A blurb appeared on Linked In a few days ago, opening a forum discussion about self-employment. It reported that self-employment is on the rise in America, and that ?Americans no longer want a boss?. A reasonable desire I think. And it means we may all need to be self-employed, at least eventually.
Other findings in the blurb:
- The number of self-employed in the US could triple to 42 million by 2020.
- Millennials will be the fastest growing self-employed group (good for them!).
- 97% of self-employed workers have no desire to return to traditional work ? count me in that majority.
- 43% feel that becoming self-employed will give them more control over their career.
- One-third cited “family reasons” for seeking to work independently.
I have serious doubts about self-employment tripling in the next couple of years, but I sure love the poster?s enthusiasm. If it does turn out to be true, it could be just what we need to right some of the wrongs in the US economy, at least for the vast majority who inhabit the group formerly known as the middle class.
In the past couple of decades, we?ve been seeing an expansion at the opposite ends of the economic spectrum. The rich have been getting richer, while many in the middle class have fallen a notch or two. It?s even gotten hard to know exactly who the middle class is any more.
Perhaps we can dare to hope the Linked In blurb is on target, and we?ll see a resurgence of self-employment. After all, this was once a nation of farmers and shop keepers, and we could use a lot more of that going forward.
The Next ?Greatest Downturn Since the Great Depression? Might Make it Happen
Every few years, we experience yet another ?greatest downturn since the Great Depression?, despite promises after the last one that it was a one-off event that could never happen again. It?s quite possible that when the next one hits, as it certainly will, the promised resurgence of self-employment will kick in for real.
In the short run, that?ll probably feel like a disaster. People will be leaving living wage jobs, and forced to start businesses at much lower levels of income. But perhaps it?ll be a necessary transition.
A 2015 report by the US Bureau of Labor Statistics (BLS), Self-Employment in the United States, revealed that 10.1 % of the US workforce ? or 15 million workers ? are self-employed. But that?s down from 12.1% back in 1994.
Perhaps the decline in self-employment has something to do with why recessions seem to be getting progressively more severe. It may be that there are too many people employed in competing industries. When hard times hit, and employers go into survival mode, payrolls are cut.
But what if the percentage of the workforce that?s self-employed were to double, to about 20%? That would actually make it more consistent with self-employment levels in many European countries. 20% of the workforce would be 30 million workers. Being self-employed, they won?t be subject to layoff.
Now it can be argued that the self-employed can go out of business, and that?s true. But in most cases, it?s not an either/or situation. A self-employed person could lose 30% of their revenue, and still keep working. By contrast, the salaried worker who loses her job must now survive on an unemployment check. And that?ll run for only a few months.
If a larger percentage of the workforce is self-employed, they?ll have more resilience during economic downturns.
The Advantages of Being Self-Employed
There are certain undeniable advantages to being self-employed. One is greater resilience. Your income may decline, but it?s not likely to shut down completely, as is the case with a lost job.
But some other advantages include:
- Ability to control the flow of your career. You?re not subject to the approval of an all-powerful boss.
- More control over your income. It can be increased as much as your time, talents and determination will allow.
- You can diversify income sources in a way you can?t with a job.
- An opportunity to be creative. In most jobs, you?re hired to do a very specific set of tasks. If you?re self-employed, you can determine what you work on.
- You?ll have more control over your time. I work more being self-employed than I did when I was salaried. But I have more control over my time, so it blends better with my life.
- No waiting in line for the boss?s approval on time off.
- More personal expression. As a self-employed person, you can choose how you dress, the words you use (as opposed to political correctness), who you?ll do business with, and often where you work, as well as the hours you?ll keep.
- You can?t be forced into retirement. My experience is that most self-employed people don?t retire.
- The ability to redirect your business, into any direction you choose.
- Many businesses can be sold for cash windfall. In some cases, that can be your retirement.
- You can choose to work full-time or part-time with many businesses. It can often be blended with a full-time or part-time job.
