Why Entrepreneurs Choose Freedom Over Money
"Show me the freedom" doesn’t have quite the same ring as "Show me the money," but it could be the tagline for a movie about entrepreneurs.
Despite reporting more day-to-day stress, lower earnings and more hours worked than people employed by others, research shows that entrepreneurs are more satisfied with their jobs -- and happier in general.
According to research by the Pew Foundation, 39 percent of entrepreneurs report experiencing "complete" job satisfaction versus 28 percent of those who work for a boss.
This greater job satisfaction spills over into the rest of their lives, and has a lasting effect. A recent study out of the Max Planck Institute of Economics in Germany and the University of Sussex in the United Kingdom revealed that transitioning from wage employment to self-employment boosted people's overall life satisfaction for as long as two years after their move.
The greater satisfaction of entrepreneurs doesn't come from earning more money. The average earnings for Americans aged 15 and older was $31,683 in 2011 according to the most current Census Bureau data. For the self-employed subset, this figure was $30,766.
Nor do higher levels of happiness stem from less work or less stress. Full-time self-employed people work more hours than full-time wage employed people, according to 2013 figures from the Bureau of Labor Statistics. Entrepreneurs also spend double the amount of time thinking about work when not at work as those who work for others, according to a survey of 2,000 business owners and employees conducted last September by AXA Business Insurance.
People who work for themselves are happier because of the freedom that working for one's self permits. So valuable is the opportunity to be one's own boss that studies show you have to pay people twice as much to get them to work for others and still have the same level of job satisfaction as being self-employed.
Of course, the chance to be one's own boss is why most Americans go into business for themselves. When a representative sample of 3,001 American adults were asked by surveyors from TNS Custom Research in the second half of 2012 why they would prefer to work for themselves 54 percent said "personal independence" and "self-fulfillment." An additional 33 percent said "freedom to choose place and time of working." In contrast, only 9 percent said "better income prospects."
Despite the fact that people who work for themselves earn less, work more, have fewer benefits and experience more on the job stress than those who work for others, a majority of Americans would prefer to be entrepreneurs. Workplace autonomy is a powerful motivator.
Scott Shane is the A. Malachi Mixon III professor of entrepreneurial studies at Case Western Reserve University. His books include Illusions of Entrepreneurship: The Costly Myths That Entrepreneurs, Investors, and Policy Makers Live by (Yale University Press, 2008) and Finding Fertile Ground: Identifying Extraordinary Opportunities for New Businesses (Pearson Prentice Hall, 2005).