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<\/p>\nIn an analysis of tax and income data from 2000 to 2015, the study found the average entrepreneur made $27,000 annually (in 2012 dollars) at age 25\u2014slightly less than the $29,000 for a paid employee at the same age. <\/p>\n
But those workers soon switched places, and by age 30 entrepreneurs made $55,000 versus $45,000 for paycheck workers, or 22% more. <\/p>\n
As they got older, the average income gap between them widened, and by age 55 the self-employed made 70% more: $134,000 versus $79,000 a year.<\/p>\n
The study also noted that entrepreneurs often have other sources of income when starting out, either from paid employment or a separate business, allowing them to post positive overall earnings even if their new businesses haven\u2019t yet turned a profit.<\/p>\n
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Minneapolis Fed<\/p>\n
But the data on average earnings also masks sharp inequality among self-employed workers, meaning that \u201cthe typical dollar in self-employment does not come from the typical self-employed individual,\u201d according to the study, which was published in July and highlighted in a separate post from the Minneapolis Fed<\/a> last week.<\/p>\n In addition, 80% of the income earned by the self-employed came from those making $100,000 a year or more.<\/p>\n \u201cIRS data show that many of the primarily self-employed earned less over the sample years than paid-employed peers with similar characteristics, but in the aggregate this subgroup has a much lower share of the total income than those that earned more than their peers,\u201d the study\u2014authored by Anmol Bhandari, Ellen R. McGrattan, Tobey Kass, Evan Schulz, and Thomas J. May\u2014said.<\/p>\n