Big Quit, Gig Economy Leads to Rise in New DC Businesses

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Call it the big scramble.

Despite record unemployment and concerns about widespread business closures at the start of the coronavirus pandemic, the number of people looking to start and grow their own businesses in the DC area has increased, according to analysis by The Washington Post.

While more than 1,000 establishments in the sectors including food services, construction, entertainment and wholesale disappeared during the first part of 2020 in the DC metro area, the number of new physical businesses has continuously increased over the next few quarters and has exceeded the number that closed, Bureau of Labor Statistics data shows. This growth – much of which has come from educational services, healthcare, construction and finance – does not include online shops which economists say have also grown.

Covid has closed businesses in downtown DC. Many have reopened – in the suburbs.

Combined, the district, Maryland and Virginia saw business license applications grow from about 176,000 in 2019 to 219,000 in 2020 and 262,000 in 2021.

The surge has been a surprising by-product of the pandemic, experts said, as new business owners emerge aiming to supplement dwindling incomes, turn hobbies into professions or venture into new businesses.

The latter was the case of Teresa Padilla and Geraldine Mendoza, who were laid off from their jobs as pastry cooks and restaurant managers, respectively, after the March 2020 pandemic. Their jobs were among more than 140,000 positions in the restaurant and accommodation. industry that disappeared in the months after the pandemic began in the DC metro area, according to BLS data.

But in the summer of 2020, Padilla and Mendoza started selling sandwiches at a Capitol Heights pop-up kitchen and food truck, found success, and then secured their own building. In October 2020, they opened their brick-and-mortar restaurant, Taqueria Xochi, a fast-casual Mexican restaurant in the district, named after the ruins of Xochitecatl in central Mexico.

Padilla now works as a chef and Mendoza as an operations manager. The business grew rapidly, Mendoza said.

“It happened unexpectedly and organically,” she said. “Fortunately, we had a lot of friends who brought our food to town through word of mouth for us. And that’s what gave us the confidence to push and say, ‘OK, this is going to work. ‘ ”

The local boom in business creation, experts say, could lead to a spike in innovation and a shift in workplace culture, forcing companies to re-examine their relationships with workers, who have quit in waves for new jobs. new jobs or going it alone.

“Over time, we recognized that the pandemic was leading to a restructuring of the economy,” said John Haltiwanger, professor of economics at the University of Maryland at College Park. “I think we were surprised by the [application growth] because at the start of the pandemic, our economy was only contracting at a huge rate – but then it started to recover.

In the first year of the pandemic, DC leaders expressed growing concerns about the dwindling number of business license applications being submitted — which would ultimately translate into lower business tax revenue for the city.

“We know that a full recovery will require getting the District’s businesses, homeowners and entrepreneurs back to doing what they do best, which is sharing ideas and employing and serving District residents,” said Brooke Pinto. , a member of the DC Council (D-Ward 2) said during a committee meeting in the spring of 2021.

Prince George’s County economy rebounds after pandemic job loss

New trends then began to develop. Among them: Many workers regained crucial hours in their days when they started working from home in early 2020.

“The pandemic has definitely allowed us the luxury of having more time and energy,” said web developer Nameer Rizvi, who lives in Ashburn, Va., but worked in DC. “My commute to the office was two hours out and then two hours back in. So having those four hours of the day back, that definitely helped.

The new times allowed Rizvi and his partner, Naomi-Grace Panlaqui – also a web developer – to follow through on an idea they seeded in early 2020: an app to aggregate concert listings from across DC

Rizvi and Panlaqui named it DC Music Live. For now, they said, they are still freelancing and working steadily while tinkering with the app, which is still in its early stages and not yet profitable.

The pandemic-era ride could be changed forever

Experts said the pandemic had accelerated the trend of people going into business, which had been revived by the emergence of Etsy, Uber and Lyft. A 2019 U.S. Census report released by a team of economists reported that self-employment has held a relatively stable share of the labor force for about 50 years — until an increase over the past decade.

“I think we’re seeing, in many ways, the long-awaited rise of the gig economy,” Haltiwanger said. “I think it really took off during the pandemic, partly because we realized we could actually do it.”

Gig-economy jobs and how to deal with irregular income

The DC Small Business Development Center, located at Howard University, helps aspiring business owners with basic start-up courses in areas such as financial literacy, business promotion, and international expansion. In 2019, said executive director Carl Brown, the center helped 800 people. A year later, that number more than doubled to 1,640, then hit 1,665 in 2021, he said.

“I’ve never seen it like this before,” Brown said. “There are no signs of slowing down.”

Some in the area, like DC resident Will Deatherage, have started their own businesses because the pandemic has made it harder to find a job. Deatherage built Catholics for rent – a group of media consultants – after his internships disappeared when the pandemic lockdowns were put in place.

“I had about 10 or 15 job applications that I was pursuing,” he said. “They were all doing very well. I was getting a lot of callbacks, a lot of interviews, and all of a sudden the pandemic hit and every one of those job opportunities disappeared. Hiring freeze, budget cuts. A total economic panic.

He and his team now help clients with web design, video and podcast production, graphic design and music composition. Mentoring university students and providing them with career experience is also a priority.

As gig economy grows, parents find flexibility and fulfillment — and pitfalls

Other new entrepreneurs were part of another aspect of the workforce overhaul due to the pandemic: an explosion in quits. From April 2021 to May 2022, more than 4 million people on average across the country left their employment each month, the highest level on record since at least 2000, according to BLS data.

Elizabeth O’Donnell was part of the wave of pandemic resignations. O’Donnell, 31, had been a DC public school teacher for seven years, but after her daughter Aaliyah was stillborn at seven months in 2020, O’Donnell said she was denied paid family leave. (DCPS did not respond to a request for comment.)

The experience prompted O’Donnell to leave DCPS and found Aaliyah in Action, an organization that provides care for families after the loss of their babies, of which she is also CEO.

If employers or industries don’t support workers, O’Donnell said, “people will leave the profession, or they’ll leave and go find another place where they’re valued.”

How DC-area employers kept workers happy amid the big quit

Local governments play a vital role, said Daniel Koroma, Montgomery County Business Liaison, in creating an ecosystem that provides support for new businesses — with tools like seed grants, office spaces and programs that help owners run their businesses properly. But some local jurisdictions and business development centers, including Montgomery, are struggling to keep pace with the recent surge in new businesses.

In Montgomery, which had previously struggled to start a business, officials say they’ve seen a nearly 30% increase in demand for business licenses and services since the pandemic began.

“We need to be more comprehensive, and when we do that, then we’re able to help small businesses become viable in the industry because it’s important that we provide them,” said Daniel Koroma, a liaison officer. with businesses for the county. .

“Zero regrets”: Six months after quitting, these workers are thriving

Still, Haltiwanger said, most licenses probably won’t turn into businesses or, if they do, might not stick around. In Virginia, more than 30% of business licenses established in 2020 have already been canceled or terminated, according to State Corporation Commission data analyzed by The Washington Post.

It’s common, though, Haltiwanger said, and such failures often spur innovation. The eagerness of people to start new businesses is a good sign for the economy because as businesses grow they can create new jobs, he said.

“You can’t have our economy without experimentation and without an entrepreneurial spirit,” Haltiwanger said.

Lance B. Holton