Happy Labor Day (Or Not) – Bad News For Workers

Most people I know think of Labor Day mainly as an excuse for a long weekend or the unofficial end of summer.

But the history of Labor Day is that it was born out of the labor movement as a tribute to workers. This pandemic and the demands it has placed on frontline workers should make this Labor Day particularly meaningful.

I’m a cynic and assume that people will be too wrapped up in election news or the zig zag volatility of the stock market to give workers their full due. Another factor vying for attention is labor-related but not in a good way — the still shaky economy and high unemployment figures.

While the very latest news seems good (the unemployment rate fell to 8.4 percent) the bigger picture is grim. Temporary layoffs from earlier in the pandemic are now becoming permanent job losses.

Hiring is still happening, of course, but if you review this list from LinkedIn about who’s hiring now, you’ll see that the big numbers are coming from InstaCart, McDonalds and Amazon. Sure, some of the hires may be high-pay roles, but many will be lower-wage jobs. If you are mid-career, with 10, 20 or more years of experience and looking for a job right now, expect to face fierce competition for a shrinking pool of good-paying, knowledge jobs.

Consulting is a viable alternative to finding a new job

One of my passion projects is career coaching, and a lot of my clients are taking the consulting route. Sometimes the consulting is a stopgap to keep money coming in and to stay current professionally, while continuing to look for traditional employment. But sometimes, consulting is a permanent change and becomes the new career identity.

If you’re on the fence about entrepreneurship, consulting is a good way to test the waters. As a services business, the start-up costs are minimal (a big factor in why we picked a services v. products business to start). You can also land your first customers quickly – maybe even your former employers.

For more on consulting as a business or side hustle, check out our free short e-course, Making FIRE Possible. One of the lessons is called Making Money From What You Already Know.

Beware of these four pitfalls in the employee-to-entrepreneur transition

That said, even though consulting may be easy to start, it doesn’t mean it’s easy to continue. I have seen new entrepreneurs struggle with four main things (and I certainly struggled with when I started consulting 13 years ago):

1 – Sales becomes your primary job

As a consultant you only earn when you have a project, so your first responsibility is to sell that project.

If you don’t think of yourself as a natural-born salesperson (and very few people do), you’ll have to learn. I had a lot to learn — my favorite book on sales by far is The Snowball System by Mo Bunnell.

2 – Everything else becomes your job too

You execute the work, of course. You also bill for it, including keeping after late-paying clients. You are also your own Help Desk, advertising firm and customer service.

It’s just as exhausting as it sounds.

3 – You don’t have a company expense account

Sure, you could outsource some of the secondary jobs (and you should, once you have enough revenue to cover).

However, you don’t start with an expense account, so you need to build up to that and be prudent in the meantime about what you spend.

4 – You don’t have a company identity anymore

This break-up with your career past has proven to be a big one for many of my clients. This is especially true if they come from a brand-name company or a senior position that many people recognize and respect.

Reintroducing yourself as doing something else for a much smaller company (just you!) feels like a let-down or step back, especially at the very beginning when your business has few, if any, wins.

I had changed roles and industries several times already before I started working for myself, so my identity wasn’t too closely tied to any one career. However, it still took some getting used to, when I had to explain I was no longer with a company but on my own.

Even if you think you would never go into business for yourself, you may not have a choice

I call myself a reluctant entrepreneur because it was years into my business before I felt more like an entrepreneur than an employee who happened to fall into entrepreneurship.

There wasn’t a global pandemic that pushed me into it, but I was in the publishing industry in the early 2000’s, and the print-to-digital transition was in full force. My colleagues just complained about how annoying the disruption was, but I could see the bottom line impact would be devastating.

The once-premier employer I was with did finally close, more than 10 years after I left, but I had a running start to a new life, over colleagues who hung around till the doors finally shut.

It’s not just media that is being disrupted by technology. AI and automation will disrupt many, if not all, industries. The pandemic is accelerating adoption of new technology like AI.

It’s not hard to imagine a scenario where far fewer people (i.e., far fewer jobs) will be needed to achieve the same level of productivity.

You could just strive to achieve FIRE before the pandemic, AI or other disruption impacts you. This is the underlying point of finance journalist Scott Gamm’s upcoming new book. But depending on where you are on your FIRE journey, you may not have the time to rely on hitting your numbers, especially with today’s crushingly low savings account rates (the top rates are less than 1%!).

A happy postscript

While the job market stats make this an ominous Labor Day, especially if you don’t envision yourself an entrepreneur, I have found that, for myself and many of my clients, the employee-to-entrepreneur transition has a happy ending.

I’m less stressed and more fulfilled, and I don’t think FIRE would have even been on our radar had I been so narrowly focused on the 9-5. We certainly would not have been able to hit our FIRE number without the unlimited upside that entrepreneurship provides over a traditional job.

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How about you? Entrepreneur or employee or both?