Even before lockdowns, travel halts, and business shutdowns ravaged entire industries across the world, more and more individuals in America were already turning to freelancing and entrepreneurship to either start new careers or supplement incomes.
From 2015 and 2019, the number of freelancers in America grew by 4 million, with a total of 57 million people in the country currently earning money outside of a traditional employer.
That number accounts for roughly 35% of the country’s total workforce, highlighting how this trend has been progressively gaining ground with the introduction of highly reliable marketplaces such as Upwork and Fiverr.
Meanwhile, the number of new business establishments in America – those with less than one year in operation – has grown to 800,000 in March 2020, increasing by roughly 240,000 since 2010.
According to Jasdeep Singh, a Connecticut-based business consultant and cannabinoid operations and marketing leader, these two statistics suggest that more Americans will continue to turn to entrepreneurship and freelancing now that the pandemic has reshaped the way people connect and work.
Effects of the pandemic in how people perceive working from home
The pandemic effectively forced companies to send workers home as a preventive measure to stop the spread of the virus.
By doing so, these businesses triggered the strongest digital transformation boom seen in decades. Companies began to fully acknowledge the benefits of remote working as they were forced to invest time and resources to learn how to continue being productive and profitable regardless of the hurdles associated with this work methodology.
In fact, a recent survey from McKinsey & Company surprisingly revealed that 54% of corporate respondents said they believe that this pandemic-related shift to remote work is here to stay, rather than being solely an event-driven situation.
On the other hand, with remote work and peoples’ increasing comfort with such interactions now in the spotlight, freelancing has also grown. It has become a $1.2 trillion market according to data from freelancing marketplace Upwork, up 22% from the total size reported in 2019.
Now, are Americans really creating new businesses during the pandemic?
As counterintuitive as it may seem, statistics seem to suggest that they are. Singh, who also holds an MBA from the University of Connecticut, found that there was an 18.5% leap in the number of applications for Employer Identification Numbers (EIN), a procedure that entrepreneurs must complete when launching a new business, according to data from the US Census Bureau.
Some of the factors that are driving more people toward entrepreneurship include the proliferation of highly user-friendly e-commerce website, such as the ones offered by Shopify and BigCommerce, that facilitate website building, SEO visibility, and transaction logistics. Social media, online marketing platforms, and multiple channels for advertising have helped new businesses gain access to customers faster. Lastly, supply chain management has become more transparent as suppliers, such as Alibaba, serve as a bridge for individuals seeking to find low-cost vendors in other countries for the endless number of products that can be sold online.
As the demand for jobs continues to dry up in pandemic-battered sectors, some professionals have been forced to adopt a ‘sink or swim’ attitude toward working. This reality, in combination with possibly more time at home, may be leading many people to want, and have the time, to exert more control over their careers. Surviving in today’s economy may mean that the gig economy is not seen as a fringe or side activity, but a viable way to become financially stable.
How will this transformation of America’s workforce affect the economy?
With some forms of remote work and increases in entrepreneurship here to stay, Singh, believes that the business landscape is destined to change. While offices will eventually begin to fill again, many companies and workers are realizing that remote work can still be highly productive while also offer cost savings for both sides. This shift in the physical location, or lack thereof, for work will lead to greater flexibility for workers in terms of when to work, where to live, and how to approach a healthy work-life balance.
Like most everything in our complex economy, the changes’ effects will expand to multiple sectors. For instance, businesses that relied on regular office foot traffic will need to adapt their business model. Restaurants will need to maximize delivery service, commercial real estate will have to offer more creative and flexible leasing, transportation will need to be more flexible, and in-person meetings will take place in a variety of venues.
Meanwhile, the technology industry will likely emerge as the big winner of this shift. The digital infrastructure required to perform work activities from home will offer established firms, such as Zoom, Microsoft, Slack, and Verizon ways to expand their offerings as well as a multitude of opportunities for yet-to-be-founded companies. Just this year, we’ve seen huge growth in companies that facilitate communication (ex. Zoom), collaboration (ex. Microsoft), access (ex. Verizon), and hardware (ex. Netgear).
Once experienced individuals in certain fields, such as finance, technology, or marketing, begin to make their mark in the world of entrepreneurship, including individual consulting, they may become less likely to depend on a traditional employer for their living. This could begin a supply dry-up for roles and end up driving both starting and top-level salaries higher. The job market could shift to a “seller’s market” for highly-skilled individuals.
Given the trends that Dr. Singh has identified in this article, it seems inevitable that the US workplace is heading for a systemic transformation prompted by high levels of freelancing and entrepreneurial activity in the country. In essence, this will result in a shift of how our entire economy works.