The Great Resignation And The Startup Boom, Two Sides Of The Same Coin?

By now you’ve undoubtedly heard about the Great Resignation, a term coined by an economist this past April which saw a record-breaking number of “quits”.  The number of resignations increased each month this year, and in August alone 4.3 million Americans quit their jobs.

Various theories as to what’s behind this have been thrown around, with the obvious culprit of the COVID pandemic lurking beneath at the foundation.  Liz Elting wrote a piece for Forbes saying:

As employers took to social media to complain that “nobody wants to work anymore,” their employees started sending out their resumes; if “nobody wants to work,” well, it stands to reason that people who do want to work are worth more. In other words, the only thing that happened is that workers proved able to recognize that they had genuine leverage for the first time in most of their careers. For the first time, the company needed them more than they needed the company. It’s really that simple. Yes, really. 

Earlier in the piece she brushed off the theory that workers are rethinking their relationship with traditional work.  She also brushed off the notion that folks want a better work life balance, claiming that “just restates the sentiment of workers for the whole postwar era.” 

Well, yes but this is the first large scale worldwide pandemic in the post-war era, so there’s that. 

Another phenomenon, however, has been happening simultaneous to the Great Resignation, and it’d be hard to imagine the two are not closely linked.

 

Start Me Up

Workers haven’t just been quitting in records numbers, they’ve been starting in record numbers as well.  From a National Bureau of Economic Research Paper:

Applications for new businesses from the U.S. Census Bureau’s monthly and weekly Business Formation Statistics (BFS) fell substantially in the early stages of the pandemic but then surged in the second half of 2020. This surge has continued through May 2021. The pace of applications since mid-2020 is the highest on record (earliest data available is 2004).

A New York Times piece written after the study above claims 2021 applications are on a pace to beat 2020. 

So let’s look at this broadly and rewind a bit.  A global pandemic hits in early 2020, and for a while businesses are told it’s literally illegal to stay open. Those who can still work largely discover the joys and reduced stresses of working from home. 

Meanwhile the government issues three large scale stimulus checks and unemployment benefits are extended for many.  As things slowly start getting back to “normal” in 2021 after vaccine roll outs, we notice people are both quitting and starting up businesses in record numbers. 

Is it me or are these people kind of doing the whole FIRE thing, presumably without having the “FI” piece of the equation? 

Maybe I’m looking at it too simplistically, but to me it appears millions out there are indeed having a come-to-Jesus with their work life. 

After plodding along like zombies in the quicksand of work for years, the pandemic forced changes that got them out of the muck and cleaned up just enough to realize how dirty they were. 

And when the boss ordered them back, they said “no thanks, I’m done. I’ve got my own thing going on” 

 

Look Ma, No Net

I realize that every worker who quit their job didn’t start a business.  The reality is obviously more complex and nuanced. 

But a record number of resignations and startups at the same time tells me there’s a lot of light bulbs being turned on out there, and a lot of dreams finally starting to be chased. 

And isn’t that the essence of the FIRE movement?  All of us who seek to FIRE reach a point with our W2 jobs and careers where we question what we’re doing, and why we’re still doing it. 

We use the security of financial independence as a safety net to allow us to to walk the high wire of quitting, or starting a new business.  I suspect most “regular folks” who have been quitting since the pandemic don’t have that safety net, which makes me have a massive amount of respect for their bravery and fortitude.

 

The Future

A writer for the Atlantic took a different angle on the Great Resignation and one to me that is more intriguing.  Referencing the record number of quits all through 2021 he wrote:

…quitting is a concept typically associated with losers and loafers. But this level of quitting is really an expression of optimism that says, We can do better. 

We can do better.  I’ve been fortunate to meet many in the personal finance community in person, and every single one of them exudes a growth mentality. 

We indeed can do better my friends, and as we succeed we can only hope to spread the contagion to others.

The Atlantic article cites another interesting data point:

…the share of Americans who say they plan to work beyond the age of 62 has fallen to its lowest number since the Federal Reserve Bank of New York started asking the question, in 2014. 

So perhaps along with quitting and starting a new business, many are realizing they can indeed ‘retire’ from everything earlier than they previously imagined. 

Before I researched this article, if I had to guess what the biggest change in work life would be from the pandemic I would have said that it finally made work from home something that’s here to stay.  But now I think it’s bigger than that. 

I think millions of workers have reexamined their relationship to their jobs and careers.  And from that many have turned the wheel to change course.  It’s exciting to think of the energy and innovation that will inevitably arise.