March CPS so they have to be imputed from annual data and hours worked.  This is generally a problem at the tails of the distribution, where you get people saying they work way less than minimum wage.  (High earnings also have a fairly low top-code, so you don’t get such a good measure of the best off.)  Today I’m sticking with annual earnings.

Ok, looking at those who claim to be self-employed, either incorporated or non-incorporated (2x as many are not incorporated as incorporated).  Note that this is people who claim self-employment as their primary occupation–it does not include people who are wage earners but have self-employment on the side.

By age:  The median age of self-employed workers is 48.  Compare that to the median age of wage/salaryearners (non gov’t) of 40.  Government workers’ median age is 45.  The youngest 10% of self-employed workers is 32 and younger, compared to 22 and younger by wage earners and 27 and younger for government workers.  The oldest 10% are age 65+ compared to 59+ for salary workers and 61+ for government workers.  Yes, self-employed workers skew older.

Average median earnings:  Note that income includes losses.
Median Total family income: for a self-employed worker: $70,007; for a wage-earner: $62,357.5; for a government worker: $80,000. So not too shabby for any of these employed groups. What about
Median Total individual earnings: for a self-employed worker: $34,000; for a wage-earner: $31,000; for a government worker: $44,200. Note that these numbers don’t provide the complete picture– wage earners and government workers will be getting benefits that self-employed workers will not. Sadly I didn’t download any benefits information and the CPS doesn’t have great info on benefits anyway. Another thing that’s hiding here is that government workers have higher education levels than wage earners on average, and that’s not being accounted for in these summary statistics. It’s just the raw data. (I also didn’t download the education variable, but should have.) From my own work I know that at least some subsets of self-employed are more educated than the average wage earner, and I wouldn’t be surprised if that holds on average. Someone I was talking to recently told me that self-employed people are bifuricated into high earners and part-time housewives.
What about self-employment income all by its lonesome?  “Conceptually, the INCBUS figure should be the amount earned after subtracting business expenses from gross receipts.”  Median self-employment income for the self-employed:  $3,000.  That’s pretty awful.  The top 1% is $200,000.   If you limit to people who are at least making *something* after business expenses, then you get median income up to $22,000.  Median self-employment income after expenses is 0 for the other two groups, although the top 1% do make 1K and 2K respectively in self-employment.

By gender:  63.75% of self-employed folks are men.  The remaining 36.25% are women.  For those under the age of 50, 61.66% are men and 38.34% are women.  For those over the age of 50, 66.12% are men and 33.88% are women.  Looking at gross total individual income of the self-employed, median earnings for men are $41,105 while median earnings for women are $22,000.  Looking at business income minus expenses, men make $1 at the median and women make $5,002 at the median.  Men report lower lows and higher highs as well.  It could be that men are better at writing off business expenses or they take more risks.  If you limit to making any business income, men’s median rises to $30,000 while women’s is half that at $15,000.

Finally, by marital status:  73% of self-employed folks are married.  54% of wage-earners are married.  65% of government workers are married.  8.7% of married people are self-employed.  I threw in separated with divorced– not sure if that’s appropriate.  12.4% of self-employed people are divorced.  12.8% of wage earners are divorced.  13.2% of government workers are divorced.  6.7% of divorced people are self-employed.  2.2% of self-employed people are widowed.  1.7% of wage earners are widowed.  2.1% of government workers are widowed.  2.7% of widowed people are self-employed.   12.7% of self-employed people are single.  31.3% of wage earners are single.  20.1% of government workers are single.  1.3% of single people are self-employed.

So, those are the numbers you asked for.  I can run other stats pretty easily, and can download other variables too.