The Rise of the Necessity Entrepreneur

The economists David Blanchflower and Andrew Oswald set out to find the answer to exactly that question.  Their main discovery was not at all what was expected. They thought they’d find that the unifying theme among entrepreneurs was an outsize willingness to take risks. No. It was very different, almost the contrary, and much  more concrete: “The probability of self-employment depends positively upon whether the individual ever received an inheritance or gift.” In other words, those who already have some form of security are the people most apt to work for themselves—and by a wide margin, the authors added, even when factoring in “personal, family, and geographic characteristics.” This would likely explain why one of the largest dives in self-employment in the U.S. happened in 2007, just after the cratering of the housing market. “Home ownership made it possible to be self-employed,” explains Blanchflower, a professor of economics at Dartmouth. “They had something to borrow off of. You can’t do this now.”

Kathleen Christensen, who directs the Alfred P. Sloan Foundation’s Working Longer program, suspects many aren’t starting their own businesses because they’ve been seized with a vision or a solution to a problem, as the mythologized version of the entrepreneur supposedly is. “From the research I’ve conducted,” she says, “they often lack other options.” Many are conscripts in self-employment rather than volunteers. There’s now even a term for such workers: “necessity entrepreneurs” (rather than “opportunity entrepreneurs”). Though not a whole lot of work has been done examining the difference between these two groups, what little there is suggests that necessity entrepreneurs aren’t always as successful—or as happy.

One day, it’s possible that many of us will think of work “not as a stable engagement, but a series of engagements,” as urban theorist Richard Florida puts it, and the concept of a “career” will become quaint, as will the idea of “work” as a place.

This transformation will have consequences far beyond a lack of psychological stability and job security for workers. It will change the very nature of work as we know it and in doing so will cause an evolution of the modern American worker.  This shift is important on so many levels and as such, we need to support each other during this transformation.  The result in a unified network of education and community to move forward into the next era.

I can’t wait to see what’s on the horizon!