Employment Trends: The Great Resignation and the Move to Self-Employment

A record number of people left their jobs during the period around the COVID-19 pandemic—in fact, the quit rate in the United States reached its highest point in 20 years in November of 2021. The U.S. Bureau of Labor Statistics reported that an incredible 47 million people voluntarily quit their jobs that year.

This is an alarming stat on the surface, and it raises a lot of questions. Why are all these workers quitting? Where are they going? Should you be joining them? 

In this article, we’ll explore the Great Resignation and other employment trends that may drive a record number of people to seek out self-employment. We’ll also dive into the pros and cons of working for yourself to help you decide if it’s the right path for you.

The Great Resignation Isn’t New

There’s no denying that there was a Great Resignation. However, as the Harvard Business Review recently pointed out, the phenomenon isn’t actually new. Yes, 2021 did see a record number of people leaving their jobs. However, this number has been trending upward steadily since 2009. In fact, the only exception was 2020, when pandemic uncertainty seemingly caused many people to hold off. 

It would appear that the pandemic simply compounded an existing trend, spurred on by a growing sentiment that workers are not being treated as well as they’d like or deserve. This is a frequent reason cited by former employees who have left retail, hospitality, and service jobs. 

This also begs the question—where are all these people going? It seems obvious that they aren’t simply leaving the workforce. Many are “trading up” to better-paying jobs—in fact, many companies have raised hourly rates and put in place initiatives to help make workers feel more valued.

However, there’s another option: self-employment. Reports indicate that more Americans are self-employed now than at any time since 2008 - which may help answer the question of where participants in The Great Resignation are going.  

As people see others leaving their jobs in search of better pay, better work-life balance, better working conditions, or greater flexibility, it may produce a desire in them to do the same. And for many, these changes are synonymous with self-employment. 

There’s certainly an allure of freedom that comes with the idea of working for yourself, and during times when people are more likely than ever to be evaluating their work situations and opportunities, it makes sense that we’d see these types of spikes. 

Major Employment Trends Spotlight Flexibility

Quit rates aren’t the only things changing in the workplace. Companies everywhere are being forced to reevaluate how they do things. Many are making changes to try to retain staff, keep them happy, and attract new talent. The major trends in this area include:

• A focus on fairness and equity: Employees want to be treated with the respect they deserve. And they want that same treatment to extend to all employees, regardless of circumstances. As workers demand better, these issues are set to become major areas of focus for HR departments.

• A growing interest in a four-day work week: There’s been a push to improve work-life balance by shaving a day off the work week. This sounds really nice on paper, and some countries, such as Iceland, have done large-scale trials of it. Some US companies are also experimenting with the idea.

• A dissatisfaction with returning to offices full-time: Working from home has proven to be excellent for employees' work-life balance and well-being. However, many companies either return to the office full-time or push hybrid models. The mishmash of options is frustrating to many workers—some want to go back because they like the social aspects or lack of distractions of the office, while others enjoy the flexibility of working from home. 

You may notice that these happen to be some of the major issues resolved by working for yourself. When you’re self-employed, you can set your own schedule and work from wherever you’re most comfortable and productive. You also don’t have to worry about fairness as much because you’re the boss. Whatever your reasons, freelancing and self-employment bring a number of advantages.

The Benefits of Freelancing and Self-Employment

Maybe you’re part of the Great Resignation and trying to figure out how to find the appreciation and balance you need. Maybe you’ve always wanted to work for yourself but were never sure how. No matter your background, self-employment can be a rewarding path with many advantages, especially in flexibility and finances.

Flexibility

One of the main reasons people leave the traditional workforce to be their own boss is the freedom and flexibility offered. This flexibility takes several forms:

• How you work: When you’re self-employed, you get to decide how you’ll accomplish a given task. You can use whatever method or tools you like. If you’ve ever been an employee in an organization and forced to use tools you couldn’t stand, this is a relief.

• Where you work: With many organizations calling employees back to the office, this one will be a relief. Whether you like to work at home, in a coworking space, in a private office, or at the beach—the choice is yours. 

• When you work: Everyone has a particular time of day when they’re most productive—and it’s not always from 9–5. Additionally, life outside of work usually happens during these hours. Self-employment can give you the flexibility to meet these demands and work when you’re at your best. This might be for you if all the news stories about a four-day workweek sound enticing.

• Who you work with: When you do freelance work, you have the freedom to decide which clients you want to work with and which projects you want to take on. While you can certainly change your full-time employer, it’s a much more difficult process. You also can’t choose your coworkers and typically can’t pick and choose the work you do. 

• How much and how often you work: When you’re self-employed, you have the flexibility to choose how much work you’ll take on. If you want some extra money, you can take on more, and if you’re feeling burned out, you can back off for a couple of weeks. 

Financial Benefits

Of course, there are also financial benefits to working for yourself:

• Multiple revenue streams: Having multiple income sources is a powerful way to protect against financial instability (like a potential recession) and boost your own financial position at the same time. While you can certainly have multiple sources of income with a traditional job, self-employment makes it easier—you’ll typically have several clients at once, and can more easily add new products and services.

• Potential for higher income: Freelancers generally have a higher ceiling on pay than full-time employees doing the same job. Now, this doesn’t mean you’ll automatically get a pay raise when you move to self-employment. In fact, it can take a lot of work, and while the ceiling is higher for self-employed people, the floor is also lower. However, the potential is there.

The Disadvantages of Self-Employment

Nothing is perfect—anyone considering a move to self-employment should carefully weigh the cost. There are a few potential disadvantages to working for yourself:

• Income can be inconsistent: A stable, consistent paycheck is one of the biggest advantages of a full-time job. You get paid the same amount, on the same day, on the same schedule. When you’re self-employed, you generally don’t have this—at least not right off the bat. Getting to a similar place is possible, but you can never guarantee 100% consistency.

• Taxes: When you’re self-employed, you’re fully responsible for all your taxes. Employers typically take your taxes out of your paycheck and pay them to the IRS on your behalf, but this doesn’t happen with self-employment. This essentially means it’s extra work for freelancers (at least without good accounting software for self-employed people). Additionally, when you’re self-employed, you are considered the employer, and so you have to pay a self-employment tax on top of your regular income taxes. 

• You’re the boss: Being your own boss sounds amazing to many (maybe even most) people. However, while it has many advantages, it also comes with a harsh reality—there’s a loss of external motivation and accountability. Some people have a hard time motivating themselves to work when there’s not someone they’re accountable to. Others struggle with prioritizing work or getting organized. These are legitimate concerns—it can be stressful when you have to call all the shots.

• No paid time off (or other benefits, for that matter): This is a major issue that some don’t consider. When you work for yourself, particularly as a freelancer, you get paid for the work you do. When you’re on vacation, you’re (ideally) not working, and thus, not getting paid. Similarly, you’re responsible for your own retirement, health insurance, life insurance, and other benefits. This does reduce the effective pay somewhat.

The Key to Freelance Success Is Support

Whether you’re considering leaving your full-time job to join the Great Resignation or looking to start a side hustle and earn a little extra income, great support is often the key to success. Having the right people behind you helps find clients, manage workloads, and make tough decisions. And having the right software stack helps reduce friction in your workflow and makes everything that much easier. 

That’s where Found comes in. Found offers powerful accounting tools and banking for freelancers and small businesses—we take care of the details so you can focus on doing excellent work and reap the rewards of self-employment.

This material has been prepared for informational purposes only.