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Employees quit at a record pace to join the ranks of the self-employed

Posted by Celene Robert

December 13, 2021

Americans have been leaving their jobs in great numbers and finding a path to self-employment as consultants, retailers and small-business owners during the pandemic. According to The Wall Street Journal, Department of Labor data show that the number of unincorporated self-employed workers has risen by 500,000 since the start of the pandemic. This amounts to an increase of 6% in the ranks of the self-employed since March 2020.

While there are many reasons people are shifting toward self-employment, researchers say chief among them are the need for greater flexibility, fear of exposure to COVID-19, disagreement about vaccine mandates and frustration with pre-pandemic office life. 

What the numbers say

The share of U.S. workers employed with companies with at least 1,000 employees has fallen for the first time since 2004, according to October 21 Labor Department statistics reported by The Wall Street Journal. Meanwhile, the percentage of U.S. self-employed workers has risen to the highest in 11 years. The convergence of these two trends has left many U.S. companies struggling to hire and retain employees.

Separately, a study conducted by Prudential Financial found that 1 in 3 workers in the U.S. “would not want to work for an employer that required them to be onsite full time.” 

A rise in opportunities

By the time COVID-19 arrived in the U.S., apps, websites and organizations that cater to entrepreneurs and freelancers were already helping employees jump-start businesses of their own. Then, the pandemic spurred others to do some soul-searching and reconsider their priorities.  

At the same time, federal funds provided during the pandemic provided many individuals with a financial cushion to pursue self-employment. Meanwhile, Instagram, YouTube and TikTok are providing marketing platforms for aspiring entrepreneurs, while cryptocurrencies such as bitcoin have inspired a new generation of traders. 

LinkedIn reports that its number of members who indicate they are self-employed by listing services from a field called “Open for Business” has quadrupled since the pandemic began, to 2.2 million. And according to Census Bureau data, 4.54 million new businesses registered for federal tax-identification numbers from January through October 2021.

Women outpacing men in business formations

According to a LinkedIn analysis of user profiles, enterprises founded by women have grown by 27%, while those founded by men have grown by 17% since the pandemic started. A Pew Research Center analysis also reflects stronger growth among female entrepreneurship amid the pandemic, with the number of self-employed female workers increasing by 4.3% and the number of self-employed male workers decreasing by 1% during the period.

Etsy Inc., an online marketplace for buying and selling items, reported 7.5 million active sellers as of September 30, 2021, among which as many as 86% are women, according to Saas Scout. An Etsy survey indicates more than 4 in 10 of new sellers on the platform started their businesses during the pandemic to stay home to care for family members.

Freelancers are gaining momentum

According to a 2021 survey, Upwork concluded that 20% of people working remotely during the pandemic were considering leaving their jobs for freelance work. CEO Hayden Brown told The Wall Street Journal that “a new type of career path has emerged, with half of the Generation Z talent pool actually choosing to start their careers in freelance rather than full-time employment.” 

In a survey by the Freelancers Union and Elance-oDesk (now Upwork), 77% of freelancers said they were making the same amount of money as they did in their previous job, while 42% said they were making even more money. 


Celene Robert
Celene Robert

Celene heads up the marketing at Escalon. Passionate about helping companies grow their business, she spends her days finding new ways to bring essential business services to startups, SMBs, and growth-minded companies. Based in the PNW, she’s the proud owner of 8 pairs of Birkenstocks and a sassy, cuddly cat.

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