In what’s now being called the “Great Resignation,” a record number of employees have quit their jobs since the lockdowns started. Month after month since 2020, the number of people leaving jobs voluntarily has broken historical records. All told, some 36.3 million people quit in 2020. Through November of 2021, some 43.1 million Americans quit their jobs, according to the Bureau of Labor Statistics (BLS). That’s approximately one-quarter of working Americans.
In the inimitable words of country songsmith Johnny Paycheck, employees are saying, “Take this job and shove it!” Employers are left holding the bag, with some 10.6 job openings against only 6.8 million unemployed Americans looking for work.
Some of the quitters are walking out of one job into another, others are retiring, stepping back to part-time, or leaving the workforce entirely. Industries losing the most employees include leisure and hospitality, with 15.8 million quitters, and retail with 7 million leaving their ranks. In professional and business service firms, 7.5 million employees walked off the job this year.
With all this turmoil in the employment scene, record numbers of Americans are discovering what the Wall Street Journal calls their “inner entrepreneur” as they pursue their personal American Dream.
Many of these corporate-American “quitters” are joining the gig economy. More than nine million Americans are classified as self-employed unincorporated workers by the BLS, but that number vastly underestimates the total number of people doing freelance gig work.
Some 51.1 million Americans participate at some level in the gig economy, a 34 percent increase over 2020. While the majority (34.1 million) are occasional or part-time freelancers, another 17 million are full-time independents, according to MBO Partner’s “State of Independence in America” report.
Of these freelancers, about half are highly skilled knowledge professionals working in computer programming and IT, marketing, and business consulting. They are attracted not just by the flexibility of freelancing, but because they can make as much or more working for themselves. An Upwork survey found 75 percent of full-time freelancers said their earnings are on par or even higher than when they were employed. Upwork is an online freelancer-employer matchmaking service.
Further, Upwork expects the number of freelancers to increase as employers demand employees come back to the office. Some 20 percent of people working remotely during the pandemic said they planned to leave their full-time jobs for freelancing.
Emboldened by success in the gig economy, some will use it as a springboard to form their own companies and eventually hire people to work for them. A recent survey by Digital.com found that nearly one-third of people who quit their jobs post-Covid did so to start their own businesses.
New Business Formation
On the flip side of the Great Resignation are record numbers of new businesses being formed. Some five million entrepreneurs have applied for a federal tax-identifier number in 2021, the largest number on record since the Census Bureau began tracking it. This followed a previous record set in 2020 when 4.4 million startups were registered.
To put the record-setting new business numbers in context, consider that over the last decade, an average of 2.9 million businesses were started each year from 2010 through 2019. By comparison, some 50 percent more new businesses were formed in 2020 and the number of startups grew over 70 percent above the decade average in 2021.
Only three industries out of 19 accounted for 40 percent of all startups in both 2020 and 2021. Retail made up 20 percent, making it the top industry gainer, and number two ranked professional services and third-ranked other services at 10 percent each. In 2021, more entrepreneurs stepped in to tackle the many challenges in the nation’s supply chain, with the number of new businesses in the transportation and warehouse services sector up nearly 40 percent over 2020.
It is reasonable to assume that all those entrepreneurs starting retail, professional services, other services, and transportation companies came out of and know those industries well enough to bring new perspectives and innovative solutions to each. It’s just what the U.S. economy needs after the blow it’s taken from the lockdowns and the Biden administration’s failed economic policies.
Forced to Go Solo
Writing in Harvard Business Review, Ian Cook, vice president of people analytics at Visier, reported the most significant increase in corporate resignations is among those in mid-career, between 30 and 45 years old. The number of mid-career resignations rose by 20 percent from 2020 to 2021. Workers aged 45 to 60 years also resigned at elevated levels in 2021.
Specific times in people’s lives are predictive of major career moves, like starting a company. Milestone birthdays, work anniversaries, the birth of a child, and children leaving the nest correspond to times of personal reflection that become the catalyst for major life changes.
With the lockdowns came more time to reflect on life goals and ambitions. Many have found their current careers and employers wanting. After being housebound for many months while corporate offices were closed, mid-career professionals discovered they liked the flexibility of working from home on their own schedules. They could accomplish more in less time without all the office distractions.
Any number of reasons explain why people quit their jobs to go solo or form companies, but a few stand out. The first is the control and autonomy that comes with being your own boss. Being in control of one’s work and time is a compelling motivation to pursue an entrepreneurial journey. While an entrepreneur still has people to answer to, whether clients, customers, or investors, self-employment is a way to get out from under a boss’ thumb and do your thing.
The second is the ability to pursue a job with meaning and purpose. Meaning is deeply personal and inwardly focused. Research has shown the meaning behind the work is more motivating than any other aspect of work, including pay and rewards, opportunities for promotion, or working conditions.
Purpose is how one’s personal meaning is expressed outward into society, or how one’s job is making a difference in the world. A McKinsey study found that the uncertainties caused by the pandemic response have turned people’s attention toward more purposeful work. Those who find it are better for it, with those who say they are “living their purpose” at work reporting five-time greater levels of well-being compared with those who are not.
The third reason Americans are risking it all on their own is to create more wealth. Achieving greater financial means and the social status that goes with it is another motivator to start a business, although it is probably the weakest reason to do so.
The statistics don’t favor startup businesses. More than 20 percent of startups don’t make it into their second year, yet few people get wealthy working for someone else. And if one builds a successful business, the business itself becomes a valuable asset.
Keeping the American Dream Alive
As the new year dawns, the resignation trends we’ve seen throughout 2020 and 2021 can be expected to continue, and even accelerate if Biden’s vaccine mandates go through. Many Americans also find themselves at cross purposes with the “woke” agenda of much of corporate America. Their consciences won’t allow them to support businesses that promote causes they can’t, so they’ll take their chances going out on their own.
Since its founding, even before, the United States of America has been a country of dreamers, people driven to escape the tyranny of kings and rigid hierarchical social structures to forge a better life free of those constraints. It’s the dictionary definition of the American Dream: “The ideal that every citizen of the United States should have an equal opportunity to achieve success and prosperity through hard work, determination, and initiative.”
If entrepreneurship is the foundation of America’s economic success, then America is headed for even greater greatness in the years ahead as growing legions of enterprising entrepreneurs turn their talents, energy, and experience to new businesses. The American Dream is alive and well in America in 2022.