Less than a year ago, I described the decline of the middle class as the story of the century. I continue to believe that. Nothing that has taken place since has changed that outlook, not the record stock market, not the alleged recovery in housing, and not the improvement in the official unemployment rate.
Last month, in an article re-printed in numerous publications, Michael Lombardi used even stronger language to describe the decline of the middle class in An Obituary for the American Middle Class. Done, finished, history. What ever is left of it, is on life support.
Rather than rehashing the factors causing the decline of the middle class, I?d rather focus on what I think is emerging as the ultimate solution to the problem, and one we can all take advantage of on an individual level. I think that the solution is self-employment, and it will help to transition us to what ever the brave, new future will be, on a number of fronts.
Solving the employment issue
Many of the over 50 age group, and the under 30 class too, are finding it especially difficult to find and maintain employment. This is particularly true when it comes to full-time, fully benefited, living wage positions. For many in the over 50 group ? the Baby Boomers ? self-employment is becoming the preferred career option. The under 30 age group ? the Millennials ? probably need to consider this option as well. If you can?t find a job, you may have to create your own. That?s what self-employment is all about.
Many of today?s ?jobs? are a host of variables. They may be part-time, temporary, or contract based. They may involve multiple skill sets ? above and beyond those typically required for such a position. Responsibilities may change in a short amount of time. And jobs are constantly being redefined. If you can?t keep up, you?ll go in the next round of layoffs.
Unfortunately, the situation may be due to get even worse. Changes mandated by Obamacare are causing employers to reduce worker hours. It is not inconceivable that the 29 hour work week – which will enable employers to escape mandatory health insurance for their employees ? will replace the current 40 hour workweek.
Self-employment can address the problems of both reduced hours, and less control over your work life. You can decide what kind of work to specialize in, what kind of schedule you want to keep, how long you want to keep your career, and even how much money you want to earn.
If that sounds revolutionary, it isn?t. Prior to the First World War, we were a nation of farmers, craftsmen, and shopkeepers ? self-employment was the rule, not the exception. This may be a case of transitioning ?back to the future.?
Preparing for – and living in – retirement
This week Charles Hugh Smith dared to ask the question Are We Approaching Peak Retirement? He points out that there are now just two full time employees for every person collecting Social Security, and that the 7-8% investment returns needed to support pensions and private retirement plans are highly unlikely from today?s record high stock markets. I completely agree and think it?s time that we need to be making other arrangements – the Golden Age of Retirement is fast coming to an end.
Self-employment can address two major concerns with retirement:
- It can provide a supplemental income that will at least enable you to semi-retire, and
- It can provide an additional income that can be used to build retirement assets well before retirement.
Why self-employment and not just a part-time job? Self-employment will almost certainly work better during your retirement years. You will not need to qualify for a job, to keep hours the jobs require, or to deal with the limited income the jobs offer.
With your own business, even if you can only semi-retire, you?ll have a lot more control over your time, your income, and even the work you do. And you can probably continue your business literally for the rest of your life.
Creating flexibility in an uncertain economy
It is at least somewhat ironic that jobs are becoming increasingly rigid in the face of a rapidly changing economy. We can probably surmise that employers are reacting to uncertainty in the general economy by seizing more control of their employees.
It often starts when you are applying for a job. The position requires an impossible level of qualifications. There are multiple job interviews, and a plethora of background checks ? often required for positions that pay only $10 or $15 per hour. The job itself requires juggling multiple tasks, often including customer contact, as well as interfacing with more than one computer software programs. Management bounces from strategy to strategy ? some lasting no more than a few days ? trying to create a workable system that can address insurmountable challenges.
And beyond on the job responsibilities, workers face greater uncertainty in regard to compensation than ever before. You can easily be reassigned from one job to a lower paying one in the same organization. And benefits seem to be in a state of perpetual change. The entire concept of a ?steady paycheck? is being revised downward.
How do employees keep up? Increasingly, they don?t. This is why so many people experience job burnout and perpetual stress. These have also become part of ?the cost? of holding a job. How much is this stress also contributing to the deterioration of families, and all the additional complications that adds to the mix?
If the economy is less certain than it has been at any time in our lives, one quality that we absolutely need to build into our repertoire is a mobile and flexible lifestyle that enables us to deal with the punches of change.
Self-employment allows you to do that. It enables you to make changes at your own pace, to emphasize your strongest skills and abilities, and to operate without the constant fear of losing your job. At a minimum, we need that kind of flexibility just to keep our sanity!
Getting started even if you?ve never been self-employed
There?s no doubt about it, there are risks in becoming self-employed. But since it is now clear that there are also substantial risks in holding a job, the jump isn?t nearly as nerve-racking as it once was.
There ways that you can start your own business and minimize the risks of the process. Choose a business:
- Doing work that you like – it makes a more natural transition
- Where you have relevant skills (or can quickly learn them) – this lowers the learning curve
- Where you have an excellent chance of making at least some money quickly – even a small cash flow can motivate you to go for bigger prizes
- That can be operated from home, and on the internet – it?s more comfortable, and cuts down on overhead
- Where you have contacts who are already working in the business – that minimizes rookie mistakes
- That you can operate as a side business – eliminating cash flow as a concern
Even if you don?t have all of these going in your favor right now, you can acquire most of them quickly. The more you have in place before you launch your business, the less risk you?ll take on, and the greater the chance of success.
The whole concept of being middle class is changing, and your best chance of staying in it (or advancing beyond it) may require being self-employed. No one can take better care of your career and financial future than you can yourself.
Have you given this much thought?
I would urge people who need to find a career to look within themselves and find their entrepreneurial spirit. Whether it’s researching all the free info on the Internet to start marketing on the Web or venturing into any other type of business, it makes much more sense than any other trend right now.
Hi Janice – For a lto of people, self-employment will be the only way forward, especially as jobs and careers are degraded by technology and off-shoring. Fortunately, the internet offers great promise for self employment. I think we all need to be bold about it.
Kevin, totally agree with you regarding the many benefits of self-employment! One thing that worries me for the self employed though, is health insurance. The reality today is that insurers are looking for reasons to either drop the “higher” risk insureds or raise the premiums to unaffordable levels. At least with a group plan, your premium is shared and typically is a more affordable rate. Thoughts?
Hi Jim – I’ve long considered health insurance to be the weak spot of self-employment. Obamacare should hopefully help on that front. You can no longer be declined or rated up for health conditions, and premium rates should level out.
But it does nothing to address the cost of insurance, which will probably continue to rise.
I’ve given some suggestions in this post The Self-Employed Health Insurance Dilemma and hopefully that will help. In the end, there’s no easy way around this issue, but it’s increasingly becoming a problem, even for people with employer plans, as premiums increase and employers get rid of the programs.