The Self Employment Revolution… (why employees are REALLY leaving)

So unless you've been living under a rock, if you're a business owner, you've heard of what's called the great resignation over the past couple years with so many people resigning from their job and going getting another job. But I'm going to talk about something today that some people are not thinking about and how you could potentially keep employees that would otherwise leave. So why is the great resignation happening at a period in time when there's actually quite a bit of economic instability after COVID 19 well, a lot of people would put the blame on stimulus checks and there's definitely played a part due to the fact that there's been unemployment check, there's been just straight up checks sent to them in people's mailboxes as well as rent forbearance, mortgage forbearance, and people have to pay any money on their student loans. In addition to that, there's also been the child tax credit which has helped people with children get even more money on their taxes as well as just again straight money in their bank account. Now in 2019, 39% of Americans could not afford a $1,000 unexpected expense. That means if they had a thousand dollar automotive repair or house repair that they weren't expecting, or a health bill that potentially could put them in bankruptcy. Well after 2020 when everyone got $1,200 and then you know, $1,400 or whatever it was, all of a sudden every single American could afford $1,000. And to many of them they felt relatively wealthy. Now, although I definitely feel like stimulus has been a contributing factor to the great red nation, I feel like there's something that's actually bigger happening here in on today. It's what I call the self employment revolution. And this is basically where people quit their job and instead of going and starting a business, they just become self employed. They don't get a bunch of employees, they become somewhat of a solo operator. If you were building their own business, they might do this virtually and be a freelancer, or they might actually start a business but work by themselves. Now this type of economy is actually extremely popular in places like Europe as well as Australia, where taxes are higher and regulation is substantially higher as well as the cost to employment people is significantly increased compared to the United States. Now this seems all great and fine because it seems like people are going to make more money, but in fact most people when they leave their job and they become self employed, actually make less money unfortunately. And according to Gallup in their research the 50th percentile, the middle of people that are self employed make $34,000. That means that half of self employed individuals make less than $34,000 per per year in income. This also means that most self employed people would actually make more money if they were to go just get a job. Now the downside of being self employed is that you also don't have a lot of the social benefit programs like Social Security and unemployment. So there's not that social net to catch you if something is to go bad. You don't have unemployment now to fall back on. You don't have Social Security that you're paying into. Although some would argue that having the lower and working class become self employed is a positive thing, it's actually statistically going to increase the widening gap between the poor and the rich. This will also cause what we're seeing right now in the labor economy and that is an increasingly higher wage having to be paid by employers simply because they can't find anyone to work. Since everyone is wanting to become self employed, I feel like another contributing factor to all of this is the fact that social media and media in general is pushing the notion that having a job and working for someone else is something to be looked down on and that there's a lot of freedom in having your own job and being self employed. Although this may be true, I do feel like the economic ramifications of this are going to have some serious consequences for the vast majority of individuals. Oh, and by the way, that widening gap between the rich and poor is also going to increase the notion that we need to increase taxes, which is going to be a self fulfilling prophecy. Because if you increase taxes, why would I want to be taxed as a W2 employee when I can just go become self employed and get around those taxes from the government. But if you're watching this, you're probably a business owner trying to figure out how do you get employees and keep employees. And during this whole great resignation, you're able to keep those employees on long term. And in my opinion it's not to fight the trend or say it's bad or say that people are soft because they're trying to get out of working a 9 to 5 or they don't want to get out of bed and they want to work from home. That in my opinion is a failing recipe in this labor economy. Rather, we should be focusing on how can we make our places of work and our businesses a place where self employment is actually something that can be felt without all the downside risks. Financially that so many people are taking because the vast majority of people seeking self employment aren't doing it for the money as much as the freedom and a lot of intangible benefits that can actually be provided by the employer if they're self aware. So what can you do in your business to allow employees to actually feel the benefits of being self employed without having to take the risk financially and going out on their own? Here's just a couple examples. For example, if you have company trucks and vehicles, maybe potentially instead of having them meeting at one place, you allow them to take the trucks home, the equipment home. Now this is going to be difficult for some industries and we haven't figured it out even for our own. But it's definitely something in our mind as we continue going forward to reduce overhead and allow them the autonomy and the freedom to take the trucks and equipment back to their own house. The beautiful thing about being self employed is that if you work hard and you get new customers, you see benefit. The same thing can be done for your employees and that is pay them for leads that they bring to the business. Why would I not pay an employee to bring a lead if I'm also willing to pay Google and Facebook and all these other advertising sources the same amount of money? I'd rather give the money to my employees. Why not set up a bonus structure inside of your business to incentivize employees getting new leads and customers for you and for the business and making sure they get paid to kind of scratch that entrepreneurial itch and that self employment drive that wants to go get more business. You could potentially also set up a P4P system or paid for performance. We actually created an entire software on this called P4P software.com and this is extremely important. The harder I work as an employee, the more money I want to make. Another thing to consider is whether or not you pay hourly or P4P or what we call pay for performance. We created an entire software around this called P4P software.com you can check it out. But what P4P is is you pay for performance. The harder someone works, the more efficient they are. The more revenue they bring to the business, the more money they make. Instead of paying someone by the hour to get paid by