Government data shows a record gap between the number of job openings and the number of unemployed people — 11 million versus 7.4 million. While this is a headache of epic proportions for hiring managers and HR directors, economists and labor market experts say there is a significant silver lining.
“This time has been really fertile. We’ve seen a huge increase in new businesses since the pandemic started,” said Julia Pollak, chief economist at ZipRecruiter. “There are more opportunities out there.”
“There are a few big themes happening,” said Dave Carvajal, CEO of Dave Partners, a recruiting firm focused on the tech industry. “There’s a large amount of money that’s going into venture-backed startups,” he said. Much of this is driven by the ascendance of digitally native consumers and workers — and the pandemic did the rest.
The Census Bureau’s Business Formation Statistics data set shows a surge in people filing tax paperwork to start a new business. From the period of January through November 2021, there were just under 5 million new business applications submitted, a jump of 55 percent over the same time period in 2019. What’s more, a significant number of these are what the Census Bureau refers to as “high-propensity applications,” which means they are likely to create new jobs.
You realize you’re working overtime every week. If you’re doing it, you may as well be doing it to make your own company.
“The way people want to operate and the way they think, is changing — and the new technology companies that are developing these technologies and systems facilitate that,” Carvajal said. “The way these people think is totally different from past generations. What this pandemic has done is accelerated a lot of these behavioral patterns… It was quite a catalyst.”
Frank LaMonaca, certified mentor at SCORE, a program that offers executive mentoring for entrepreneurs, said the pandemic provided an unexpected “window of opportunity” for people hungry to go into business for themselves. “What it did give them was the time to reassess the future of work in their life,” he said, adding that the two most popular SCORE workshops are on business fundamentals and social media marketing, respectively.
“I loved teaching but… it was time for me to leave, essentially,” said Danielle Neal, a second-grade teacher in Baltimore who worked with SCORE mentors to hone her business skills. She resigned this May when the school year ended to turn what had been a side project helping small businesses navigate social media into a full-time enterprise.
“The market is there. Small-business owners want to put themselves out there but they don’t understand the social media world,” Neal said, adding that she hopes to be able to expand enough next year to hire. “Long term, I’d like to hire people… I want my own agency with other employees.” For some former worker bees, the turning point was seeing their work responsibilities multiply in the wake of the pandemic. The pressure of juggling simultaneous office-based and online programs when her Florida-based employer reopened prompted Chelsea Kidd to come to a realization.
“I was back in the office and also supporting a lot of virtual initiatives. It had been a pretty challenging two-pronged approach to work,” she said. “You realize you’re working overtime every week. If you’re doing it, you may as well be doing it to make your own company.” Kidd, also a SCORE mentee, resigned from her job in late 2020 and moved to Montana from South Florida in 2021 to launch SiteWell Solutions, a wellness consulting business focusing on remote workers.
The ability to work at home broadens the workforce in many ways. “I’ve been in corporate wellness for about 15 years [and] I was just ready to fully take the leap,” she said.
The current startup surge is also a tremendous benefit for some of the many workers who took advantage of the disruption generated by the pandemic to take the next step in their career path. “I think what shifted is post-pandemic, this whole concept of remote-only opened up a world of new opportunities,” said Anand Balasubramanian, who left a job where he had worked for six years because greater acceptance of telecommuting gave him opportunities beyond Ames, Iowa, where he lives.
That uncoupling of demand for talent tied to a particular location isn’t just good for entrepreneurs. It’s also promising from a macroeconomic standpoint. Researchers say one of the factors contributing to a tepid and uneven recovery following the Great Recession was the lack of new business development. “The other thing I think is a permanent change is the ability to work at home,” LaMonaca said. “It broadens the workforce in many ways.”