Zoomers fuelling entrepreneurial boom
Not even an economic downturn could stop them. In recent years we’ve seen a boom in the ranks of the self-employed, and once again “older workers” are a driving force for change. There’s no age limit on becoming your own boss — whether it’s a part-time side business or launching a company. In fact, statistics report that baby boomers and seniors are more likely to be self-employed than younger generations.
Self employment at an all-time high
So how do the numbers look? In Canada, there are now more self-employed workers than ever before — despite the recession. According to Statistics Canada, the number of self-employed workers increased by 4.3 per cent from October 2008 and October 2009 — that’s over 100,000 people. (In comparison, the number of paid workers fell by 480,000, or 3.3 per cent.)
If those numbers seem a little modest, consider this: Between 1987 — 2005 the average increase in self-employment was about 2.2 per cent each year, and the number of paid workers rose an average of 1.4 percent annually. Despite a decrease between 2009 and 2010, there are now more than 2.67 million self-employed workers in Canada, up from 2.52 million in 2005 and 1.83 million in 1990.
The gap between men and women is also narrowing: over time, the number of self-employed women has grown at a faster rate than men. Currently, about 38 per cent of self-employed workers are women — up from 35 per cent in 2000 and 31 per cent in 1990.
Self-employment is also on the rise in the U.S., according to the Bureau of Labor Statistics. Over 15.7 million Americans are self-employed as of 2009 — that’s about 11 per cent of workers over all. According to the Kauffman Index of Entrepreneurial Activity, the number of start-ups in 2009 reached a 14-year high — even higher than during the turn of the century tech boom.
Older workers boost entrepreneurial trend
So we know there are more self-employed workers — but what qualities contribute to success? Many reports have looked at trends among the self-employed and one characteristic stands out: age . You might think starting a new business is a venture for the “younger and more energetic” Generations X and Y — but they’re not the ones leading the way. In fact, the rate of self-employment among older workers remains steadily higher than among younger workers.
But don’t take our word for it. Over the past 10 years, studies consistently show that people over the age of 50 are more likely to start a new business or work for themselves as a freelancer or consultant. Statistics Canada notes that the 2008-2009 increase in self-employed workers was mainly due to people age 55 and over — especially women, who accounted for 58 per cent of the increase overall.
Past reports also show a higher percentage of older workers are self-employed — and that proportion continues to increase with age. According to the latest census data (from 2006), about 44 per cent of senior men and 28 per cent of senior women who were still in the workforce were self-employed. While nearly 40 per cent of men aged 65 to 69 were self-employed, that number jumps to more than half by age 75. For women, the rates are about 25 per cent for ages 65-69 and rise to one third for women over 70.
And according to a report from the Ewing Marion Kauffman Foundation, Americans aged 55 to 64 had a higher rate of entrepreneurial activity than workers between the ages of 20-34 — not just in one year, but every year from 1996-2007. Though Gen X outpaced baby boomers in 2008-2009, older adults also experienced a significant increase.
Older workers are putting in more hours too. In Canada, self-employed seniors are more likely than paid workers to work full time and work year round.
Why are Zoomers turning entrepreneurs?
So what’s fuelling this shift? We already know that people are living longer, healthier lives — and that changes how they approach their careers. We need to save to fund these longer periods of retirement, but this extra time also affords more opportunity to stay active and engaged in the workforce.
However, there’s a little more to this story than longer lives. There are many reasons older workers are drawn to self-employment, including:
Greater freedom and autonomy. Unfortunately, workplaces haven’t quite caught up to the needs and desires of older workers — like flexible hours, part time work and opportunities to take leadership roles. Self-employment gives workers more control and flexibility and allows them to better balance work, leisure and responsibilities like caregiving.
And while the trend hasn’t been fully explored yet, some experts wonder if workers who face health or mobility issues might be drawn to self-employment to accommodate these challenges — allowing them to work longer.
They’ve got the human capital. There’s something to be said for experience — not to mention the skills and business savvy older workers build up during their careers. Older workers are no less creative or enthusiastic than younger workers, and they’re just as willing to take a risk. Simply put, they’ve got the know-how to put their ideas into action, and they’ve got strong networks to help them on their way.
They’ve got the financial capital too. While older entrepreneurs aren’t necessarily free from financial pressures, they tend to have more cash to invest in a new venture and more access to credit. They’ve had more years to save, and they’re more likely to be free of financial commitments like a mortgage and raising children. In both Canada and the U.S., there’s a link between high income and self-employment among seniors.
Lack of opportunities. Whether it’s due to a job loss or a desire to return to the workforce after “retiring”, older workers face quite a challenge finding a new opportunities. They’re often forced to take a pay cut to stay competitive, and it’s hard to find a position where they can use their skills and expertise. Some workers aren’t content to settle — they’ve created their own opportunities instead.
New market trends. You’ve likely heard there’s a big market for services and products catering to the 50+ demographic — everything from products and services to housing and health. Older workers are in a good position to create and contribute to these growing sectors. “Seniors for seniors” type businesses are popping up in many sectors, like personal training and real estate.
A desire to give back. Self-employment is far from self-serving. Many self-employed people create jobs for others and mentor younger workers — like founding their own practice or firm.
Add it all up and older workers have the qualities associated with entrepreneurial success. Combined with their desire and need to keep working — not to mention the size of this demographic — it’s no surprise that they’re changing the job market. While there’s a lot of talk about how baby boomers are “redefining retirement”, these trends make it evident that they’re changing their career paths too.
Sources: Ewing Marion Kauffman Foundation, Statistics Canada, U.S. Bureau of Labor Statistics, UK National Endowment for Science, Technology and the Arts