[New Zealand] Self-employed workers earning less than minimum wage

In New Zealand, new data released by Inland Revenue has revealed that self-employment is failing to lead to higher incomes, RNZ reports.

It found that many self-employed people earned less than the median wage, and that more than half of those whose income was their main source did not even reach minimum wage.

The data, shared with RNZ, reportedly shows that the median income among people who report wages or salaried income in the 2024 tax year was $62,115.

Self-employed people whose self-employed income was more than 50 per cent of their taxable income had a median income of less than $45,000, while those reporting business income, and self-employment as a lesser part of their income, had median incomes in line with wage and salary earners.

A greater number of business income-earners were at the top end of the income scale

According to Inland Revenue, 70 per cent of people who reported self-employment income as more than 50 per cent of their taxable income were earning less than the median income of all workers. The figure fell to 58 per cent for those earning wages and salaries, and 55 per cent of those with business income as the majority of their earnings.

Additionally, 53 per cent of people who were primarily self-employed were earning less than the median wage.

Speaking to RNZ, Gareth Kiernan - Infometrics chief forecaster - said this could reflect a new business’s progression.

"When a person starts out, some will form companies, but many will just work for themselves - and then as their workload increases, they start to take on other people and/or progress to a different trading model, meaning that they shift into the business income categories instead," he said.

University of Otago economist Dr Murat Ungor reportedly stated that there was a clear skew in the data.

"The lower-income pattern emerges specifically when you narrow the focus to the unincorporated self-employed.

"Their overall median is $50,446, and among those for whom self-employment makes up more than half of total income, it falls further to $44,721; below even the all-individuals median of $45,232.

"By contrast, those who combine self-employment with wages report a much healthier $54,875. The skew, in other words, is concentrated among people whose primary source of income is self-employed income/sole-trader activity.

"Roughly seven in ten people who depend mainly on self-employment report taxable incomes below the national median wage, compared with fewer than six in ten wage earners. One might interpret this as a meaningful gap.”

Source: RNZ

(Quotes via original reporting)

In New Zealand, new data released by Inland Revenue has revealed that self-employment is failing to lead to higher incomes, RNZ reports.

It found that many self-employed people earned less than the median wage, and that more than half of those whose income was their main source did not even reach minimum wage.

The data, shared with RNZ, reportedly shows that the median income among people who report wages or salaried income in the 2024 tax year was $62,115.

Self-employed people whose self-employed income was more than 50 per cent of their taxable income had a median income of less than $45,000, while those reporting business income, and self-employment as a lesser part of their income, had median incomes in line with wage and salary earners.

A greater number of business income-earners were at the top end of the income scale

According to Inland Revenue, 70 per cent of people who reported self-employment income as more than 50 per cent of their taxable income were earning less than the median income of all workers. The figure fell to 58 per cent for those earning wages and salaries, and 55 per cent of those with business income as the majority of their earnings.

Additionally, 53 per cent of people who were primarily self-employed were earning less than the median wage.

Speaking to RNZ, Gareth Kiernan - Infometrics chief forecaster - said this could reflect a new business’s progression.

"When a person starts out, some will form companies, but many will just work for themselves - and then as their workload increases, they start to take on other people and/or progress to a different trading model, meaning that they shift into the business income categories instead," he said.

University of Otago economist Dr Murat Ungor reportedly stated that there was a clear skew in the data.

"The lower-income pattern emerges specifically when you narrow the focus to the unincorporated self-employed.

"Their overall median is $50,446, and among those for whom self-employment makes up more than half of total income, it falls further to $44,721; below even the all-individuals median of $45,232.

"By contrast, those who combine self-employment with wages report a much healthier $54,875. The skew, in other words, is concentrated among people whose primary source of income is self-employed income/sole-trader activity.

"Roughly seven in ten people who depend mainly on self-employment report taxable incomes below the national median wage, compared with fewer than six in ten wage earners. One might interpret this as a meaningful gap.”

Source: RNZ

(Quotes via original reporting)