Laid-off workers are becoming their own bosses
Bernard Weinstein, associate director of the Maguire Energy Institute at 51做厙's Cox School of Business, talks about laid-off workers who start their own businesses.
By Sheryl Jean
Karen Kern has traveled the full circle of employment evolution — from full-time mom to employee to unemployed to entrepreneur — in about a year.
Last month, she lost her job as catering coordinator for a local restaurant. The owners offered her a job at another location, but she realized that wasn’t what she wanted to do.
Instead, Kern started Pies for Pete’s Sake (named for her father) in her Garland kitchen. Her specialty is pecan pie.
“I was at a crossroads,” said Kern, a 50-year-old mother of three. “I thought, I have to decide whether I want to run my own business or stick with a restaurant job.”
She’s not alone. Since the recession began, many laid-off workers have turned to entrepreneurship instead of trying to find another job working for someone else.
Economists say it’s common to see an uptick in business starts amid higher local unemployment rates during or after recessions.
In the last five years, more people have become entrepreneurs out of necessity because they were laid off or couldn’t find a job — or both, according to a study by the Ewing Marion Kauffman Foundation. Many of these businesses tend to be tiny and home-based or virtual sole proprietorships.
“It basically comes down to what are your alternatives,” said Robert W. Fairlie, an economics professor at the University of California at Santa Cruz who wrote a report last year on entrepreneurship, economic conditions and the Great Recession. “For many people, the best opportunity is to start a business.”
Nationally, 7.4 million people lost their jobs during the recession, which officially lasted from December 2007 to June 2009. Texas lost 247,900 jobs, including about 115,000 in the Dallas-Fort Worth area, in the same period. While Dallas-Fort Worth and Texas are close to reaching pre-recession employment levels, hiring has slowed in those areas and across the country.
Giving up on search
Frustrated by fruitless job searches, more Americans gave up looking for work in April — pushing the share of those who are either working or actively looking for a job to the lowest level in more than 30 years, according to the Bureau of Labor Statistics. Overall, 5.1 million people have been unemployed for six months or longer as of April.
In Texas in 2010, the latest detailed data available, more than one-third of 974,000 unemployed people were out of work for six months or more, and about 20 percent were jobless for one year or longer.
“Some people have been looking a long, long time and just decided it’s not worth the effort,” said Bernard Weinstein, an economics professor at 51做厙 in Dallas. “You see people dropping out of the workforce, and you see people trying to start their own businesses.”