The labor shortage is helping entrepreneurs make a full comeback while millions of Americans stay on the sidelines
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- A new analysis from Pew finds "recovery has been stronger for self-employed workers" than for Americans who work for other people.
- The number of US self-employed workers is 0.9% above its level from the second quarter of 2019.
- Second quarter data shows non-self-employed US workers have seen a percent decline of 4.3% from 2019 to 2021.
Although the pandemic was brutal on employment in the US, self-employment seems to have already made a full recovery according to new research from Pew Research Center.
That's based on Current Population Survey data from 2019 to 2021. Pew combined monthly data on how many self-employed and non-self-employed workers there were in the US during the second quarter of these years and looked at how these numbers have changed during the pandemic. Pew's analysis includes only Americans that are actively at work.
The results show that entrepreneurs are thriving in the era of the "Great Resignation." Pew found that "recovery has been stronger for self-employed workers" than for those who are employed by others.
Based on its analysis, both the number of workers who are self-employed and not self-employed took a hit from 2019 to 2020, a decline of 14.2% and 15.5% respectively using second quarter data.
But self-employed workers seem to have been having an easier time getting back to pre-pandemic levels, and are in fact a little bit above their level from the second quarter of 2019. After dropping to about 12.7 million in the second quarter of 2020 from 14.8 million the second quarter the year before, the number of self-employed US workers who are actively at work is back up to 14.9 million as of the second quarter of this year.
That's an increase of about 130,000, or 0.9%, since before the pandemic. Those not-self employed haven't been as lucky. As seen in the following chart, the number of non-self-employed US workers in the second quarter of 2021 was about 5.9 million below the 2019 level of 137.3 million.
"The stronger recovery for self-employed workers is consistent with trends in previous recessions in which some workers who lost their jobs have been observed to turn to self-employment," Rakesh Kochhar, the lead author of the analysis and senior researcher at Pew Research Center, told Insider in an email.
Additionally, some parents left the labor force while they took on more childcare responsibilities during the pandemic and have yet to come back. Pew wrote in its analysis that self-employment "may have been a useful option for some parents juggling child care and work" during the pandemic.
The work landscape has changed during the pandemic. As Insider previously reported, there was a record number of new businesses created during the pandemic in 2020. Reasons for this increase include people who were laid off or quit and are deciding that now would be a good time to make a career change and to work for themselves.
When looking at the gender breakdown, self-employed women saw a percent increase of 4.3% between 2019 and 2021, while men are just 1.0% below their pre-pandemic level.
Overall, employment in the US is making its way back after a devastating job loss of over 20 million jobs during the spring of 2020. The US has seen job gains each month this year so far, although just how many jobs added has varied. There were just 194,000 nonfarm payrolls added in September, well below economists' expectations.
Industries are not recovering at the same pace from the pandemic, as some were hit harder than others and have more ground to make up, and economic recovery also hasn't been equal among lower-, middle-, and higher-income Americans.
But as industries try to recover, people are quitting their jobs across the US and at a historically high rate. They are saying goodbye to their current positions and hello to new ones with better benefits, including higher wages and more flexibility.
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