Echoes through time: the romance of the unusual

Live the full life of the mind, exhilarated by new ideas, intoxicated by the romance of the unusual.

Ernst Hemingway (1899 – 1961), The Complete Short Stories of Ernest Hemingway

This quote comes via the irresistible Cultural Offering.

 

Image: Biography.com

 

Echoes through time: to remain an emerald

Whatever the world may say or do, my part is to keep myself good; just as a gold piece, or an emerald, or a purple robe insists perpetually, ‘Whatever the world may say or do, my part is to remain an emerald and keep my colour true.’

Marcus Aurelius (AD 120 – 180), Meditations (7.15)

 

The sovereignty of the Ouija board

We sovereign professionals are a strong-willed lot, always completely in control and aware of the forces acting on us. So, I love this psychology study on Ouija users.

Psychologists at Aarhus University tracked the eye movements of users in the normal, involuntary, spirit-driven state and when using the planchette (pointer) to deliberately spell out words in a “voluntary” state.

Spoiler alert!

The experimenters found that:

when looking to see whether at least one participant in a pair made a predictive eye movement, the rates of prediction were just as high as for individuals in the voluntary condition (i.e. for any given move of the planchette, at least one person usually knew where it was going); second, rates of prediction increased in the Ouija board condition, but not the voluntary condition, presumably as the participants became increasingly aware of the diminishing number of meaningful options available.

Read the full spookiness, here.

 

Photo by dragonoak on Foter.com / CC BY-NC-ND

How much do sovereign professionals earn?

Understanding the earnings of sovereign professionals (in the UK) is more difficult than it might first appear. This report from the Office of National Statistics (Trends in self-employment in the UK) makes a good stab and much of the data below comes from that report. However, it is necessarily flawed and, I would argue, most likely understated, especially for full-time self-employed.

How to define self-employed

The problem lies in legal status and the way that income is taxed. In the UK, if you are a sole trader, then you trade on your own account. You bill your services as, say, John Smith, Plumber. That income less your business expenses is subject to income tax (ignoring national insurance, another form of employment tax, for simplicity).

However, there is another option. you can incorporate a limited company and trade through that. The limited company has its own legal identity and the profits it makes belong to it (and its shareholders). You can then take your share of profits as a dividend on the shares you own and/or the company can hire you as an employee and pay you a salary. Both dividend and salary are subject to taxes, but the rules are different and the net effect can be different, too. It’s often more tax-efficient to use a limited company structure (though less so than it used to be).

There are other reasons, too. Many people like the clear separation between business and personal. Being Director / Managing Director / CEO of ABC Ltd. can appear more senior and lend gravitas to a business card. It can also signal, perhaps, greater seriousness or commitment to the business. These things  can be illusory, but effective. Perversely, a limited company (by definition, limited in its liability) can find it easier to obtain business loans than a sole trader (who is liable to the full extent of their personal worth).

In the business-to-business (B2B) market (e.g. independent consultants, designers, interim managers etc.) and especially at the more expensive or senior end, the limited company model is (I would suggest)  much more common than the sole trader. And, in any survey, the sole employee-director of a limited company will necessarily respond that he or she is most definitely NOT “self-employed”.

About the self-employed

All of that said, the ONS report throws up some interesting data.

Population

There are now 4.8 million self-employed people in the UK, 15.1% of the labour force and up from 3.3 million (12.0%) in 2001. And, more of those self-employed people are solo workers: 4.0 million in 2016, compared to 2.4 million in 2001.

Income

Median income for full-time self-employed in the financial year ending March 2016 was £347 per week (£18,044 pa).

Median incomes for the self-employed have not increased as much as those of employees or general inflation:

  • Increase for full-time male self-employed (2000-01 to 2015-16) = 22.8%
  • Increase for full-time male employee (2000-01 to 2015-16) = 44.8%
  • Increase for full-time female self-employed (2000-01 to 2015-16) = 22.9%
  • Increase for full-time female employee (2000-01 to 2015-16) = 52.8%
  • Cumulative inflation over the period = 51.8%

Education

Interestingly, the share of self-employed with degree-level (or higher) education has grown from just 19.3% in 2001 to nearly one third (32.6%) in 2016.

Degree-educated, self-employed people now make up 4.9% of the total (employed plus self-employed) labour force compared with just 2.3% in 2001. As the ONS report says:

Growth in self-employment has been driven mainly by those who have a degree (or equivalent), increasing its share amongst both the self-employed and total employment, showing that relatively highly-qualified individuals are becoming more concentrated in self-employment.

Wealth

In terms of property wealth, for the 35-54 year-old age bracket, 27.0% of self-employed have property worth over £250,000, compared to just 17.6% of employees.

For the over 55 age-group, the difference is even more marked: 56.2% of self-employed compared to just 37.5% of employees.

By contrast, the self-employed typically have much smaller pension pots.

Aged 35-54, just 14.0% of self-employed have a pension pot of £100,000 or more compared to 34.2% of employees. And, 45.1% have no pension provision (other than state pension) compared to just 16.4% of employees.

In the older age group, 34.8% of self-employed have a pot of £100,000 or more compared to 56.4% of employees. Nearly a third (30.3%) of 55+ years have zero pension provision compared to 14.2% of employees.

In terms of cash, the figures are neck and neck except for the two extremes of the 55+ age group, where the self-employed generally have greater cash wealth. There are fewer self-employed with less than £20,000 in cash assets (51.9% compared to 59.4% of employees) and more self-employed with greater than £100,000 in cash(19.4% compared to 12.2% of employees).

What about those limited companies?

Elsewhere, ONS data hints at possible growth in sovereign professionals operating through their own companies.

Between 2010 and 2017…

  • The number of micro-businesses (0-9 employees) has grown by 28.2%
  • The number of employees in those businesses has grown by only 18.9%, meaning the average 0-9 employee business is smaller.
  • In fact, the average employees per business has dropped from 2.5 in 2010 to 2.3 in 2017.
  • At the same time, the average revenue per employee has increased from £127.7k to £144.2k. Total revenue has increased by 34.2%.
  • By contrast, in the next band of 10-49 employees, number of businesses and number of employees have grown by around the same mount (17.9% and 17.6% respectively), while revenue has grown by only 12.3%.

In essence, there are more businesses of smaller size, generating income more effectively.

Given the wide bracket of 0-9 employees, that’s hardly definitive, but it is at least suggestive. The next task is to try and get more granular on size and on business sector.

In the meantime, I hope this is a useful summary for those interested in the world of sovereign professionals.

 

Photo by Peter van Eijk on Unsplash

 

 

Evolution of the Grey Fox

The Grey Fox talks openly and honestly about his evolving blog: seven years old and with a slightly broader remit of “ageing with style”:

Style is not just how you look and what you wear: it’s how you live – where you go on holiday, what car you drive, the watch you wear, what food and drink you like, what you do in your spare time, how you treat others, what books you read.

Always worth a read.

Poetry: The Icelandic Language

The Hammock Papers shares an evocative poem from Bill Holm, The Icelandic Language:

In this language, no industrial revolution;
no pasteurized milk; no oxygen, no telephone;
only sheep, fish, horses, water falling.
The middle class can hardly speak it.

In this language, no flush toilet; you stumble
through dark and rain with a handful of rags.
The door groans; the old smell comes
up from under the earth to meet you.

Read the rest, here.

More on Holm, here and here.

This poem, apparently, comes from a collection, The Dead Get By With Everything.

 

Photo by Ghost Presenter on Unsplash