Archive for the ‘Launch My Business’ Category

According to economists, the Great Recession of 2007-2009 ended over a year ago. This is technically true—GDP growth rates show the economy is no longer contracting, but growing ever so slightly. But we keep hearing about a “new normal” for the American economy, and recent statistics bear this out.

Job growth has been stagnant during this recovery period, and this is historically unusual. When most recessions end, growth usually comes roaring back and job creation quickens dramatically, as new capital and labor are redirected from less productive purposes to more productive ones. That doesn’t seem to be happening this time. 

What Is Going On and What Can We Do To Fix It?

A deeper look at economic statistics reveals that job loss has been particularly striking for men. Unlike previous economic downturns, this recent “mancession” has wreaked havoc with typically male-dominated industries. See the chart below to compare official government unemployment rates by gender, produced by econ and finance professor Mark Perry of University of Michigan. The unemployment disparity between genders has never been this pronounced in previous recessions.
Certainly, the bursting of the housing bubble is playing a major role. Construction and manufacturing jobs – usually filled by men – have evaporated. And with so many homes underwater, worth less than the mortgages on them, this situation has restricted labor mobility for the unemployed. Unable to move to where the jobs may be, these underwater homeowners have limited options for finding work.

Complicating the matter is the credit situation for small businesses (the sector that creates most of the jobs and hires most quickly post-recession). Not much capital is available for lending. In addition, the federal government has been the biggest borrower on the planet, Hoover-ing up available money. Capital for lending is a zero-sum game—there’s only so much available for lending. And when the most secure borrower on the planet borrows much of the available money, that doesn’t leave much for the private sector. Moreover, investors are still feeling burned by the downturn, and are holding their money much closer these days, making national economic growth more difficult. 

Further, much of the borrowed government money was spent on stimulus projects that propped up education, health care and state/local government sectors, which also happen to be more female-dominated. Despite the talk of improving infrastructure, only a small portion of the government spending went to heavy construction projects, an industry that employs mostly men. All in all, it seems be a perfect storm of Mancession proportions.

Entrepreneurship Is the Answer

So the new normal certainly looks to be quite a challenge for the unemployed, the majority of whom are men. If this situation leaves you unable to go where the jobs are, then maybe you need to bring the jobs to you. If nobody can hire you, then hire yourself. Launching a small business and becoming self-employed may be the best option. 

Certainly, many of the unemployed are skilled people looking for opportunities from others that may not exist, and may not come back anytime soon. But those skills and talents still need new outlets and more productive uses. The new normal may present those opportunities. 

Many enterprises and industries have suffered during the recession, but the creative destruction of American capitalism moves on. Other industries have emerged, and these could be ripe for entrepreneurship. The tech industry proceeds apace. Smart phones are proliferating. “Buy local” efforts continue to gain steam. 

Ultimately, the usual ways of thinking won’t help entrepreneurs in the new normal. There may not be as much disposable income available for consumption, so opening a high-priced sandwich shop may not be your best bet (although in some areas this may be a perfectly logical business to start—do your homework on your market!). But 90 percent of the country is still employed and the business of living continues throughout the country. Figure out the unmet needs of the marketplace and then figure out how you can meet those needs through your newly launched small business. There are more resources than ever targeted at helping people start small businesses—be sure to take advantage of their help. 

The Great Mancession may have eliminated many jobs men typically do, but it hasn’t eliminated these workers’ existing skills and potential productivity. The world of entrepreneurship awaits your contributions, if you are willing to take the risk. In this new normal, there aren’t a lot of other options. And starting a small business may be your best one.

About the author
John L. Duoba is the publisher and managing editor of Business Owner’s Toolkit at www.toolkit.com, and he has nothing against sandwich shops, high-priced or otherwise.