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 16,599,836 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 2024 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. 16.6 million people, 9.9 percent of the 166.9 million who work. The share runs from one in seven in Montana, 14.9 percent, to one in fifteen in West Virginia, 6.7 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 West Virginia, Indiana, Ohio, Wisconsin and Kentucky.
3. Self employed people with a company earn more than employees in all fifty states. The premium runs from 4 percent in Wisconsin to 60 percent in North Dakota, where the incorporated median is $77,700 against $48,588 for an employee.
4. Self employed people who have not incorporated earn less than employees in all fifty states. The penalty is 39 percent in New Jersey, $35,736 against $58,364, and 35 percent or worse in California, Colorado, New York, Alaska, New Jersey, Illinois and Virginia.
5. Six in ten self employed Americans are on the lower side of that line. 9.85 million of the 16.6 million have not incorporated, from 68 percent in Rhode Island and Tennessee to 50 percent in Utah.
6. The Dakotas are the only place where working for yourself without a company pays like a job. South Dakota's unincorporated median is $44,430 against $44,757 for employees, a difference inside the survey's margin of error. North Dakota is 4 percent behind. Everywhere else the gap is at least 9 percent, and in 36 states it is 25 percent or more.
7. The paperwork that separates the two groups costs between $35 and $1,000. The first year cost of forming an LLC is $35 in Montana and $1,000 in Massachusetts. In Alaska the gap between the two self employed medians is $39,279 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 2024 median for the civilian employed population aged 16 and over, in 2024 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, 166,903,650 workers, 16,599,836 self employed, of whom 6,745,057 have incorporated and 9,854,779 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. 6.7 million people. Median earnings above the employee median in every state, at a median of $59,427 against $46,903 across the fifty states. This group is more male, 43 percent of self employed men have incorporated against 37 percent of self employed women.

With no company. 9.9 million people. Median earnings below the employee median in every state, at a median of $34,905 across the fifty states. In Kentucky and Mississippi the median unincorporated self employed worker earns under $30,000 a year.

Where the line is widest. Alaska, $71,459 incorporated against $32,180 not. California, $68,150 against $32,888. New Hampshire, $71,730 against $40,034. North Dakota, $77,700 against $46,779. Michigan, $60,252 against $30,187.

Where it is narrowest. Iowa, $51,413 against $36,605. Wyoming, $50,765 against $35,274. Hawaii, $52,983 against $36,989. South Dakota, $60,568 against $44,430. Wisconsin, $52,315 against $35,968.

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 72.9 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.

The middle row is the least certain of the three. Women with their own company earn 66.2 cents, which sits under the employee figure by a hair the survey can only just resolve, a z score of 2.16. State by state the margin on that row runs past 28 cents in North Dakota, Wyoming and Vermont, and past 50 cents in Washington DC. It belongs in the table and nowhere near 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. Idaho shows the largest gap at $29,861, but its own margin puts the real figure anywhere from $25,452 up, and thirteen 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. 4,127,989 American women work for themselves with no company, against 5,743,285 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, Washington DC, New Mexico, Rhode Island and Wyoming.

Ten places have a gap wider than the national $14,919 by more than both margins put together. Iowa, Idaho, Nebraska, Utah, Alabama, Colorado, Pennsylvania, Ohio, Kansas and Maryland. Iowa is the firmest of the ten, a $28,823 gap with a margin of $2,264, 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 Alaska, Delaware, West Virginia, Montana, Hawaii, New Hampshire and Vermont. The unincorporated median has a margin above 15 percent in Vermont, Wyoming, Delaware and South Dakota. 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 45 states and not in Delaware, Hawaii, Vermont, West Virginia and Wisconsin, and the unincorporated shortfall is clear of zero in 48 states and not in North Dakota and South Dakota, which is why South Dakota is reported as a tie. 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 $14,919 is the size of the gap, not its cause.