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Introduction
Click on almost any headline about the gig economy, and you’ll come across a fierce debate. Supporters of the traditional job see the world of free agents as one where capitalism has run amok, leaving hapless workers to fight each other for scraps of work—as they cling to the slippery rock of middle-class life. Champions of what author Dan Pink called the Free Agent Nation see a very different reality, in which former wage slaves can ditch their cramped cubicles in hermetically sealed offices for a life in which they control their schedule, destiny, and income.
The truth is, we don’t know yet what a world of increasingly independent work will mean. We’ve never had as many free agents as we do today. As of 2010, the United States Government Accountability Office says that 40% of US workers have “alternative” work arrangements in their main jobs, meaning they are freelancers, temps, contractors, contract company workers, or part-timers. That is unprecedented—and it’s a change that’s happening in industrialized nations around the world. The Global Entrepreneurship Monitor—a sweeping study produced by Babson College, Universidad del Desarrollo, and the Korea Entrepreneurship Foundation—found in its 2018/2019 report that solo entrepreneurship is taking off in many parts of the world. Brazil leads the planet, with 53% of entrepreneurs operating on their own, with no employees. Madagascar is number two, with 30% of entrepreneurs flying solo. Meanwhile, the report finds that the gig and sharing economy, which it breaks out separately from traditional entrepreneurship, is exploding. In South Korea, an incredible one in five adults is involved in these activities. Other countries with very high rates are Israel, Chile, Ireland, and the United States, the research found.
Many people worry that these workers will struggle without giant employers helping them to run their work lives and keep their paychecks steady. That’s a valid concern. But another, equally important point is what this growing army of free agents can accomplish on their own. Armed with the right knowledge and mindset, could they create something even better for themselves than the traditional “secure” job? Would they be better off without powerful gatekeepers deciding the fate of their careers? Would they have a greater chance of reaching their true potential and attaining a higher income in a world where they drive their own careers and a boss can’t subtly penalize them for being too young, too old, a mom, a member of a minority group, a person with a disability, a caregiver, a committed Little League coach, someone who wants to work from home, or any of the other reasons people get slow-tracked at traditional jobs, regardless of their many talents and contributions?
I am a former senior editor at Fortune Small Business magazine and have contributed to Fortune, Money, Quartz, CNBC, Forbes, Inc., and many other publications. Based on my experience interviewing hundreds of entrepreneurs every year, I believe the vast majority of self-employed people have barely begun to unlock their potential in making the most of their businesses. That potential may be even greater than we imagine. Not long ago I spoke with Eric Scott, a principal at Founders Fund, a venture capital firm in San Francisco, where Peter Thiel, cofounder of PayPal, is a partner. Scott, then a partner at PayPal cofounder Max Levchin’s venture capital fund SciFi VC, told me he and his colleagues have been asking themselves how much longer it will be until a one-person firm gets acquired for $1 billion.
As we figure out where it is possible to take a one-person business, the question is how to help free agents make a great living. Most of today’s free agents have jumped or been thrust into running a one-person business without any preparation. Universities have a vested interest in selling the idea that all of their graduates will be working as highly paid full-time employees at well-known companies. Outside of entrepreneurship programs, they rarely broach the possibility that their students may end up working for themselves nor do they teach skills that will help them thrive in self-employment. It’s easy to see why schools don’t want to talk about this. How many parents, raised in a world of traditional jobs, would willingly pay the huge annual tuition bills if they knew their children might essentially be signing up for Freelancing 101? And how many students would be willing to take out tens of thousands of dollars in student loans if the promise after graduation was not, in fact, a cool job at Google but a business where they had to hustle up their income on their own, without a guaranteed paycheck? In reality, many graduates are patching together their income this way, as the world of employment rapidly changes, but have yet to master how to thrive in self-employment.
Meanwhile, midcareer workers find themselves increasingly insecure, as their companies look to cut costs by outsourcing overseas, automating work once done by people, and replacing full-timers with contractors, a trend that was accelerated in 2020 during the pandemic. Even if employees view their jobs as permanent, clearly the employers don’t see things the same way. At the same time, many companies are increasingly candid about the fact that their plans for traditional staffing are built around “junior” talent. That’s good news when you’re looking for your first job, but it means that with each birthday, promotion, and salary bump, employees in these firms are a little closer to getting squeezed out of their jobs. Many workers might do better running a solo business than climbing the shaky career ladder, if they have the know-how to do so very successfully. In fact, many older workers find that the entrepreneurial world is a lot more welcoming to all generations than the world of traditional jobs, where age discrimination is rampant. Data from the Kauffman Foundation, which studies entrepreneurship, shows that people ages fifty-five to sixty-four are the fastest-growing group of business owners. In 2018, they made up more than a quarter of people involved in new entrepreneurial activity, up from 14.8% in 1996.
Theoretically, there are plenty of places outside of school to learn how to run a business. But if you turn to the experts in your local startup ecosystem, you’ll very likely hear that to succeed, you’ve got to “scale” a business into a job-creating machine—and if you don’t want to, you’re not ambitious enough. “The thinking is that it’s better to invest in ten people who are going to grow their businesses to a very large size than in one hundred people who are going to run single-person businesses,” says Donna Kelley, a professor of entrepreneurship at Babson College. Many programs run by government and financial services firms that serve small business also view one-person firms as duds—run by people who failed to become job creators because they think too small. Their emphasis is on reprogramming solo entrepreneurs out of mindsets—like not delegating enough—that keep them from hiring people.
But consider this: As of 2019 there were 30.7 million small businesses in the United States. According to the most recent census data available from 2018, 26.5 million were “nonemployers,” meaning no one had a job there except the owners. The vast majority are one-person businesses, but some are partnerships or small teams of founders. I believe most have actively opted out of hiring employees for a simple reason: they don’t want to, at least for now. Maybe they don’t have the cash flow to cover the costs of adding employees. Maybe they recognize that they’re better suited to running a solo firm than managing a staff. They’ve made the decision they think is best about how to run their businesses at the moment. And there is nothing wrong with that.
There is something wonderful and exciting in the fact that millions of independent spirits in the United States have taken the initiative to create jobs for themselves, doing exactly what they want to do. Not everyone wants to be Elon Musk, dreaming up the next SpaceX, nor is everyone cut out to be a boss. Many people start businesses to gain control over their time and enjoy independence—a freedom that can slip away as an organization grows. And this is a conscious choice. “They are doing it because they prefer to, not because they have to,” says Kelley, who has studied businesses around the world as leader of the US research team for the sweeping Global Entrepreneurship Monitor study. “As society becomes more advanced, people are more likely to do the jobs and work they want.”
