The Own Boss Gap

Every Labor Day the same rankings arrive, the hardest working states, the best states to work in, the states where people leave the most vacation unused. All of them measure employees, because that is who the surveys count. They cannot see the 16,481,910 Americans who employ themselves, 9.9 percent of everyone who works, one worker in ten.

This page puts those workers back, state by state, from two 2025 census tables. It counts them, and it compares what they earn with what employees earn in the same state. The phrase self employed turns out to be hiding two groups with almost nothing in common.

1. One worker in ten is their own boss. 16.5 million people, 9.9 percent of the 167.3 million who work. The share runs from one in seven in Montana, 15.0 percent, to one in thirteen in Indiana, 7.5 percent.
2. The self employed West. Seven of the ten states with the largest share are in the West or on the northern Plains, and the other three are Vermont, Maine and Florida. The five with the smallest share are Rhode Island, Ohio, Pennsylvania, West Virginia and Indiana.
3. Self employed people with a company earn more than employees in all fifty states. The premium runs from 2 percent in Vermont to 49 percent in Alaska, where the incorporated median is $70,363 against $47,217 for an employee.
4. Self employed people who have not incorporated earn less than employees in all fifty states. The penalty is 42 percent in Wyoming, $28,321 against $49,119, and 35 percent or worse in California, Connecticut, Illinois, Kentucky, New Jersey, New York, Oregon, Virginia, Washington and West Virginia.
5. Six in ten self employed Americans are on the lower side of that line. 9.7 million of the 16.5 million have not incorporated, from 70 percent in Tennessee to 49 percent in Florida.
6. In four states the census cannot tell a self employed person with no company apart from an employee on pay. North Dakota, Delaware, Montana and Alaska sit inside the survey's margin, so the gap there is a tie. Alaska shows $36,281 against $47,217, a 23 percent gap, but the $11,148 margin leaves it unresolved. Elsewhere the smallest penalty is 15 percent, in South Dakota. In 38 of 50 states it runs 25 percent or more.
7. The paperwork that separates the two groups costs between $35 and $1,020. The first year cost of forming an LLC is $35 in Montana and $1,020 in Massachusetts. In Alaska the gap between the two self employed medians is $34,082 and the first year cost to incorporate is $400. This is a description, not a promise, see the section on what the comparison cannot say.

Ranked by the share of all workers who are self employed. Pay is the 2025 median for the civilian employed population aged 16 and over, in 2025 dollars. Employee means an employee of a private company. The two percentage columns compare each self employed median with the same state's employee median.

National totals, 167,279,529 workers, 16,481,910 self employed, of whom 6,786,638 have incorporated and 9,695,272 have not. The District of Columbia is excluded because it is not a state.

The word self employed covers a dentist with a practice and a corporation, and a person driving deliveries on a 1099. The survey separates them, and the split is the story.

With a company. 6.8 million people. Median earnings above the employee median in every state, at a median of $60,647 against $48,322 across the fifty states. This group is more male, 44 percent of self employed men have incorporated against 37 percent of self employed women.

With no company. 9.7 million people. Median earnings below the employee median in every state, at a median of $35,192 across the fifty states. In Kentucky, Mississippi, New Mexico, West Virginia and Wyoming the median unincorporated self employed worker earns under $30,000 a year.

Where the line is widest. California, $70,417 incorporated against $32,222 not. Massachusetts, $76,401 against $40,809. Oregon, $66,353 against $30,855. Alaska, $70,363 against $36,281. Wyoming, $62,337 against $28,321.

Where it is narrowest. Delaware, $56,227 against $46,699. Mississippi, $41,861 against $28,246. Vermont, $51,246 against $37,395. North Dakota, $61,098 against $46,393. Alabama, $45,863 against $30,804.

A woman who works for herself with no company earns 63.3 cents for every dollar a man in the same position earns. That is the widest gap of the seven classes of worker the census measures. A woman employed by a private company earns 72.2 cents. Working for yourself is sold as the flexible choice, and on these figures the sex pay gap is wider outside a job than inside one.

What this does not say. Forming a company does not raise anyone's pay. These are the middle earnings of three different groups of people, not one person measured twice, and the groups differ in hours, trade and business size. The census reports what people earn, never why.

Women with their own company sit at 65.8 cents against a man's dollar, with a margin of plus or minus 1.2 cents, the widest of the three rows. The gap between this row and women with no company is 2.5 cents, and the survey can only just separate the two. Four states run above 28 cents (Delaware at 42.5, Wyoming at 40.0, Vermont at 30.8, Rhode Island at 29.0), and Washington DC runs past 90 cents. That is why this row stays in the table rather than a headline.

Below is the no company row for every state, sorted by the dollar gap, with the margin of error beside it. The margin is the point, not the trim. North Dakota shows the largest gap at $32,726, but its own margin puts the real figure anywhere from $19,147 up, and thirty one other places reach that floor. No state can be called the widest in the country on this data, so read the table rather than the order.

This is not a small group. 4,161,232 American women work for themselves with no company, against 5,534,040 men. The earnings table folds unpaid family workers into the same line, so its label is a little wider than that count. Those workers have no pay, so they sit outside a median earnings figure.

In 46 of the 51 places the gap is bigger than the survey's own error. In five it is not, which means the census cannot tell those women and men apart. Those five are Delaware, Massachusetts, New Mexico, Rhode Island and Washington DC.

Eight places have a gap wider than the national $15,117 by more than both margins put together. Maine, Idaho, Utah, Colorado, Alabama, New Jersey, North Dakota and Montana. Alabama is the firmest of the eight, a $18,941 gap with a margin of $1,988, the tightest in the group.

Every figure on this page comes from one of four places.

Margins of error. Medians for small states carry wide margins. The incorporated median has a margin above 15 percent in Delaware, Hawaii, Kansas, New Hampshire, New Mexico, North Dakota, Rhode Island and Wyoming. The unincorporated median has a margin above 15 percent in Alaska, Delaware, Montana, Rhode Island and Wyoming. At the printed medians, the incorporated group is above employees in all fifty states and the unincorporated group is below in all fifty. Taking each margin at its edge, the incorporated lead is clear of zero in 42 states and not in Alabama, Delaware, Mississippi, North Dakota, Rhode Island, Vermont, West Virginia and Wyoming, and the unincorporated shortfall is clear of zero in 46 states and not in Alaska, Delaware, Montana and North Dakota, which is why those four are reported as ties. Rankings that turn on small differences between small states are rough.

Margins on the sex figures. The dollar gap carries the root of the sum of the two squared margins. The cents figure carries the census ratio margin. Census margins are printed at 90 percent confidence, and every claim of significance on this page turns them into standard errors first, so a gap called bigger than the error clears 95 percent.

The survey reports what people earn, not why. People with larger, older or more profitable businesses are more likely to have incorporated, so the incorporated premium reflects who incorporates as much as what incorporating does. Nobody should read this table as evidence that filing paperwork raises income. It shows which side of the line each state's self employed sit on, and what the line costs to cross.

The same caution applies to the sex figures. Men and women in the no company group are not doing one job for two rates of pay. They are different people in different trades working different hours, and the survey cannot pull those apart from what a buyer will pay. The $15,117 is the size of the gap, not its cause.