Judging in the Cash-Smart Kids competition is under way – watch this blog each Monday for updates!
I have recently been contacted by Chad Moutray of the US Small Business Administration. He has been running a longitudinal study of a group of Baccalaureate graduates from 1993, and he was kind enough to share his findings with me.
You can read the whole paper here – Baccaluareate Education And The Employment Decision: Self-Employment And The Class Of 1993.
There were a couple of findings which I thought were interesting.
The first was that the choice of major was related to the chances of an individual being self-employed later in life. Those who majored in education, engineering, math and science were more likely to be employees, while those who majored in social science were more likely to be self-employed. The question remains whether personality and preferences cause both the choice of major and the choice of employment style, or whether taking certain majors leads individuals to “run on rails” as employees because those industries are less conducive to entrepreneurialism.
The second interesting observation was that the self-employed tend to fall into two groups with regard to income – either they earn less than $20,000 a year, or they earn more than $100,000 per year. There are a few in the mid-range, but compared with employees, who earn up to $60,000 per year in the not-for-profit sector, or between $60,000 and $90,000 in the for-profit sector, the mid-range incomes are under-represented in the self-employed group.
One possible explanation for this income distribution is that different individuals have different motivations for becoming self-employed. Some become self-employed to escape the income limitiation imposed by being an employee, while others become self-employed in order to have flexible working conditions, work from home, work part-time, work in an area they enjoy, or to have more personal autonomy than an employee can possibly attain.
Some parents in our program focus on income potential when teaching their kids about money and business. This study shows that many individuals are choosing self-employment for reasons other than generating large incomes. Take the time to find out what motivates your child, rather than imposing financial motivations by default.
After all, I would rather be the parent of a happy entrepreneur who earns $15,000 a year, than a miserable corporate suit who earns $90,000 a year. Wouldn’t you?
