The pandemic has sparked an unprecedented surge in entrepreneurship jobs and self-employment. Hundreds of thousands of Americans are going it alone as consultants, retailers, and small-business owners.
The move helps to explain the ongoing workplace upheaval, with more people seeking flexibility, concerned about covid exposure, dissatisfied with vaccine mandates, or simply dissatisfied with pre-pandemic office life. It also exacerbates labor shortages in some industries and increases pressure on businesses to change their employment policies.
According to Labor Department data, the number of unincorporated self-employed workers has increased by 500,000 since the pandemic to 9.44 million. Except for this summer, this is the highest total since the financial crisis of 2008. The total equates to a 6% increase in self-employment, while overall jobs in the United States remain nearly 3% lower than before the pandemic.
From January to October of this year, entrepreneurs applied for federal tax-identification numbers to register 4.54 million new businesses, a 56 percent increase over the same period in 2019. That was the highest number ever recorded, dating back to 2004. Two-thirds were for companies that aren’t expected to hire new employees.
According to Labor Department data, the proportion of U.S. workers who work for a company with at least 1,000 employees has fallen for the first time since 2004. Meanwhile, the proportion of self-employed workers in the United States has risen to its highest level in 11 years. They accounted for 5.9 percent of US workers in October, up from 5.4 percent in February 2020.
The rise in self-employment coincides with complaints from many U.S. businesses about difficulties, in some cases extreme, in finding and retaining enough employees. According to Labor Department data, workers in the United States resigned from a record 4.4 million jobs in September.
Kimberly Friddle, 50, will leave her position as head of marketing for a regional mortgage firm near Dallas in September 2020. Her sixth and eighth-grade daughters were having difficulty attending school virtually, and both were showing signs of anxiety months into the pandemic. Although her boss was understanding, she desired the flexibility to assist them without juggling Zoom meetings and projects. Ms. Friddle planned to stay home indefinitely with the support of her husband, a pharmaceutical-company executive. But when a friend contacted her the next month, she saw an opportunity.
The friend sold home décor items on Amazon.com from his home in Canada, and Covid-related border restrictions made it difficult to process returns. When he explained what he needed—primarily, someone to inspect returned items for damage and ship them back to Amazon—Ms. Friddle saw the job as a good challenge and an opportunity for her older daughter, Samantha, to gain some work experience. They began processing returns for him steadily. When other Amazon sellers he knew needed help with warehouse-related tasks that were also made harder by the pandemic, he referred them to Ms. Friddle.
Now she runs an Amazon logistics, warehousing and fulfillment business full time from the family’s home outside Houston and rented warehouse space nearby. Her older daughter works about 10 hours a week with her, and Ms. Friddle recently hired an assistant. She hopes to expand her services to Walmart vendors.
In July, the family’s monthly income returned to roughly what it was when she worked in marketing, Ms. Friddle said. Though the decision to leave that job was an emotional one, she said, a change after 27 years has given her new energy and confidence in addition to flexibility.
“I didn’t have a plan when I left,” she said. “I wasn’t giving enough attention to the needs of my family. I wasn’t giving enough attention to the job that needed to be done. I felt like I was failing everywhere.”
Now, “I feel so successful and I wake up every day like, ‘I wonder what’s going to happen today.’On a recent investor call, Upwork Inc. Chief Executive Hayden Brown, citing a September 2020 survey, said: “A new type of career path has emerged, with half of the Gen Z [age 18 to 22] talent pool actually choosing to start their careers in freelance rather than full-time employment.”
According to an Upwork survey conducted in the summer of 2021, 20% of people working remotely during the pandemic were considering leaving their jobs for freelance work. According to LinkedIn, the number of members who indicate they are self-employed by listing services in a field called “Open to Business” has quadrupled to 2.2 million since the pandemic began. Almost half of new entrepreneurs have a college degree, and nearly four in ten have a postgraduate degree.
According to a LinkedIn analysis of user-profiles, female-founded businesses have grown by 27 percent, while male-founded businesses have grown by 17 percent since the pandemic began. Meanwhile, according to a Pew Research analysis of Labor Department data, the number of self-employed female workers actively working has increased by 4.3 percent in the two years through July, while the number of self-employed male workers has decreased by 1%.