Is entrepreneurship the new safety net? In a viewpoint column this week, Chris Farrell suggests that corporate careers have become more uncertain than ever, and young people are looking to microenterprises for stability.
Corporate loyalty used to work both ways, with loyal employees being rewarded with long-term job security. That model began to fall apart with mass layoffs in the 1970s, Farrell notes. Now that pay cuts and furloughs — once shunned even by corporations laying off workers — have become commonplace, he suggests, workers see less value and stability in corporate careers. Along with bolstering savings, workers are looking to microbusinesses as a hedge against the risk of layoffs or pay cuts:
The other lesson speaks directly to the emerging DIY mindset of the post-meltdown era. Instead of relying on the onetime holy grail of employment—a good-paying job with full benefits—workers may find themselves becoming microentrepreneurs, especially those in creative businesses. For instance, many recent college graduates own their own “independent” music company on a social networking site. Small, entrepreneurial ventures provide another safety net, giving workers a small measure of control over their fate in an increasingly unstable environment.
… Adds Dave Ulrich, professor of business at the University of Michigan and a partner at the RBL Group, a consulting firm: “Plan for a career mosaic. Careers used to be linear with stages or steps that people could anticipate. Now they are a mosaic where people move into and out of positions and jobs.”
That mosaic now includes your own microenterprise on the side—just in case.
The barriers to entrepreneurship during this recession are lower than they have been during any prior downturn. If you’re out of work, the opportunity cost of starting a business is diminished. It’s easy to see why some people find entrepreneurship less risky than employment, as counterintuitive as that may sound.
Unfortunately, the country hasn’t caught up with this rising entrepreneurial workforce in a lot of ways. Our tax code and especially our health care system still favor traditional employment over entrepreneurship.
Farrell’s entire column is worth a read.