In 2020, millions of Americans lost their jobs as the rapid spread of COVID-19 across the United States forced business establishments to close, some permanently. A year after, the economy and the labor force experienced another crisis: mass resignation. Even as the pandemic continues to rage, many people are reconsidering their careers and job options.
The Pandemic Resignations
The trend started gaining widespread attention around the first half of 2021. According to the Bureau of Labor Statistics, around 4 million workers quit their jobs by July of last year. By the end of the month, there were 10.9 million job openings across the country — a record. The trend continued for several more months, setting another record in August after 4.4 million people walked away from their employers.
To this day, companies are still struggling to fill open positions, especially in low-wage sectors. Many have had to raise hourly wages and offer additional benefits to attract skilled applicants to send their resumes and interview for the position.
There is no one root cause behind the so-called Great Resignation. While the trend picked up the pace and peaked in 2021, the pandemic is not solely to blame. It is true that the ongoing public health crisis may influence the decision for many to file their two-week notice. A highly-contagious and deadly illness that has already claimed millions of lives worldwide can make people reevaluate their lives and shift their priorities. Those who only stayed at their job for the money before the pandemic is now more eager to pursue their real passions. Some workers have had a taste of working from home and never want to go back to the office ever again.
Alongside the Great Resignation, mass retirement is also occurring across the nation. Of course, Baby Boomers are leaving the workforce, and that has nothing to do with the pandemic. However, a significant number of people who quit last year were walking away from their jobs to retire early.
Leaving Employment, Entering Freelancing
Many of those who left their jobs are exploring alternative opportunities to earn a living.
Those who have been sitting on savings are starting their own small business. As of September 2021, 1.4 million new startup applications were filed with the government, according to the data from the Census Bureau. For comparison, only 987,000 new businesses started in 2019.
Others have become independent contractors. A study by Upwork, a platform for freelance job hunting, revealed that over 2 million Americans started working as freelancers last year. In total, around 36 percent of the entire workforce is now performing freelance work.
Many choose freelance jobs because of the flexibility it affords them. Freelancers have better control of their workload, their schedules, where they work, and the people they work with. These factors appeal to workers, especially to young professionals.
Over half of all working Generation Z (Gen Zers) are freelancing. Meanwhile, 40 percent of Millennials are full-time independent contractors.
Many workers now see freelance work as a permanent career rather than a temporary income source.
Increased Demand for Freelancers
The Great Resignation, and the challenges of finding applicants to fill open job positions, is driving companies to hire freelancers to meet work demands. A previous survey conducted by Harvard Business School and Boston Consulting Group revealed that 60 percent of business leaders prefer to “rent, borrow, share talent” rather than hire a full-time staff member.
There are benefits to hiring independent contractors. They are skillful and can do the tasks assigned to them as effectively as a regular employee. However, they are only around for as long as they are needed — perfect for demands that are only temporary. Now that more people are turning to freelance work as a full-time career, the pool of talent is bigger. Companies can hire third-party services for payroll, human resources, information technology support, customer service, and other roles normally handled by a full-time employee.
Most importantly, it is cost-effective. Full-time employees receive health insurance, paid sick leaves, and other expenses. However, freelancers are only paid for the work they perform for the company. Companies spend less on staff and overhead costs because freelancers are only passing by.
The Great Resignation is both a result of the pandemic and a problem brewing for years now. Millions of Americans are leaving their jobs for various reasons, one of which is to pursue a career as an independent contractor. This benefits both parties: workers gain better control of their time and lives, and companies can save on employment and overhead costs.
