In the US, more women are working for themselves. On the surface, it seems empowering – but there’s a dark narrative driving this rise in self-employment.
Dr Amaka Nnamani loved her work as a paediatrician in Hershey, Pennsylvania, US. She describes it as a “dream job”. Nnamani, 38, had two young children, then eight and six, and was pregnant with a third when the pandemic struck.
She was hit with the “harsh reality” of having to home-school her older children while recovering from the summer 2020 birth of her son. “We didn’t have a lot of help,” she says. By October, Nnamani and her husband were both back at work outside the home.
Unable to find a childcare centre amid the pandemic, the couple struggled without regular care. Soon, she says, “it just became too much for me to handle. I still loved my patients. I still loved my colleagues, but it was not sustainable. So, after much thought and prayer, I turned in my resignation.”
Today, Nnamani is self-employed as a consultant, breastfeeding educator and author. She’s joined the growing ranks of people who have left traditional employment amid the pandemic. According to the US Center for Economic and Policy Research (CEPR), there’s been a major spike in the number of Americans who report being self-employed. The most significant rises were for women – especially women of colour – and workers with children younger than age six.
Of course, entrepreneurship offers a lot of opportunity and benefits, including the flexibility workers increasingly crave in the pandemic era. Yet there there is a dark narrative behind the data. For women like Nnamani, leaving traditional employment seemed less like a choice than a necessary decision. In the wake of the pandemic and the midst of an ongoing childcare crisis, women – especially mothers – are being pushed out, seeing self-employment as less a desire than a necessity.
Who’s striking out on their own – and why
Between 2019 and the first half of 2022, the share of self-employed Americans within the total employment pool grew 4%, amounting to an uptick of 600,000 people, according to the CEPR researchers. And the biggest jump in this pandemic-era data was among women, who reported becoming newly self-employed at about twice the rate of men.
The biggest contributing factor to whether women moved to self-employment was whether they had primary school-aged children
Some of the spike can be attributed to people “reinventing themselves” and their work situations during the pandemic, says Misty L Heggeness, an associate professor at the University of Kansas School of Public Affairs and Administration, US. “A traditional office nine-to-five, even if it went remote during the pandemic, wasn’t really working, especially for mothers,” she says, “in part because it's really difficult to work, even if you're teleworking, while your children are still in your household.”
A need for more flexibility, adds Heggeness, made self-employment desirable to mums particularly. “I think there are moms who really got exhausted from having to kind of juggle it all, but yet wanted to stay engaged in work and their career. They decided one way to do that was through self-employment,” she says, “trying to figure out a better work-life balance through becoming one's own boss.”
This pursuit of a better work set-up accounts for some of the million-plus US women who left the workforce during the pandemic, says Heggeness – some left, she believes, simply because they could. “When it all came bearing down on them, they either had enough resources and savings, or had a spouse who had a high enough income that they were able to back off from work to deal with the childcare.”
But for scores of others, forgoing an income wasn’t an option, though neither was staying in a job that made it impossible to take care of their families.
“It’s like choice under constraint,” says Heggeness. “There were a lot of mothers who didn't have the luxury to stop working. The fact of the matter is, their income is critical and essential to the wellbeing of that household. That income is needed to buy food and put it on the table, put a roof over their family's head, to put clothes on their family’s back. These are the women who may be disproportionately taking on self-employment.”
According to Julie Cai, an economist who contributed to the CEPR research, the biggest contributing factor to whether women moved to self-employment was whether they had primary school-aged children.
“Even after controlling for a lot of factors,” says Cai, the CEPR data shows “parents with kids under six present at home have a higher likelihood to be self-employed”. This was especially true among lower-earning women and those without a college education. As she explains, low-wage workers faced the most difficulty keeping positions during the pandemic because those jobs were the most unpredictable. “Some of those hourly workers faced involuntary volatile working hours,” Cai says. “The employer might demand more hours or cut them without much advance notice.”
There’s a racial disparity at play, too, adds Cai. “In research I’m currently doing, we’ve found that non-white women were more likely to experience volatile hours during the pandemic. That could be a big part of the story.”
In fact, the CEPR research showed the demographic with the most total gains in self-employment rates between 2020 and 2022 was women of colour. It makes sense that they’d be the biggest group to make the shift, says Cai, because women of colour tend to be one of the larger groups represented in those unpredictable jobs. Volatile hours make finding childcare especially tough, and that’s the main driver for these women to leave.
