What Long-Term Data Really Shows About Self-Employed Earnings

There’s a long-standing belief that people who work for themselves earn less in exchange for flexibility and freedom. But a major study is flipping that idea on its head. After tracking fifteen years of real income data, researchers found that individuals building independent careers tend to earn more than their traditionally employed peers. And the difference is not small.

At age twenty-five, both groups start out in the same place, earning about twenty thousand dollars per year. From there, things shift. Workers in traditional employment typically see a gradual climb in income, peaking at around seventy-five thousand in their early fifties. Those who work for themselves often experience faster growth and higher peaks. Their income reaches about one hundred twenty thousand at its highest point and remains well above average into their sixties.

By age fifty-five, the average person in independent work is earning around one hundred thirty-four thousand dollars. That is nearly seventy percent more than the seventy-nine thousand earned by similar workers in full-time jobs.

So why has the old story stuck around for so long? Earlier research relied on household surveys with small samples and income caps that masked higher earnings. This new study uses detailed data from the IRS and Social Security Administration, giving a much clearer picture of long-term income patterns.

The tradeoff is variability. Income tends to fluctuate more for those outside of traditional employment. In fact, their income swings are about two and a half times larger than those of salaried workers. That kind of volatility can be especially intense in industries like real estate and construction. During the Great Recession, earnings in those sectors dropped by thirty to fifty percent in a single year.

Even with those setbacks, people stayed. The number of individuals leaving this type of work remained steady, even during major economic disruption. That consistency shows just how resilient many independent workers are, even in tough conditions.

Not everyone sees higher earnings. The study found that more than half of individuals working independently earn less than their traditionally employed peers. But they represent only sixteen percent of the total income in this space. The majority of earnings come from those who stay committed, work through the challenges, and grow over time.

There is also a belief that starting your own business requires a big financial cushion. This study challenges that too. Researchers looked at housing prices as a possible factor in business formation and found no link. Many people launched businesses while taking early losses but still maintained positive income overall. That suggests most people who succeed in this space are prepared, resourceful, or supported in ways beyond simple access to credit.

The big picture is clear. Independent work does not have to mean lower income. For those who stick with it, build it out, and stay consistent, the financial payoff can be significant. The path is not always steady, but it is often stronger in the long run.