Poverty measurement in Australia has typically excluded the self-employed because of concerns about a weak relationship between their measured incomes and their living standards. At the same time, however, families containing self-employed individuals receive substantial income support. Is this support well targeted? This paper compares the living standards of low-income self-employed families with low-income employee families using data from the ABS 1993-94 Household Expenditure Survey. The use of expenditure data for the measurement of living standards poses particular methodological problems, for which some new solutions are proposed. The provisional conclusions of the paper are that: average incomes are a poor indicator of the average living standards of the self-employed; poverty is greater among self-employed families; but, because of the weak association between income and expenditure for the self-employed, the average living standards of low-income self-employed are higher than employee families.