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Posted December 7 2011

Martin Prosperity Insights

The Occupational Classes: Not All Jobs are Created Equal - Self-Employment Edition

Toronto - The fifth piece in the ongoing series exploring the characteristics of work in the creative and service occupational classes considers the economic outcomes of self-employed workers.

It is important to recognize that self-employment is, and can be, a difficult variable to interpret. On the one hand, it can mean that an individual has exhausted him or herself in a labour search and are compensating by working independently outside of a firm. Or, it might mean that someone is extraordinarily skilled and are able to utilize this to have the luxury of working ‘for themselves.’ In turning to comparing the service and creative classes in terms of self-employed work, this exploration starts to satisfy a few questions. For example, what percentage of each class is self employed? Is self-employment desirable or undesirable, and in what ways? What benefits are enjoyed as a result?

Exhibit 1: Self-Employment by Occupational Class

The ‘share’ row tells us what proportion of each occupational class is self-employed or not self-employed. We find that only 17% of the creative class is self-employed while 83% are not. In fact, a higher proportion of workers in the creative class are self-employed than the proportion of workers in the service class who are – just 11.9% of the service class is self-employed while 88.1% are not. In both occupational groups, workers who are self-employed take home (on average) 65% of the average income (respective to occupational class). Of those in the creative class who are self-employed, 31.5% are employed part-time voluntarily (an 80% greater-than-average rate in the creative class) while 24.3% of service class voluntary part-timers represents a 9% less-than-average rate for the service class).

One difference for the occupational classes (between being self employed or not self employed) is that those in the creative class who are not self-employed work slightly more hours per week than creatives who are self-employed (31.2 versus 30,5). In the service class, this effect is more pronounced as self-employed workers work 36% more than the average service work week and still take home much less of the average service wage (-53%) and the average service income (-36%). Self-employed workers in the service class work a lot more hours (36.0) than the service class average (26.6), and, they put in these extra hours for less pay.

In sum, though the proportions of self-employed workers in each occupational class are similar, the labour market outcomes for self-employed creatives are better (related to the occupational class share) than the outcomes for self-employed service workers.

Next week, our Insight series will describe the variation number of jobs by occupational class before concluding with a summary piece.

The Martin Prosperity Institute at the University of Toronto‘s Rotman School of Management is the world’s leading think-tank on the role of sub-national factors — location, place and city-regions — in global economic prosperity. We take an integrated view of prosperity, looking beyond economic measures to include the importance of quality of place and the development of people’s creative potential. Additional insights

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