Those are just some of the advantages of self-employment. Even when the economy is going well, they?re usually not available in most job situations.
Self-Employment Looks Very Different in the 21st Century
In generations past, self-employment looked like a farm, a workshop or storefront. It can still be any of those. But it?s more likely to look like a computer in a home office, some kind of mobile service, or some form of marketing or networking strategy.
In most respects, self-employment today is much more mobile than it has been at any time in the past. Charles Hugh Smith has even given it a name: mobile creatives. I became interested in the concept immediately, since it describes my own method of earning a living.
Basically, mobile creatives are people who earn their living primarily based on their skills and creativity. It often isn?t credentials driven, the way many jobs are. And it rarely requires large outlays of capital.
It?s primarily dependent upon what you can do to earn a living, and most of us can do that more ways than we?re aware. I do that primarily by blogging and freelance blog writing. But in the recent past, I?ve also done public accounting and various contract assignments. And that?s the point, it?s completely flexible.
Creating a Flexible Occupation to Support a Flexible Lifestyle
The point is, it?s a flexible work style. It?s based on a foundation of self-employment, but it can also include a mix of part-time or temporary jobs, contract assignments, or even multiple business ventures. That may sound a bit complicated, but it adds greater flexibility to your life than a typical all-encompassing job.
One of the biggest advantages however is that you can ease into becoming a mobile creative. You can start a side business, working alongside your current career, and gradually build it until it becomes your primary occupation. From there, you can set up your work life just about any way you want.
The word ?mobile? also applies to geography. Given the types of businesses the self-employed are likely to have today, there?s a generous amount of geographic flexibility. In my case, it enabled me and my family to move from Georgia to New Hampshire a few years ago, even though none of us had a job waiting here. But there are mobile creative?s living and working all over the world. In many cases, all you need is an Internet connection, and you?re in business.
The article I cited at the beginning of this post said that Millennials in particular may be the driving force in a dramatic increase in self-employment in the future. Many are not content to sit in the same career for decades, holding out for a pension at 65. They want adventure and meaning in their lives, as well as the potential to self-actualize.
In addition, it?s becoming increasingly difficult to build a bankable career in many once reliable fields. For many people in their 20s and 30s, it might be necessary to invent brand-new careers, the type that best suit them. Self-employment is the way to do that.
Adding Self-Employment to the Retirement Income Mix
Self-employment may be even more relevant to older workers. I?ve been writing much about Alt-retirement, which describes retirement years that will look dramatically different than what?s been known up to this point. In most cases, it will involve continuing to work in some capacity.
Self-employment is probably the best way to do that. Not only will you have more stability ? since age discrimination is a real thing ? but it?ll blend much better with a retirement lifestyle. You can slow it down when you want to relax, and speed it up when you need more income.
Speaking for myself, I find that I have more control over my time, workflow and income than I ever had when I was on a job. I also have better control over my sanity. I can see self-employment as the perfect earned income source once I reach the retirement years. And since I like what I do, it won?t be as disruptive in retirement as a job would be.
All that?ll be important for a lot of people approaching retirement, given that traditional defined benefit pension plans are fast disappearing, Social Security is being ?tweaked? lower, and most people lack adequate levels of retirement savings.
There?s one more really important point that needs to be made here. With more people living into their 80s and 90s today, abandoning work in your 60s could proved to be a strategic mistake. Even if you have a healthy six-figure retirement portfolio, it can be drained by a combination of an extended life and relentlessly rising living costs. Working longer will reduce that possibility.
And as luck would have it?
Not surprisingly, older workers are more likely to be self-employed than the general population. In fact, they have the highest level of self-employment of any age group. According to the BLS survey I quoted earlier, the rate of self-employment is highest among workers 65 and older ? 15.5% of workers. That?s more than 50% higher than the 10.1% rate for all workers.
It makes sense too. Older workers have a combination of experience, skills, contacts, and financial resources to be self-employed. Certainly more so than very young people. They are advantages that older workers should tap into.
