Executive Summary

• The most common sources of independent income in America
• Independent wealth is concentrated in the hands of a few, but it doesn't have to be that way
• The promise of the Mobile Creative Model for developing independent income
• The importance of beginning to develop multiple streams of income now, before crisis hits

If you have not yet read The Self-Employed Middle Class Hardly Exists Anymore available free to all readers, please click here to read it first.

In Part 1, we looked at a variety of IRS and other data to conclude that about 15% of the workforce of 145 million earns some self-employment income, but only 15% of those earners (4 to 5 million) made enough to support a middle class life. Of these around 3 million are estimated to be self-employed professionals. Punchline: very few Americans are able to afford a middle-class lifestyle without working for corporations or the government.

In this Part 2, we examine the primary sources for developing independent income, defined as income that is not paid directly by the government or Corporate America or their pension funds (public and private). 

The Primary Sources of Independent Income

Thanks to the complexities of U.S. tax law, specifically, how the tax code treats various kinds of income, we have a reasonably precise snapshot of earned and unearned income. We can identify the primary sources of independent income as:

1. Earned income from owning a small business or self-employment.  Of 28 million small businesses, about 6 million have employees (the classic small business model) and around 22 million are businesses with no employees, sole proprietors or partnerships/incorporated businesses with no employees other than the owners.

Since the IRS data doesn’t break down the number of small businesses within each category that have employees, we have to consider other markers of self-employment to get a realistic picture.