The age of entrepreneurs: Why 4.3 million Americans quit their jobs in August

Wharton management professor Jacqueline “Jax” Kirtley isn’t making any predictions about when or how the Great Resignation will end.

Nearly 4.3 million Americans quit their jobs in August, the highest number on record since the government began collecting data 20 years ago. The quit rate coincides with a dramatic surge in applications for new businesses since the COVID-19 pandemic began, mostly for sole-proprietor ventures.

The pandemic is to blame for these concussive shocks to the labor market, but Kirtley is careful about drawing any conclusions.

“We’re seeing a lot of people embrace this opportunity to do something different. Whether it’s going to stick, whether it’s going to be permanent, whether it’s going to be the thing that keeps me going through this crazy time and I go back to working for a company later — I don’t think we know the answer to that yet,” she said.

In an interview with Wharton Business Daily on SiriusXM, Kirtley said some people have been quitting for very pragmatic reasons, such as concerns over personal safety or lack of child care. Others have been quitting because the pandemic has made them rethink their life’s purpose and career goals.

“That’s fantastic in a lot of ways,” she said. “It is challenging because the labor market isn’t looking like employers are used to it looking. You’re seeing that every time you go to a restaurant. They have lots of empty tables because they don’t have enough staff.”

The increase in new business filings indicates that many workers are quitting to start their own businesses. While entrepreneurship is good for the economy, Kirtley pointed out that not every founder is going to be the next Jeff Bezos or Elon Musk.

“We pay a lot of attention to these fantastic stories of unicorns and firms with these astronomical valuations, but most entrepreneurship is much smaller than that,” she said, adding that there is a lot of room in between big unicorn companies and tiny sole proprietorships.

Entrepreneurship is also aspirational, which may explain why so many people want to try it.

“We are big fans of the hero story in entrepreneurship,” Kirtley said. “We see what other people have achieved against the odds, and we’re inspired by it. It gives us the hope and the power to go off and try to do it ourselves.”

According to Kirtley, the uptick in entrepreneurship isn’t surprising given the gig economy, which was gathering steam even before the pandemic. A lot of Americans who were running a side hustle for extra cash, like driving for Uber or Lyft, turned those gigs into full-time work.

She also noted that if working from home continues, it has the potential to alter workplace culture. Freelancers, for example, may no longer be thought of as outsiders if nobody is physically at the office.

The end of the Great Resignation is yet unwritten. But Kirtley said she’s confident it will turn out just fine. She expects there will be a bit of a power struggle, which may resolve with large companies increasing pay and flexibility to lure workers back.

“We’ll find a solution, maybe on an employer-employee basis,” she said. “But we’re pretty good as people, as members of the economy, at finding a way to make it work. There will be shifts in how some of it’s done, hopefully all for the better.”