The Great Resignation is a tale of the American people getting mad as hell and not taking it anymore. The University of Michigan and the Federal Reserve’s surveys of consumers’ sentiment and expectations highlight the same thing: The public is fed up with the state of affairs, whether it is public policy blunders or companies getting wealthier despite the inflationary crisis. As a result, workers are ostensibly taking matters into their own hands and choosing to invest blood, sweat, and tears to achieve the American Dream by working for themselves. Out of all the developments that have unfolded since the early days of the coronavirus pandemic, the entrepreneurial boom has been one of the few bright spots in an ocean of bad news. Are more people becoming their own bosses today?
The Pandemic Entrepreneurial Boom
Over the last year, a trend nobody anticipated is unfolding in real-time: The Great Resignation, also known as the Big Quit. This has seen millions of people voluntarily leave their positions, despite a year of lockdowns, a soaring cost of living, and lots of uncertainty about the future. But many people, especially individuals between 30 and 45 years of age, are betting on themselves.
“It’s quite striking that the first half of 2021 has seen not only a surge in applications for new businesses, but a surge in quits,” John Haltiwanger, professor of economics at the University of Maryland and a senior research fellow at the Census Bureau, told Bloomberg. “At least some of the people who are quitting aren’t just taking another job at another firm, they’re actually starting up their own firm.”
While some folks are job-hopping to command a better compensation package, others are putting their talents to use and launching small businesses. Be it inside their garages or on the web, professionals are utilizing a wide array of avenues by taking a gamble to become successful entrepreneurs.
But is the boom real or wishful thinking? The data suggest the former. To perhaps put this into perspective, the number of U.S. startups has increased so much that the Census Bureau announced it intends to make business formations an official statistic beginning on Dec. 8.
For the currently available data, there was a record figure of new startup applications in the first nine months of 2021, climbing to 1.4 million. This is up from a little more than 987,000 before the pandemic in 2019. Moreover, all kinds of people are getting involved in entrepreneurship. Last year, the number of new black business owners rose to 11%, while female entrepreneurs advanced to 49%.
New business creation is being witnessed across the economy, though some sectors have shifted in response to the recent developments in the marketplace. For example, there has been an increase in new startups in the transportation and warehousing industries. With the internet and a treasure trove of digital tools and resources, it is cheaper than ever before to initiate a fresh venture.
Start Me Up!
Individuals are not only officially starting brick-and-mortar establishments or consulting firms. In recent years, particularly during the COVID-19 public health crisis, there has been an explosion in freelancing, gig work, and the broader underground economy. From Uber drivers to freelance writers, approximately 60 million Americans have engaged in this type of work. And the number of services and platforms popping up, whether it is Upwork or Door Dash, will further facilitate this environment of being your own boss and earning a living. Of course, the government always threatens to impose its will and apply new rules and regulations that diminish entrepreneurial success.
Beware the Hand of Government
Unfortunately, most small businesses fail within their first few years. But the most terrifying component of running a mom-and-pop shop out of a basement is the state, particularly in the era of COVID-19. Licensing rules, regulatory compliance that eats up a considerable portion of a company’s budget, or federal corporate tax policy that makes entrepreneurs lose sleep at night are just some of the public policy pursuits that negatively affect smaller firms. Corporations can absorb many of these burdensome costs, but a business of five can hardly afford the same pecuniary penalties. Indeed, government is the destroyer of the free-enterprise system, but the inherent entrepreneurial characteristic possessed by millions of Americans will fight back by doing what they do best: innovate and prosper.
~ Read more from Andrew Moran.