Originally written by Anna Jordan on Small Business
A sole trader’s income is around a third of that of their fully employed counterparts, according to a report from the Institute for Fiscal Studies (IFS).
Three years after starting their own businesses, people who went into solo self-employment after a period of unemployment report earning nearly 30 per cent – or £500 less – per month on average. That gap has gone up from 21 per cent in 2002-2003.
ONS figures show that there are more self-employed people than there have been in the past 40 years. However, this move towards self-employment hasn’t created many businesses of scale. According to the report, one in nine workers is now a sole trader with no employees. That’s up from one in 11 in 2008.
Worryingly, more than four in ten solopreneurs were classed as being in poverty in 2018-2019 after deductions from housing costs, compared to one in ten who are in full-time employment. They’re also more likely to be ‘materially deprived’.
All of that said, self-employed people typically have a higher level of job satisfaction and wellbeing than those who are in full-time employment. It’s even true for people who became self-employed because of a lack of