Fired Federal Workers Are Flipping the Script (Again)

Do you remember where you were 5 years ago? In February 2020, Covid-19 was just making its presence known in the United States. By the time the shutdowns began in March, most of us had already begun living the new normal — work from home. But for many employees, there was no work from home option.  The recent DOGE-firings, cancelled contracts and paused SBA loans are bringing back gut-wrenching reminders of when pandemic shutdowns created an urgent need for "subsistence income" to pay bills and make ends meet.

Ah, yes. Entrepreneurship 101: How To Start A New Business

Soccer-moms suddenly became grocery shoppers and social media influencers. Cooks, janitors and window-washers became sanitation and disinfection specialists. Remodelers stayed busy by building Plexiglas partitions and adhering social distancing decals to retailer's checkout lines. Bartenders and waitresses suddenly found themselves delivering meals for their employers or driving for Uber, Lyft or DoorDash. Call-center employees went to work as quality remote staff.

And now, five years later, a million and a half fired federal employees are finding that they, too, are going to need to flip the script and maybe (if they can pull it off) get paid even MORE for doing exactly what they've always done — THEIR JOBS!

In 2020, at the height of the pandemic, there were 4.38 million applications to start new businesses in the United States, which was a whopping 24.5% increase from 2019! This was a record number of applications at the time, and represented an unheard-of start-up rate of 10.7%. And that number has grown by approximately 5% almost every year since.

• The number of new business applications in 2020 was 4.38 million.

• That number grew in 2021 to 5.41 million.

• New business applications in 2022 dropped slightly to 5.08 million.

• In 2023, those new business applications set a new record at 5.49 million.

• 2024 saw new business applications flow in at a rate of just over 430,000 per month.

• If those figures are any indicator, recently fired federal employees seeking to start their own private firms could push new business starts to 7 million, making 2025 a banner year!

The surge in business applications following the pandemic was so sharp that many wondered whether it truly reflected a rise in entrepreneurship, or whether it could be some measurement artifact related to a pandemic-era distortion. However, evidence now suggests that the surge was real and no well-supported alternative explanation has been found. One could only expect that we will see this same post-Covid entrepreneurial explosion in the post-DOGE era.

The U.S. Chamber of Commerce applauds entrepreneurs, acknowledging that they are the ones who step up to tackle problems and resolve issues. During the COVID-19 pandemic, when America faced significant challenges in a short period, entrepreneurs met the challenge. Emerging economic demands and shifting consumer preferences provided more opportunities for new businesses to launch, and entrepreneurs were the ones who showed up in force.

Numerous people who lost their jobs due to pandemic shutdowns transformed their ideas and hobbies into home-based businesses. The number of non-store retailers surged as individuals began selling products from home. Professional and business services saw an increase as entrepreneurs recognized the demand for consulting services. That pattern continued in 2022, 2023 and into 2024, with most business applications submitted for ventures in the retail trade and professional services sectors.

America's distinctive free enterprise system fosters this kind of entrepreneurial expansion. The data clearly indicates that Americans are eager to launch their own small businesses.

It is essential for the government to support policies that facilitate the creation of new businesses rather than obstruct it, as new enterprises bring more opportunities to our communities. As these new businesses expand, they are likely to hire more people locally and stimulate the local economy.

Small businesses have an outsized impact on our labor markets. Half of all Americans employed by private companies work for a small business. With a rise in entrepreneurship, this influence is set to increase. Many Americans see this as an opportune moment to launch a small business. Small businesses and entrepreneurs have exerted their presence on the U.S. economy during the economic expansion following COVID.

According to the U.S. Department of Treasury:

• Small businesses have created over 70 percent of net new jobs since 2019. In the previous business cycle, small businesses created 64 percent of net new jobs.

• Small business optimism is rebounding as inflation falls. Multiple measures of business optimism show substantial increases in recent months. More than 70 percent of small business leaders expect revenues to grow over the next year, the most since the pandemic.

• Entrepreneurship continues to surge: the United States averaged 430,000 new business applications per month in 2024, 50 percent more than in 2019. The subset of applications for businesses most likely to hire employees has also risen to 140,000 per month, 30 percent more than in 2019.

One underappreciated aspect of the entrepreneurship surge is that the population of Americans working for themselves is growing more diverse. Self-employed workers reflect an important subset of small business owners: those who work for profit in their own unincorporated business. Historically, this group has been dominated by White Americans and men. But today, it is more diverse than ever before with women making up 43 percent of self-employed Americans, more than ever before. Black, Asian, and Hispanic shares of self-employed Americans are also near all-time highs. Even with the recent restrictions on diversity, equity and inclusion, opportunity in this expansion is applying more broadly than ever before.

Significant challenges persist. Credit availability for small businesses remains historically limited, though there has been some improvement in recent months. Additionally, business owners, similar to households, continue to encounter excessively high costs. However, considering the recent advancements, it is crucial to acknowledge the vital role small businesses have in the U.S. economy.

The fact remains: These federal jobs are not going away. They will still need to be filled, and no one knows the job requirements and relevant federal government acumen better than the person who has been sitting at that desk as a full-time federal employee. The key difference will be when that former federal employee walks back onto the job as part of the new workforce, made up of small business owners and federal contractors who'll now be paid 5-to-10 times more to fill that gap than what they were paid as a federal employee.

If you (or someone you know) are a recently fired federal worker who is interested in starting a new business or registering your existing business for possible federal contracting opportunities, please feel free to reach out to me directly. I'd be happy to help you make your (their) dreams of being small business owner and federal contractor a reality.