Unemployed workers could actually be self-employed

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Daniel Island economist Stephen Slifer said that many workers who were let go or left during the pandemic might have chosen a different career path over their old job: Entrepreneurship.

Slifer delivered his annual Economic Outlook Conference 2021 via video teleconference Thursday morning to local community and business leaders. Included in his forecast were data regarding the “Great Resignation,” which has been used to characterize businesses struggling to find talent during the pandemic.

“Firms are having a really tough time getting enough workers,” Slifer said. “Employment is still four-and-a-quarter million below the pre-pandemic peak.”

Slifer, who owns economics analysis firm NumberNomics, said the 4.2 million people didn’t just disappear, and while stimulus checks might have accounted for a dip in the data for a time, that money didn’t last forever, and many seem to have gone into business for themselves.

The economist pointed to payroll employment, which analyzes individual workers who are on a company’s payroll.

“It doesn’t include self-employed workers,” Slifer said. “We do have another series of unemployment, which is called civilian employment. This is what goes into the calculation of the unemployment rate, and it happens to include self-employed people.”

Specifically, as of October, payroll employment since the pandemic-era recession ended hit 18.2 million. Those are workers who are employed by businesses.

Compare that to civilian employment, which includes self-employed workers,  that number hit 20.7 million in October.

“Could it be that a lot of those folks that aren’t on the payrolls today kind of ventured off on their own and started their own business?” Slifer said.

The latest data show 10.4 million job openings in the U.S., which is a record number.

“They’re off the charts. … These are firms looking for bodies, right? We’ve never seen anything like this,” Slifer said. “So perhaps if a lot of these people have chosen to start up their own business, maybe that’s one reason why firms are struggling so much.”

Employment data show that of the 4.2 million workers missing from the pre-pandemic workforce, 2.5 million are self-employed, 1 million retired on rising stock market and home prices, and others might be exploring their options, he said. He said a lot of workers have chosen to permanently leave careers in food and beverage, for example.

“That’s kind of easy to do when you’re being paid not to work,” Slifer said. “If I’m a restaurant worker back in March of last year, and I get laid off – I am a line chef, for example – I've been doing long hours, kind of hot back in those kitchens. I don’t get paid a lot. It’s a great opportunity to kind of think about things and figure out what to do next.”

He said with federal unemployment benefits having run out, many individuals may have sought training for another career path going forward and might be ready to re-enter the workforce.

“My guess is a lot of these folks are going to be back on the job fairly soon,” Slifer said.