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, many seasoned professionals — ages 55 and over, have joined the ranks of the self-employed.
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 (the vast majority of self-employed) in May 2010 than in May 2007. Even 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 to 64 year-olds rose since 2007 by 97,000.
The unemployment rate for people aged 55 years and older has increased sharply since the beginning of the recession and the labor force participation rate – the numbers of these people who are either employed or looking for work, rose over the same period. Older workers are not leaving the workforce and, when they become unemployed, spend more time searching for work than younger workers.
The self-employment alternative
Across all age groups not in the labor force, the number of people not currently looking for work due to discouragement over job prospects increased from 2008 to 2009 by 68 percent. So what did all those discouraged job seekers do? 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. Those factors may be at play during this recession.
The realities of a protracted job search and the liminations of umemployment insurance create the necessity of exploring other employment options. With minimal investment required for businesses such as consulting services and access to a wealth of information on starting a business, even those boomers who never considered the entrepreneurial route may find themselves joining the ranks of the self-employed.