I think it's permanent
I wrote about a theory, and then found the data to back it up. So, here's another theory. Also, 7 other things worth your time.
Back in October, I wrote about a young woman who shared tips on TikTok on how to make money by signing up for academic surveys.
Her name was Sarah Frank. She’s a freshman at Brown University, and she had a whole slew of these videos suggesting ways to make a little money on the side.
Better than working retail, some might say.
Things went viral (her videos, not my article).
Millions watched and acted on her advice—to the point that researchers were flummoxed, trying to figure out why their survey samples suddenly skewed heavily toward Generation Z women: 91 percent, in one case.
Hmmm, I thought (and I wrote at the time). I had a theory:
It has to do with the Great Resignation and those 4 million people per month who keep quitting their jobs … If you ask the Department of Labor, they’ll tell you that they’re doing so with nothing else lined up.
But honestly, that makes zero sense. … And it makes me wonder:
What percentage of people quit jobs (especially lower-wage jobs), because they figure they might as well try turning side-hustles into a full-time income? …
I don’t have data, but very often the simplest explanation for big changes is the obvious one.
Guess what? Now we have data!
And it seems to show exactly what I (and many other people, I'm sure) thought might be going on. A lot of people are in fact quitting their jobs to become their own bosses.
Check out these statistics reported in The Wall Street Journal, citing the U.S. government and other sources:
First, new Labor Department data shows that there are now 500,000 more unincorporated, self-employed workers than there were at the start of the pandemic: 9.44 million.
Next, the number of new applications for federal tax ID numbers jumped 56 percent between 2019 and 2021; two-thirds of those were for businesses expected to employ nobody other than the founder.
The percentage of workers in the U.S. who consider themselves self-employed rose from 5.4 percent in February 2020, just before the pandemic, to 5.9 percent now.
In September 2019, the online marketplace Etsy had 2.6 million active sellers; as of the same time this year, the number was 7.5 million.
And, there are similar signs from online career sites and marketplaces like LinkedIn and Upwork.
Overall, I think this is a positive development. (Although it probably doesn't matter how anyone feels about it; this trend is happening.)
Whether they were driven by fear of COVID, or the realization that they didn't want to give up flexibility, or lack of child care—or if they simply took stock and realized they'd rather take a bit more control of their own destinies—this wave of newly self-employed workers could explain a lot.
Pointedly, I don’t even think people need to be right for the shift to make data-centric sense.
In other words, they don’t have to be correct in that they estimate they’ll make more or be happier filling out surveys or driving for Door Dash or learning how to sell things on Amazon.
They only have to think that they could legitimately be and that the risk-adjusted return is likely to exceed what they’d make punching a clock (or whatever the 21st-century slang for that lifestyle that won’t make me seem older than I am might be).
Will it be a permanent shift? I was tempted to end here with a wishy-washy, “time will tell!” kind of coda.
But, you know what? Here’s my next prediction. Yes, it’s a permanent shift—at least, a long-term one.
All things considered, for a lot of people, it’s better to own the company if you can, even if it’s a very small company.
It’s better to be diversified, not relying on a single income source to keep your head above water, and keep your family in bread and shoes, so to speak.
And, once you’re no longer in the position of having to justify taking time off, or trying something new—to say nothing of realizing you can legitimately claim some things as tax deductions that weren’t available to you as a W-2 employee—it’s hard to go back.
Call for comments: I’m curious to know, how many of you have started businesses, or side hustles, or gone to work for yourself since the start of the pandemic? And what do you think: Is this a permanent shift, or a temporary one?
7 other things worth your time
Things are closing again due to COVID (specifically Omicron): examples include some schools in Maryland, some Broadway shows, the entire country of Holland. President Biden is set to address the nation tomorrow; critics say he should have done it a day or two ago, already. (KHON, NYT, Reuters, NBC News)
Senator Joe Manchin, Democrat of West Virginia, seemingly put the nail in the coffin of Biden’s domestic agenda, saying he will not vote for the Build Back Better bill. The Senate is evenly split 50-50 (with Vice President Harris breaking ties), so Democrats needed unanimity to pass the bill. Goldman Sachs immediately cut its growth projection for the U.S. as a result of the announcement. (Fox News, Forex Live)
How the government helps investors buy mobile home parks, raise rents and evict people. (NPR)
Bruce Springsteen has sold his entire music catalog for $500 million. (BBC)
You're never too old to learn; 104-year-old Indian woman learns to read, fulfilling a lifelong dream. (The Guardian)
Soldiers re-enlisting in front of a massive explosion is one of the military’s best photos of 2021. (Task & Purpose)
A professor wanted to test if anyone actually read his syllabus. So he included simple clues to find a $50 bill in an on-campus locker, and sat back. Out of 70 students and an entire semester, nobody read thoroughly enough to know to look for the cash. (Actual photo.) (CBC, Facebook)