July 2006

Business owners ranked better than wage earners

Business owners in the 1990s were more likely than wage earners to be in households classified as high income earners and wealth holders, according to a study released today by the Office of Advocacy of the U.S. Small Business Administration. However, their comparative share of income and wealth fell during the same period.

The report, “How Did Small Business-Owning Households Fare During the Longest U.S. Economic Expansion?”,written by Dr. Charles Ou, economist for the Office of Advocacy, and Dr. George Haynes is a follow-on to the study, “Wealth and Income: How Did Small Businesses Fare from 1989 to 1998?.”

The study finds that in 2001 small business-owning households were more than twice as likely as non-owning households (57.1 percent to 25.5 percent) to be high income, and more than eight times more likely (21.2 percent to 2.5 percent) to be high wealth households.

However, from 1992 to 2001, the chance of being in the high income category for non-owning households increased 42.5 percent, and their chance of being high wealth increased 92 percent, whereas the chances for small business-owning households increased 24.7 and 61.8 percent, respectively.

Source: The Office of Advocacy of the U.S. Small Business Administration, www.sba.gov/advo

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