When writing my monthly column for Business2Business, I included a statistic from a previous post about my prediction for jobs growth in 2010. “Unlike the economic recoveries in the past," I wrote, "we won’t see wholesale re-hiring of tens of thousands of people by a single company. In fact, only 5.8 million of the 25 million businesses in the United States have employees, and just 650,000 of those have at least 20 employees.”
The editor challenged me, asking me how is it possible to have these many businesses without employees. "Welcome to a new economy,” I replied, where downsized managers strike out on their own with their industry or product knowledge and entrepreneurial spirit and everyday workers become independent contractors and freelancers to supplement their income.
Our discussion highlighted how the current economic paradigm surrounding “jobs creation” is being threatened by an explosion of businesses without employees. It threatens many a strategic plan because top talent may no longer be looking for traditional working arrangements as the economy rebounds.
This week I received a Tweet from a colleague that included a link to a blog post about "nonemployer startups." I’ll admit — it brought a smile to my face as I now had 27 pages of documentation provided by the SBA to support my claim.
The report from the SBA's Office of Advocacy shows that firms with no employees account for three-quarters of all U.S. businesses, yet produce only 3% of business receipts. However, while they account for only a small share of the economy, they are a "gateway to becoming employer firms, providing flexible work opportunities and a path to economic prosperity."
The startup rate for nonemployer firms is three times the rate for employer firms. How companies execute their strategies will be impacted significantly by this growing trend. John Sumser posted a brilliant article on his new blog HRExaminer that just lightly touched on this issue but added several other related game-changing trends:
- New work styles: Telecommuting, independent contractor status, portfolio jobs
- Matrix Management: More bosses for everyone is becoming the norm
- Talent: Finding the right person is no longer a ’single origin’ question
How will this explosion of nonemployer firms affect your business? Will they create new opportunities for collaboration or create new competition? Will they allow you to tap top talent who are now free agents or siphon off valuable innovative skills that go to the highest bidder? How will you respond when the talent you need prefers to remain self-employed rather than waiting for your job offer? Job Market of the Future: Startups With Zero Employees?
Source: Workforce Trends