If you?ve been holding a job throughout your working life, becoming self-employed can seem liberating. You?ll lose the immediate supervisor, the rigid work schedule, the mindless meetings, and the annoying coworkers. You?ll then be free to pursue whatever business paths that interest you. You may even find a hidden creative ability that you can monetize. In that case, you may never see the need to retire.
And that brings up another important point. Who ever said that retirement needs to be about sitting home doing nothing? It should be more about downshifting, and pursuing the activities that you choose, rather than ones you?re required to do. Running your own business on a part-time basis, for example, could make the retirement years even better than if you were to completely quit doing any work whatsoever.
It will also avoid the reverse retirement syndrome, where you?re forced to go back to work after the fact because you?re running out of money. It?s happening to a lot of people these days.
Self-Employment and the Political Landscape
There?s another area where I think self-employment could benefit our entire culture. That?s politics.
America didn?t become the nation that it is, or that it used to be, by accident. Part of it was the attitudes toward personal liberty and legitimacy of opposition that we inherited from the British. But perhaps even more was the result of the fact that America was a nation of farmers and shopkeepers.
Early Americans were their own bosses, by and large. That?s a natural outgrowth of self-employment. Because you?re not part of an organization, it?s easier to be a free thinker.
Most of us don?t realize how much our thinking is controlled when we work for an organization, particularly a very large one. Employers not only dictate how we work and how we?re compensated, but they also have a tremendous impact on our behavior.
For example, you can easily adopt the language of your employer. You can also begin to accept certain social norms. You may also engage in behaviors that are common among your coworkers. And yes, employers can influence your political views.
One of the things that?s become apparent to me, and I hope to many others, is that we?ve entered a time of political paralysis. I don?t mean the ?polarization? as often discussed in the media. What I?m talking about is fear of change, or more specifically, the kind of change we need to move the country forward.
Americans are now afraid of risk. That?s no way to face an uncertain future. We vote for candidates who we think will be safe choices. We steer away from anyone who might institute meaningful change, out of fear that we might lose something important.
Change Must Come from the Bottom Up
I for one, no longer believe that our biggest problems will be solved in the political arena. America?s politicians essentially reflect the voting populace. They uphold the status quo, and speak openly about how their opponents are ?dangerous?. We have a low-risk population, and low-risk politicians. It shouldn?t surprise us that we don?t seem to be able to move forward.
When you?re self-employed, your life is inherently riskier. You also quickly begin to realize that there really is no security in life. For that reason, you?re more open to change, particularly if you perceive it to be necessary. You also become less trusting of systems. I think that?s important.
I?ve written many times on this website that we have to be responsible for the change that we want. We can?t afford to sit around and wait for the nameless, faceless ?they? to fix what?s broken. They won?t.
Change will have to come from the bottom up, and that means us.
Self-employment has the potential to make that happen. When you work for yourself, you?re no longer dependent on a single income source, like an employer. You also don?t sit around waiting to be promoted ? you basically do it yourself. That mentality will go a long way toward fixing many of the career problems millions of people are now facing. This will be especially important for young adults, who are virtually going to have to create careers for themselves.
Grassroots Change Can Only Come from People Who Run Their Own Game
As an example, we have a major problem in this country with healthcare. Everybody knows it, but they mistakenly believe the only solution is to find more money to pay for it. That?s a train wreck waiting to happen. A good article on Casey Reasearch.com, Health Insurance is the Problem, Not the Solution, and written by a medical doctor, outlines how the solution will have to come from the ground up.
I completely agree. But that?s how it will be with virtually every problem we have. We can?t keep thinking that the system is going to get us out of the very trouble that the system itself is putting us into. Only by becoming more independent, both in practice? and in the way we think, will we be able to accept out-of-the-box solutions.
Self-employment is a great big step in that direction. The more you can shake yourself out of The System, the more clearly you?ll see that solutions are out there, but not in the usual places.
What do you think? Is self-employment as the answer to our personal and national financial problems?