Millennials and self-employment in recessionary times
A career is a progression of positions that individuals hold during their lifetime, a sequence of unfolding work experiences that span various organizations and occupations…
A career is a progression of positions that individuals hold during their lifetime, a sequence of unfolding work experiences that span various organizations and occupations. Permanence in a ‘particular career state’ is becoming less customary. Also known as “Generation Y”, “the next great generation”, and the “Gen Me”, millennials exhibit higher levels of education, greater racial and ethnic diversity, and are more likely to lead in innovative roles at work. Millennials seek out jobs that are personally meaningful to them and are attracted to work settings that align with their values and interests. The decision to pursue self-employment over paid employment may be influenced by various determinants, including meaningful job content, autonomy, work-life balance, opportunities to grow, a constructive work environment, or getting away from bureaucracy.
However, despite their high educational achievement and tech skills, prior evidence shows that millennials are persistently experiencing high unemployment rates and underemployment. The Great Recession, also known as the global economic recession, affected all generations. Nevertheless, there is evidence suggesting that millennials suffered the most.
MILLENNIALS IN A RECESSION: LESS HELICOPTER PARENTING BOOSTS SELF-EMPLOYMENT
Employees’ concerns about their careers are high during a recession.
Millennials, the generation born roughly between 1980 and 1996, entered their working-age years (between 21-31 years old) at the time of the 2007-2009 Great Recession, a period that increased uncertainty in their early careers.
“Helicopter parenting” is the popular term used to describe higher parental monitoring during adolescence, a family-level predictor that is likely to influence an individual’s pursuit of self-employment during their early-career. Parental monitoring refers to parental awareness, watchfulness, and supervision of adolescent activities in multiple domains (i.e., friends, school and behavior at home).
A recent study currently under peer-review shows that higher parental monitoring during adolescence hindered millennials’ self-employment decisions during the recession. This effect is particularly observed among women and those who grew up in an urban area, limiting their options to adapt their early-career path during an economic crisis.
Self-employment in this study refers to a millennial’s decision to start their own business, part-time or full-time, during a recession.
SELF-EMPLOYMENT AS AN ALTERNATIVE TO ‘JOB HOPPING’
Millennials’ distinctive career goals and expectations makes it difficult for them to find the right job in the prevailing labor market. As a result, millennials end up changing jobs more often, a dynamic known as ‘job hopping’.
Although self-employment is typically portrayed as a risky career move, recent advances find that self-employment offers greater job stability when the individual is willing to move.
Self-employment may provide greater employment stability – a “bridge” – for individuals who hop from one job to another, especially during uncertain times such as an economic recession.
Self-employment may also offer an attractive, alternative career option that is not driven by wealth, but instead by lifestyle and contribution.
Economic recessions increase costs, risk, stress, uncertainty, and business failures while decreasing the availability of suitable employment. Entrepreneurs in recessionary times, whether out of need or for opportunity reasons, face difficult and unique circumstances. However, research shows they also face new opportunities.
In a study about entrepreneurship during the Great Recession published in the Entrepreneurship Research Journal, we found that individuals who hold at least some college education and those who are employed part time, are more likely to identify early-stage opportunities during an economic crisis and start new businesses.
In a more recent study we find that job satisfaction prior to the recession is positively related to self-employment decisions immediately following a recession (i.e., 2010 in our sample), especially among male millennials and those who grew up in a rural area.
As we are at the dawn of a new economic recession, with both millennials and centennials in the prime of their workforce years, these generations can take comfort in hard numbers that show that economic recessions are periods of high entrepreneurial activity, driven by opportunity or need.
A decade ago, a study found that about half of the 2009 Fortune 500 companies and the 2008 Inc list of the fastest-growing companies, had started during a recession. Comparatively, these companies also proved to be less sensitive during consequent economic downturns.
For millennials, and perhaps centennials, who were offered enough autonomy from their parents during their adolescence, the time to pursue their entrepreneurial goals might just have arrived.
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