Austen Saunders is a Researcher at Bright Blue

Bright Blue is currently undertaking some detailed research on self-employment for people on low-incomes. We’ll be publishing a report in the spring, but I wanted to take a moment to look at an important issue in this area: for most self-employed people, money isn’t the number one reason they become self-employed.

About ten years ago the ONS asked self-employed people what their motivations were. Thirty per cent said that they’d chosen self-employment “to be independent” compared to just 13% who said that they “wanted more money”. Flexibility is also important. Twenty-one per cent of self-employed women said that they chose to be self-employed so that they could work from home or meet family commitments.  

By paying attention to their varied circumstances and aspirations, the RSA has identified six "tribes" of self-employed people. These include “Independents” (“freedom-loving, internet-dependent business owners who are driven by the opportunity to vent their creative talents”) and “Dabblers” (“usually part-timers, their business is more of a hobby than a necessity”) as well “Classicals” (“largely driven by the pursuit of profit”). According to the RSA, 35% of self-employed people are either “Classicals” or “Survivors”, whom they define as “reluctant but hard-working individuals who are struggling to make ends meet”. These people’s choices are primarily guided by what we might think of as economic motivations. But for the remaining 65% who belong to the other “tribes”, non-financial motivations are more important. 

That’s just as well, given that self-employed incomes are falling. We might want to consider the possibility that part of the drop in self-employed earnings is due to people choosing to trade income for other benefits (like the experience of independence). We should recognise that some self-employed people are making rational choices about how much they’re willing to pay (in foregone earnings) for things like independence and flexibility. This doesn’t mean ignoring the one-in-four self-employed people who told the Resolution Foundation that they became self -employed because they had no other alternative. Their aspirations for more secure and better paid work need to be taken into account too. 

There are lessons we should take from this when we think about policy responses to rising self-employment. As I argued in a previous post, self-employment can help people find meaning in their work. I think we should take this just as seriously as more easily measurable outcomes like earned income. Work should serve human ends, not the other way around. As we continue our research, I hope we’ll be able to identify holistic policies which help create environments in which people find it easier to work in ways which give them the things they want. And while for some people that means more money, for others it will mean the ability to balance work and family or to take risks in order to make the most of their creative talents. Those are all worthwhile goals. If we can realize them we’ll have a Britain that’s richer in every way.