Today’s millennials – those born between 1981 and 1996 – are in the prime of their lives and, with a population of over 72 million, look set to be a major force in society and the economy.
But the story is not so simple. Many millennials entered the workforce during or shortly after the Great Recession, when job openings were few and unemployment high. On top of that, most who attended college experienced dramatic increases in the cost of higher education without a commensurate increase in wages. More recently, the housing market has seen explosive spending just as millennials have entered peak home buying age. And while high inflation over the past two years has affected all parts of the economy, younger households have been particularly hard hit. The economic hardships facing millennials mean that members of the generation are in many ways lagging behind previous generations in achieving life goals and creating wealth.
These challenges pervade millennial entrepreneurs. With more personal debt, lower savings and wealth, and other financial constraints, millennials interested in starting or owning a business must overcome more barriers before doing so.
Millennial Business Owner Income Over Time
Millennial business owners earned less than the average business owner
Source: Flippa analysis of data from the US Census Bureau’s American Community Survey | Image credit: Flippa
Among business owners, millennials tend to bring in below-average incomes. According to the latest Census Bureau data, the average income of all American business owners exceeds that of millennial business owners by approximately $14,000. This disparity is partly due to the younger age of millennials, which leads to newer and less established businesses. However, there is a positive trend: over time, this gap has decreased. While the income of all business owners has remained relatively stable since 2009, millennial business owners saw a significant increase, more than doubling from $30,064 to $62,914 during that period.
Business owner income gap by generation
Baby Boomer business owners earn significantly more than their employee counterparts
Source: Flippa analysis of data from the US Census Bureau’s American Community Survey | Image credit: Flippa
Millennial business owners lag behind older business owners not only in total income, but also in income relative to non-business owners. A typical baby boomer who owns a business earns nearly 20% more than one who works as an employee, while for Gen Xers, the typical business owner earns 4.7% more than an employee. For millennials, however, the gap between business owners and employees is just 1.1%—about just $700 a year.
Millennial Business Owner Income by Location
Millennial business owners in North Dakota earn the most compared to millennial employees
Source: Flippa analysis of data from the US Census Bureau’s American Community Survey | Image credit: Flippa
For millennials in some parts of the country, however, owning a business can be far more lucrative than working as an employee. In North Dakota, the typical millennial business owner earns more than twice as much as their peers, and in other states like Nebraska (+63.6%), Mississippi (+40.4%) and Kansas (+38.9%) business owners maintain a significant profit premium. But in 16 states, millennial business owners earn less than millennial employees, including Wyoming (-27.3%), Connecticut (-25.3%) and Massachusetts (-16.0%).
One factor that can affect the income gap is the quality of jobs available to employees. At the metro level, some of the locations with the most employee-friendly differentials are full of generous-paying jobs, such as finance jobs in Bridgeport, CT (-33.5% difference for business owners) or tech jobs in San Francisco ( -33.2% ). The cities that have the best differential for millennial business owners are places where higher-paying industries are not as well-established, which lowers the opportunity cost for potential entrepreneurs.
This analysis was conducted by researchers at Flippa, a global online marketplace for buying and selling online businesses and digital assets, using data from the US Census Bureau. The researchers ranked metros by the difference between the median income of self-employed and employed millennials.
Here is a summary of the data for Pennsylvania:
- Income Disparity of Millennial Business Owners: -5.4%
- Median Income for Millennial Business Owners: $57,867
- Median Income for Millennial Employees: $61,179
- Percentage of Millennial Workers Who Are Business Owners: 6.9%
- Percentage of population who are millennials: 20.7%
For reference, here are the statistics for the entire United States:
- Income Disparity of Millennial Business Owners: +1.1%
- Median Income for Millennial Business Owners: 62,914 dollars
- Median Income for Millennial Employees: 62,234 dollars
- Percentage of Millennial Workers Who Are Business Owners: 8.1%
- Percentage of population who are millennials: 21.7%
For more information, detailed methodology, and full results, see How Much Do Millennial Business Owners Make? to Flippa.
