Think your income doesn’t cover your expenses the way it used to? It could be worse, you could be self-employed.
Recently, the Census Bureau released a report which showed that the income of the typical American household fell 6.4 percent in inflation adjusted terms since 2007, the last pre-recession year. Not good.
But for the self-employed, the numbers are far worse. Between 2007 and 2010, the median income of a household headed by a self-employed person dropped 15.4 percent in real terms.
Compared to 2006 when real median income for households headed by those in business for themselves hit their post 2002 peak, the numbers are worse still. While real median income at households of wage earners fell only 1.3 percent between 2006 and 2010, the decline was a whopping 17.4 percent households of the self-employed (see chart below).
Moreover, real household income increased for those working for wages between 2009 (when the recession ended) and 2010. But it continued to decline for the self-employed, albeit by only 0.7 percent.
With this hit to their income, should we be surprised that few people in business for themselves are hiring these days?