How Much Does An Entrepreneur Make In An Hour
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These income figures are averages for workers in the United States, but they are indicative of the earnings and overall inequality in our country.
The first data set is income, excluding taxes, which is given in 2012 by the Bureau of Labor Statistics. This figure includes the overall earnings of all employees, which in this case is all the workers in the U.S.
All the profits made are given to the owners of the business who are therefore not considered part of the average U.S. worker. We have excluded all employees making below $3,755 as all the profits made in this country go to the top 1%.
The Bureau of Labor Statistics statistics include benefits such as employer-paid insurance premiums, retirement and profit sharing plans as part of the total income and have set that figure at 23% of total income.
Amount of income that each of the different groups in this country receive
Here is the amount of income that each of the different groups in this country receive, but it is worth noting that the lowest group receive significantly less than the top group of workers.
- Employee, $24,030: Workers on salary generally get between 10% and 20% of the overall income from the business.
- Unemployed, $1,870: The average unemployed worker earns approximately $1,890 a year.
- Household Employee, $40,850: Household employees receive between 50% and 65% of the total income.
- Self-Employed, $89,220: For self-employed people this is just over 67% of the total income, the median is $93,860.
The top group are those that actually own their own business. The mean earnings for this group is $154,630 and the median is $177,080.
As can be seen the huge gap in income and wealth between the people making the majority of the money and those making only a small percentage is apparent.
This data certainly does not give any satisfaction or hope for those of us struggling to make ends meet. In fact, it only emphasizes the degree of inequality in our economy.
An illustration of how much is being taken out of our economy in the form of tax revenue is the fact that in 2013, $4.4 trillion of income was reported but only $1.0 trillion in taxes.
It is also worth mentioning that there are currently 10.3 million households that are living below the poverty line in the United States with a combined income of $55 billion, which is more than the total federal income tax receipts of the 53 million households that made over $156,850 in 2013.
What this data shows is how much a business makes an hour
These statistics clearly show that a business pays employees significantly less than the amount that a worker needs to make to get by in the United States. Also, it should be pointed out that the cost of employing a full-time worker for full-time hours is approximately $15 an hour.
With the median rent in the United States now sitting at $700 per month, this means that the amount of money a person has left to live is approximately $1500 a month, so the income a person needs to make to pay for rent and utilities is approximately $4200 per month, this means that an hourly worker is making less than the equivalent of 2 and a half months rent.
When having a salary of $24,030, which is just over one quarter of what a full-time worker in the U.S. earns, this shows that the employee is being exploited to a level that would not be acceptable if it were happening in the developed world.
With those worker wages, the businesses are making a profit of $983 an hour, therefore making more profit from a worker than they make from a movie.
This leads to a thought experiment that needs to be considered. When we look at this data what would happen if we did away with all of the businesses in the United States?
At the moment, there are over 3.4 million small businesses in the United States, according to the Small Business Administration.
With the above workers making less than what is needed to get by in the U.S. it means that a worker needs to work overtime many, many times to make a good living, in fact, many days a week. If the government removed these businesses from the economy the employees would simply have to find other work and that many likely would not be able to do so.
In fact, if businesses were removed then unemployment would likely soar to levels which would be incompatible with a functioning society. This would also mean that there would be a high number of people without a job and would be much less money to spend on things.
Even if we did manage to go through this scenario, the wage differentials would still be very large
With the way that our labor laws are set up, it is very difficult for employers to make enough money to pay an hourly worker.
According to California state law, employers are allowed to force an employee to work past 4 hours if the employee has not been compensated for the overtime hours and if that is not paid, there can be stiff fines attached.
If an employer pays an employee a base wage of $23.13 per hour, an employee has to be paid minimum wage after working 40 hours in a week which is currently $10.50 per hour. That means that if the company is doing an average of $8,800 per month they would need to pay $860 per hour, so it would mean that the worker would need to work almost two full 40-hour work weeks to make a good living.
However, if we were to change the laws, this would make it possible for many employees to make a good living.
The research also shows that a high percentage of people are self-employed and that number has also remained remarkably steady in the past decade, from 18.5 percent to 18.9 percent. This shows that the percentage of people making money from this type of work has decreased significantly in the past 10 years.
With self-employment, the amount of money earned by the individual is no longer subject to government regulation and, thus, should be much lower than if a worker were employed in a regular company. With self-employment, there is no place for people to turn to if they are being treated unfairly by an employer.
A small business is often a victim of their own success, because their ability to buy things and pay taxes and employees is limited by the amount of money they can make from the businesses they own.