their performance, it's extremely motivating to someone that would otherwise probably want to go start their own business so that they can see that same result. The harder they work, the more money they make. That's extremely appealing to someone as to why they would leave a W2 employee job and go become self employed because they're demotivated, working with a bunch of other people that aren't insp to work hard and make more money and get ahead in their life. Now this self employment revolution is also brought on because people want flexible schedules. They don't want to be bound to a certain time they have to show up and a certain time they have to leave. I understand that some industries this is not possible, but it's something to start thinking about. It's something to start considering. I don't think you need to make all these changes in one day or even in one year, but start considering and thinking about how can I make my workplace where there is a flexible schedule, where there is paid time off and people can use that time to go on vacation, take sick days and have more flexibility. That freedom and autonomy is one of the main reasons why the self employment revolution is happening. People don't want to be tied down. A specific schedule or a specific manager telling them when and what they should be doing all the day. Another part of the self employment revolution is the fact that people want to work remote. When Covid hit, everyone all of a sudden had to work remotely and a lot of people enjoyed it. Now obviously some people don't and some industries cannot have remote workers. However, get this. In 2019, 1 out of 64 jobs allowed some sort of remote work from home. Guess what? In 2022, one out of seven jobs now have some ability to work at least part time from home or remotely outside of the office. This is a massive, massive shift that's happened very quickly in the workplace. And you've got to start thinking, is there an ability for at least maybe one day a week, maybe part time? Maybe I can completely change my business model and allow people to work from home and actually be more efficient and effective and profitable for the business. Remember that some people actually do better working remotely away from other individuals of the office. That's something that might throw some people through a loop, but it's true and there's lots of studies to prove it. Again, the self employment revolution is fueled by people that potentially need remote work because of their schedule, their family life or other health conditions. So instead of fighting the trend, why not embrace that and try to figure out how can I take that person and plug them into my business where they can work long term for my company? The last thing fueling this self employment revolution is the fact that people are looking for meaning in their job. No longer do they want to show up to work to punch in the time clock or make a boss a bunch of money, or see a stock price on the Fortune 500 go up. They're not interested in that. They want to find work, in the words of Steve Jobs, that says I want to do work that makes my heart sing. Think about that. What can I do? Is the vision for my business, the products I build, the services I produce, is it going to actually make and meaningful impact on the lives of others? Because employees actually care about the vision of the company. No longer are they just there for a paycheck, they actually want to see a meaningful impact on the lives of other people, the planet and their community. If your business is not doing that, you need to focus on what your goal, your mission, why is this business existing? And then rally the troops around that idea. Because again, the goal here is not to keep employees against their will or because it's better for the business. It's to prevent them from having to go and be become self employed and go after the flexibility and all these other intangible benefits, but yet have the protection of a W2 position that is actually economically going to be in their best interest. Now this great resignation that's currently happening in our labor market is absolutely going to be a massive problem for your business. If you've created bottlenecks in the company to where only you or specific people can handle things, or if you have very high skilled labor that can only be done by people that have worked with you for a year or two years. The goal in your business, especially if you have labor, should be how do I simplify and systematize everything inside the business? How do I standardize the products and services that I sell so that anyone can join and with a matter of a few days, become profitable? This is what has made fast food companies so profitable and popular in our economy is the fact that they're able to take 14 and 15 year olds and literally make them profitable pieces of the company within a matter of couple days. This takes systems, procedures, and it doesn't necessarily mean you have to do dumb simple work. It's a matter of systems and creating standardized processes for every single part of the labor so that way you can plug in an entry level position and are not tied to investing thousands of dollars and months and years of time into employees before they become profitable. The reason this will be a problem for your business is because you can no longer depend on entry level positions staying with you for years and years and years. The great resignation and the self employment revolution are going to force businesses to adapt to being able to take an employee and quickly get them up to profitability. It's not going to be able to take months or years before someone's experienced enough to make money for the business in a meaningful way. We've got to create systems, procedures, systematize and standardize and everything in the company so that we can make a profitable employee from day two, three and four instead of month two, three and four. At the end of the day, the goal of this video is just challenge some of your beliefs instead of just saying it's about the economy or the government's giving everyone stimulus. As employers we need to think ahead of the curve and ask how is the labor market changing and play within the rules of the game. You getting mad at the government or employees over what's currently happening in the labor economy is not going to do any good. Figure out how to win within the confines and the rules of the game and right now your best employees and your best performers are looking as an option to go self employed. If you do not adapt over the next several years to these type of requirements, you might lose out on some of your best top performers. I'm the founder of Augusta Lawn Care. We have over 80 locations around in North America and we've had to do the same thing with our business trying to figure out remote work, how do we have paid time off and health benefits and other things. I'm not saying we're perfect and we're definitely the things that we talked about today. I haven't necessarily implemented all of them and it's a matter of thinking about it and challenging your beliefs of what has always been held true for you and your employment practices if you struggle to find and retain really good employees. I made another video here about exactly how you should be thinking about creating a process for hiring, onboarding and retaining great employees. Check it out. Self employed.

Economic.