Young workers are set to redefine small businesses post-pandemic

Whether out of financial necessity or emotional well-being, thousands of young workers turned to their hobbies to keep them afloat in the face of the pandemic and it’s changing the future face of small businesses.

Gen Z sees the forces of globalization, automation and shifting work norms as an opportunity to embrace their side interests as career opportunities, according to a study conducted by professional services network Ernst & Young. In fact, 65% of Gen Z respondents see themselves owning their own business in the next 10 years.

This could be, in part, to the fact that a third of “side hustlers” — people who run their own businesses on the side of a breadwinning job — globally fall into the Gen Z demographic, according to Paul Flatters, co-founder and CEO of Trajectory Partnerships, a business specialized in analyzing trends and consumer behavior.

“Gen Z have different expectations of work,” Flatters says. “Older generations came into work expecting a much more rigid work environment where there wasn't that freedom to step outside, [whereas Gen Z] have the expectation of a flexible gig economy environment — and that includes being able to do something that's your own.”

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The rise of side hustles was put in motion long before the pandemic, Flatters says. Long-term trends in work over decades have gradually introduced more autonomy at work and deconstructed the concept of a traditional 9 to 5, thereby freeing up employees to lean into extracurricular activities. What the pandemic did for some, however, was turn those hobbies into lifelines — particularly for the millions of workers who lost their jobs due to the COVID crisis.

While employment rates have improved and recruiting is top of mind for employers, as many as 10 million jobs were lost during the pandemic, according to the Labor Department. Among those jobs, a large portion were made up of young employees in entry-level positions.

“Because of the shock to the system of people's hours being cut or being laid off, they had to be entrepreneurial just to make a buck,” Flatters says. “The side hustle became more central out of economic necessity.”

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But for many young employees, their side hustle isn’t just a form of additional income, it’s a passion and a business they intend to keep managing along with a main day job — and they’re willing to put in the work to do both if it means giving their life more meaning, Flatter says.

“The pandemic forced people to confront the mortality of those near and dear to them, but possibly their own,” he says. “It really made people — whatever age they are and whatever time they have left — think about how they want to spend it.”

Side-gigs may have saved employees during the pandemic, but they have the potential to cost employers greatly in the aftermath. For example, employees are spending an average of 52 hours a week on freelance projects, according to a study conducted by Paychex, which could cause employees to submit work late (23%), turn in poor quality work (17%) and miss meetings (12%).

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So, how do employers navigate a recruiting landscape where young applicants may either already have a side hustle or will be looking to develop one over the course of their employment? They make it part of their hiring and retention strategy.

“COVID has made people reflect on what they want out of life and [employees] are willing to maybe forgo a bit of salary or some of their pension to take a bit of time out,” Flatters says. “If you're not flexible, you may miss out on some very talented people.”