Greensilkmuse's Blog


The Recessionary Entrepreneur

Posted in Business,General Musing by greensilkmuse on June 18, 2010

Small Business Owner, AFLCIO - May 2009

You see them in internet cafes, at networking events, conducting workshops, and writing blogs – they are the new generation of entrepreneurs.  Formerly employed by large corporations, and small firms alike, more seasoned professionals — ages 55+ have joined the ranks of the self-employed. 

While experienced executives who lost jobs as a result of the economic downturn have entered the ranks of the unemployed as “executives in transition”, the protracted job search has caused many of them to take temporary consulting assignments in order to stay professionally active and earn some income. 

For some, contract employment is merely a stepping stone to what they hope will be the next full-time corporate post.  These professionals prefer to be affiliated with a company. They want to take challenging roles where they can have impact.  They prefer to develop and build relationships inside organizations and see the results of their contributions over time. 

For others, job loss has provided the opportunity to be entrepreneurial, though this might not have been something they ever considered while gainfully employed.  They enjoy the autonomy and the flexibility of being on their own.  

What do the stats tell us?

Does it just seem like boomers are hanging out shingles, or is there objective data behind this view?  It may not be all that obvious from the labor statistics. There has been a year-over-year decline in self-employed workers during the recession.   According to the Bureau of Labor Statistics, there were 654,000 fewer self-employed workers in non-agricultural industries (these industries have the majority of the self-employed)  in May 2010 than in May 2007. The self employed population (agricultural and non-agricultural combined) aged 45 and over declined by 109,000 over this period.   However, self-employment for 55 -64 year olds rose since 2007 by 97,000.

And, let’s face it, more boomers are out of work.  According to a BLS report (Issues in Labor Statistics, Summary 10-04/March 2010) the unemployment rate for people aged 55 and over increased sharply since the beginning of the recession and this population is not leaving the labor market.

The self-employment alternative

The unemployed over 55 spend more time searcing for work than others — 35.5 weeks on average.  It’s easy to get discouraged about the propsects of finding a reasonable job,  Across all age groups not in the labor force (i.e, those either not working or not actively looking for work), the number of people not currently looking for work due to discouragement over job prospects increased from 2008 to 2009 by 68%.  So what have all those discouraged job seekers been doing? 

 The authors of a report published in 2003 by the Global Entrepreneurship Monitor predicted that when unemployment is high, the necessity  total entrepreneurship activity (NTEA) – those pushed into entrepreneurship because they have no better alternatives, will be high.  This is moderated where unemployment assistance is high and/or by how difficult of easy it is to start a new business. Given the limitations of unemployment insurance and the relative ease of setting up shop (particulalry for those who consult), it ssems the conditions are ripe for entrepreneurial boomers.

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