Heggeness agrees. “You have a ton of women in this country who are bearing the brunt of this [employment] dysfunction, and they're doing the best they can,” she says. “They’re making choices around their career that they might not have made otherwise, to try to manage this crisis that their family is having.”
The childcare crisis continues
When Nnamani first went back to work in late 2020, after giving birth to her son, she and her husband tried to piece together a schedule that allowed them both to work without childcare, which was nearly impossible to find due to pandemic closures.
“My husband changed his shifts to work from, like, 3 p.m. to 11 [p.m.], and my neighbours would watch the baby for the hour or two before I got home from work,” she says. “It was all pretty crazy, and extremely stressful.”
Ultimately, that lack of childcare pushed Nnamani over the edge and made her decide to resign. She’s certainly not alone. An ongoing labour crisis in the childcare industry has left many families without qualified care for their children while they’re at work.
“Childcare is a major problem; it has been for a long time,” says Heggeness. “It’s very, very expensive, and spots are limited or non-existent in so many portions of the country. You have scenarios where people are getting pregnant and going on the waitlist for a day-care centre [before the baby is born].”
In the US, 2018 data shows more than 51% of people live in “childcare deserts”, which the Center for American Progress defines as a census tract where there are more than three times as many children as day-care slots. And, of the 6.38 million parents who rely on childcare, 2020 data shows 57% pay $10,000 or more a year. The expense for parents, when they can even find slots for their children, is a number many families simply are unable to shoulder.
The chronic understaffing of childcare centres is exacerbating the problem for mums who do want to stay in the workforce. Even with Covid-19 waning, childcare centres are still continuing to haemorrhage workers and failing to make up pre-pandemic ground. More than 100,000 jobs were lost in the sector between February 2020 and September 2022, according to Bureau of Labor Statistics data. Some anecdotes from childcare providers detail losing employees to retail and other service positions, where many companies are offering high hourly rates and bonuses.
Of the 6.38 million parents who rely on childcare, 2020 data shows 57% pay $10,000 or more a year
Combined, this all has a notable effect on the choices women can make for their own employment. “It’s a broader issue for the entire economy and for economic growth and our ability to flourish as a nation,” says Heggeness. “The fact is that we continue to stifle people’s – predominantly women’s – ability to engage to their fullest extent in the labour market.”
The search for a solution
Despite these facts, some mums are still finding a silver lining to self-employment. Nnamani says she’s been able to spend more time with her children and continue to exclusively breastfeed her youngest. For income, she’s formed a company around breastfeeding education; she consults for hospital systems on a freelance basis, and recently published a children’s book on the subject.
“I do miss being in the office and seeing those kiddos,” says the former paediatrician. “What I do love is the flexibility of my time and the freedom I have. But I absolutely miss those relationships with my patients.”
Yet, says Heggeness, even this benefit of flexibility may have underlying drawbacks. “We’re seeing a greater proportion of women in occupations where there's this type of flexibility to pick and choose when and how you work,” she says. Studies show women prefer remote work, for instance, at a higher rate than men do, “But the negative side … is that sometimes we are steering people into types of work that put them in vulnerable situations.”
For instance, she explains, self-employed people are much less likely to have health insurance coverage or a retirement-savings plan, two benefits anchored by largely full-time employment in the US. “There's benefits that come along with being an employee in an established firm,” she says.
There are additional vulnerabilities that may come with striking out on one’s own, she adds. The median income of self-employed people is more than $6,000 lower than those working for an employer, and initial investments and business start-up costs mean a self-employment income can take several years to build. This figure also doesn’t account for the monetary value that employer benefits provide only full-time employees.
Nnamani has felt these effects, despite the professional progress she’s made in self-employment. “Something I actually miss a lot is just that regular income and sense of security,” she says. “I was the higher earner in the family, so that definitely was a big blow to our finances. I've since had to make a lot of adjustment, like we're having to think twice before making certain decisions. We used to have a budget for the kids’ college funds and for stocks. We pretty much had to put a hold on a lot of those things. It has been a huge sacrifice.”
Overall, Cai says the simplest solution for keeping women from turning to involuntary self-employment is for employers to provide stability in the form of both more predictable hours and childcare programmes. This, she adds, can be particularly important for women with lower incomes or less education.
And, ultimately, while self-employment offers benefits to women who found traditional employment unsustainable, asking women to work – even if it’s for themselves – and simultaneously parent still leaves mothers unable to reach their full working potential.
“Self-employment and flexible work options are not going to be enough for women with children,” says Heggeness. “It's really difficult to work, even if you're teleworking, and even if you’re self-employed, while your children are still in your household.”