The Covid-19 pandemic has wrought many changes in society from doctor’s visits over Zoom to education that is remote. We are now learning about many other less discussed changes that may be having a huge impact on our economy, careers, personal finances, and lifestyle. The changes cut across various sectors of society including our own community. For example, baby boomers are retiring years before they had planned to, and early retirement seems to be taking hold in the heimishe community as well. Even some older workers that were still on the job because they needed the income are also changing their plans and retiring. The net result is a severe shortage in the labor pool which is directly responsible for many other issues including the supply chain problems.
Yet another significant change in this “post-Covid” era is that many people are leaving jobs in favor of starting their own businesses. In my business consulting practice, I am seeing many young people who seem to be changing course from looking for a job to actively exploring opening a new business. One factor that may have influenced so many to work from home or even retire early was the long period of time people worked from home and simply got used to the idea of spending more time with family and working flextime. The prolonged layoff gave them pause as their future simply did not wish to return to the pre-Covid routines.
We already know that we are in the throes of a labor shortage to the tune of 5 million jobs less than what we had before the onset of the pandemic. The US Labor Department, which tracks this data, recently reported that there were 10.4 million unfilled jobs. One reason could be that some of the early retirees are now shifting gears, no longer looking for a “job” and instead opening up small businesses or doing consulting work in their area of expertise.
Early retirement was also prompted by a healthy stock market, particularly 401 (k) accounts, the rising value of homes, the stimulus money and extra unemployment benefits that suddenly spiked the assets of many middle-class families. In other words, people were able to see their way through an earlier retirement without suffering financially. More importantly, they felt that a significant move from a job to a business in the current environment was less risky, especially since they had some extra cash around. One report noted that in the 15 months since the pandemic began, about 2.5 million Americans retired, twice the number that retired in 2019. This essentially means that there are 1.2 million fewer people in the workforce over the age of 55 than would otherwise be expected. These are not just any workers, but experienced laborers that is very much needed in society.
Oddly enough many new businesses are opening when the memory of closings during the pandemic is still fresh. Americans are starting new businesses at the fastest rate in more than a decade, according to government data, seizing on pent-up demand and new opportunities after the pandemic shut down and reshaped the economy. Several people I spoke to had planned to open a new business prior to the pandemic, invested considerable money into their ventures, postponed the opening due to Covid but now we’re ready to resume their ambitious plan. Imagine that in the last 12 months, some 20 new kosher restaurants opened, a good number of them already on the drawing board prior to the pandemic.
Just how many new businesses opened in general? According to the Wall Street Journal, “entrepreneurs applied for federal tax-identification numbers to register 4.54 million new businesses from January through October this year, up 56% from the same period of 2019, Census Bureau data shows. That was the largest number on record that dates back to 2004. Two-thirds were for businesses that aren’t expected to hire employees. There seem to be many reasons for this sudden surge. Some have grown very comfortable with working on a flexible schedule and opening their own business gives them that option. Others have simply gone into consulting because of this time flexibility. There are even those that fear going back to a large office setting when the pandemic is still around and there is no real indication when it will end. A sizable number of new business applicants are hoping that they will be able to make more money than when they were on a salaried job.
This year, the share of U.S. workers who work for a company with at least 1,000 employees has fallen for the first time since 2004, Labor Department data show. I recently spoke to a woman who left a job with a large company out of fear of getting Covid in such a populated environment. Meanwhile, the percentage of U.S. workers who are self-employed has risen to the highest number in 11 years. In October, they represented 5.9% of U.S. workers, versus 5.4% in February 2020. We are seeing a great deal of this change in our community. More retail stores are opening every day, significantly upgrading the retail scene with beautiful stores. The service industry is booming as well and so is selling on-line with so many having taken to selling through Amazon.
Women more than men seem to have taken advantage of this new phenomenon of working from home and running a small business, namely because of the flexibility it offers them in their daily schedules. Enterprises founded by women have grown by 27% and male-founded ones by 17% since the pandemic started, according to a LinkedIn analysis of user profiles. Meanwhile, Labor Department data shows that in the two years through July, the number of self-employed female workers actively at work has grown 4.3%, while the number of self-employed male workers is down 1%, according to analysis. Limited child-care or commuting options have helped spur some of the moves.
The Wall Street Journal aptly noted that “part of the current shift to self-employment might prove temporary. The boom in self-employed day traders during the dot-com hoopla of the late 1990s deflated along with the stock bubble.” True, when people realize the challenge of going at it on their own, they sometimes revert to getting a secure paycheck and according to all data, the jobs are waiting for them.
In the meantime, the employment landscape is changing dramatically with more people retiring early, more going into consulting and an increasing number finding a way to work from home.