Jewish World Review Dec. 29, 2004 / 18 Teves 5764
The sanity of self-employment
Jeremy Kahn was working at a wine shop after college when he and co-worker Henry Rich noticed that every time someone needed a cigarette, the phrase "oral fixation" came up. What a name for a company, they mused. One thing led to another. Now, less than two years later, you can buy sleek tins of Oral Fixation Mints at Miami's Mandarin Oriental Hotel and New York City's Whitney Museum of American Art, among other places. Their mints have been spotted in the purses of celebrities from Carmen Electra to Britney Spears.
Twentysomething entrepreneurs with wacky ideas it's a story that was burned on our brains by Fast Company magazine cover stories during the Silicon Valley boom. But Oral Fixation's owners aren't partying like it's 1999. This is 2004. Candy manufacturing is old school. The investment climate is tight.
No matter. "In my opinion, it's not much of a risk at this stage at all," Kahn says. "As long as you have food on the table and a roof to sleep under, you're fine."
Call it a more thoughtful entrepreneurship. The boom-magazine covers caught just a corner of a fundamental labor-force shift. Self-employment and start-ups, The Wall Street Journal reported late last year, are driving the economic recovery. Like Kahn and Rich, 400,000 Americans went to work for themselves last year. Many are young. A report released in May by the New York-based, non-profit organization Working Today found that more than half of Gotham's million-plus independent workers are 25 to 40 years old. Even after the technology-stock fallout, the statistics show college-educated young workers are flocking to "free agency" self-employment or starting businesses of their own.
WHY FREE AGENCY MAKES SENSE
Like Kahn, though, not all claim to be great risk-takers. In fact, free agency is becoming the new conservative career track for today's young workers. Among a baby-boomer log jam in big companies, a lousy youth-employment rate and a corporate fondness for downsizing and outsourcing, becoming your own boss offers no worse a chance of success than the corporate ladder.
And when you're young, the downside failure is really no downside at all. New grads still in the market for a job this summer could do worse than chucking their résumés and writing up business plans instead.
For all of the fretting about discrimination against the silver-haired set these days, "Younger, less-experienced workers are definitely suffering more in this economy," says Bruce Tulgan, founder of workplace-research firm Rainmaker Thinking. Workers 55-plus had a 3.9% unemployment rate in May. Those 25-34, meanwhile, faced a 5.6% jobless rate. Straight-out-of-school 20- to 24-year-olds? Try 9.7%.
Labor-market gurus assure us that this climate is temporary. When baby boomers retire, the story goes, employers will beg Gen X and Gen Y workers to fill the gap.
There's just one problem. Boomers aren't going anywhere. Workforce-participation rates among 55- to 64-year-olds actually rose 2% from 2001 to 2002. A boomer cabal that's quite fond of its jobs now runs American business in its own interest.
Tim Van Hooser, co-founder of a college counseling service, Into the Best, recounts seeing commissions at an old job cut "to some extent because the sales manager couldn't get over the fact that a 22-year-old was making more than he thought was appropriate for someone my age," he says.
Couple these attitudes with downsizing, and no wonder many twentysomethings find it wiser to view companies not as employers, but as customers buying the "you" brand.
Interview Gen X workers who are worried about layoffs, Tulgan notes, and "They say, 'I'm too conservative to pay my dues and climb the ladder.' ... The irony is that this is the new, adult, security-seeking behavior."
Jeremy Pepper of Scottsdale, Ariz., for instance, founded POP! Public Relations, in part because "the industry wasn't hiring."
But even if people choose free agency because of economic woes, few flee once the woes cease. Three-quarters of New York's independent workers told Working Today they hadn't switched in and out of full-time work during the recovery. Most like their lives.
Researching this piece, I've been swamped with "I'm so glad I did this" free-agent tales from a young man who built a bike company to a young woman whose contract work launched her to a cable-company VP slot.
THOSE PESKY DOWNSIDES
These free agents mention two downsides. First, finding health insurance is a pain. Some go without. Some grit their teeth and buy overpriced policies. The other downside, of course, is that most new businesses fail. But when you are young, "failure" is relative. All you've really lost is a few years, and the free-agency skills you've gained can speed you up the ladder at any point without hitting all of the rungs.
Gil Silberman, an "entrepreneur at heart and business owner by background," started law school at the relatively late age of 28. Becoming a partner at a major firm, he knew, would take more than a decade. So he started his own firm.
"My firm was so hot that we got bought out by a major firm three years later," Silberman reports. He was made a midlevel partner, getting 12-15 years' seniority in three. "The lesson I took is that you never get to the kitchen by coming in the front door."
Admittedly, the front-door route sounds easier. Young people who think starting a breath-mint company this summer sounds like rough work can take heart that Corporate America is reading résumés again. But don't expect more stability from a Fortune 500 job than one you create yourself. Free agents, surveys find, earn about as much as salaried workers. But they also reap a benefit no salary can buy: control of their lives.
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11/11/04: The youth vote: Why it didn't rock
11/03/04: Online learning: A smart way to nurture gifted kids
02/10/04: Conservatives tune in, drop out after college
08/27/03: Get a life, parents — and let adult child have one, too
07/15/03: System wastes Ph.D. brainpower
03/20/03: Bombs are falling, but don't stop the party
02/22/03: SAT talent searches lead nowhere for many
10/08/02: Young, jobless? Skip law school, visit reality
© 2003, Laura Vanderkam