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Covid-19 taught Americans how to let go of their stable salary

Millions of Americans quit their jobs during the Covid-19 pandemic. Some retired early. Many have also become part of the flexible power to grow in the US economy. Day trader.

According to the Ministry of Labor, the number of unincorporated self-employed people in the United States reached 10 million in February, 400,000 more than when the pandemic began, and surged to 10.3 million last summer.

Those who are willing to give up on salary safety say that there are risks and rewards, and the most effective specific strategies. They can pursue passion, work as long as they like and improve their quality of life. You can do that. Because of the larger savings accumulated during the pandemic and the hot employment market that can act as a cushion if their solo path goes wrong.

However, some may find that savings are not that great after a period of market turmoil that began earlier this year and was accelerated by Russia’s invasion of Ukraine. Rising inflation is also eating up the cushions that have accumulated since 2020, and freelance life may make it possible. Is more difficult. Giving up a stable paycheck may not seem as economically attractive as it once was.

45-year-old Lisa Camerlengo experienced such life rewards and pitfalls. After working for her consulting firm for nearly 20 years, she quit her full-time job and launched her own brand strategy and communications company last July. She said she saved money. She was working clothes and commuting, but her rent rose about $ 200 and her food and gas costs soared. She also said she is currently paying more for medical and dental insurance.

“It’s hard to save because of the steadily rising cost of living,” said Camerlengo, who lives in central New Jersey.

Currently, self-employed people are not the only ones living without a stable salary. Compared to the previous period, the US workforce has increased by 4.2 million. That is, they are not employed and are not looking for a job. According to the Ministry of Labor, it’s a pandemic. The company’s salary is also reduced by 2.1 million. These moves are exacerbating labor shortages in some industries. There are still more than 11 million unresolved jobs that employers cannot fulfill.

The increase in the number of self-employed people during the pandemic made it more difficult for companies to fill open positions.


Photo:

Joe Raidle / Getty Images

Faced with an unexpected challenge after retirement, 49-year-old Wayne Lo spent most of his career advising and managing wealth for ultra-high net worth families. At the beginning of 2020, he began to consider applying his skills to his portfolio.He calculated that he had enough money to quit his job at Citigroup Ltd,

He worked for 17 years. He left in June 2020.

“I realized this was feasible with a little cost savings,” he says.

He doesn’t miss 11 hours of work and says his portfolio is functioning well despite the recent market turmoil, but when he and his wife started looking for housing in the New York area. I ran into a problem. ..Homes in cheaper areas of the United States

“They want your wealth to be this quirky number. The financial system doesn’t know what to do with early retirees,” he says.

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Malcolm Hollensteiner, Head of Mortgage Production at Sandy Spring Bank, Maryland, said most mortgage lenders require self-employed mortgage borrowers to file a two-year tax return to ensure consistency and reliability. I said.

“The mortgage lending platform has historically considered self-employed people to be more complex borrowers and potentially less successful borrowers because of the nature of their income.” I did.

Of course, the factors that encouraged many to turn to labor market bystanders could bring them back to the traditional 9: 5 work life.

Some Americans quit their jobs because of better wages, or because of childcare challenges and other hurdles, while others have seen soaring market profits, soaring house prices, and 1,200. Dollars, $ 600, according to Ministry of Commerce data, the personal savings rate (percentage of disposable income households each month) surged to a record high of 33.8% in April 2020 and continued to rise until last spring.

The American workforce is changing rapidly. In August, 4.3 million workers quit their jobs. This is part of what many call “mass layoffs.” Here’s where the workers go and why. Photo Illustration: Liz Ornitz / WSJ

However, as market turmoil and inflation pose new challenges for nest eggs, the rate is declining, dropping to 6.4% as of January.Michael Rielsch, Head of Advice and Planning for Wells Fargo,

Ted Halpan, a financial planner in Ashburn, Virginia, said high-interest credit card debt needs to be repaid in advance. Joey Casoraro, a financial planner in Wayne, Virginia, said he needed to build a cash reserve that would cost at least three to six months.

Lindsey Swanson, financial planner in Whitethorn, California, said:

The unpaid worker from the end of May is Landon Taylor, a junior high school teacher in Denton, Texas, who decided to resign and take a year’s break at the end of the school year.

During the pandemic, the number of Etsy sellers surged.


Photo:

Gabby Jones / Bloomberg News

The savings accumulated by Mr. Taylor and his wife help him maintain his family for the year, along with the hundreds of dollars he earns each month to lead a local band and help his friends in a weekend logging job. He said it should be enough. He will explore other options for making money, such as renting a spare bedroom in the house or selling household items online.

“I feel like this is an opportunity for me,” says 39-year-old Taylor. Stress about working for someone else? “

Some businesses benefit from all these new people who are willing to work without a consistent salary. By the end of 2021, the number of sellers on Etsy.com, an online marketplace focused on crafts that attracted more attention during the pandemic, surged from 2.5 million to 5.3 million. 2 years ago. At LinkedIn, new features that help users find short-term projects are attracting self-employed people in the areas of marketing, design, engineering, illustration, and video editing, said Matt Faustman, product leader at LinkedIn. increase. The increase in marketing and design services has increased by more than 50% month-on-month since October 2021.

“Many people think that I can completely transition to working as a freelancer or it may take a little extra time as I don’t have to commute. Apply them with my skills and part-time methods. I will, “says Faustman.

Grant Maddox learned this lesson when he launched his financial advisory company in October after working as a salaryman at another company. His company’s billing is primarily quarterly, and .. Maddox needs to carefully track cash flow and grow the dollar. I know his salary can fluctuate depending on the number of clients.

“Stress is definitely there,” he said.

Maddox, 29, creates an item budget for monthly expenses such as groceries to make sure there is enough quantity at the end of each quarter. If she spends $ 500 on groceries instead of the $ 600 budget per month, she will transfer $ 100 to her savings account. If you exceed your budget in one category, for example, stop buying new clothes and look for ways to save money elsewhere.

Anna McCorby, 36, also prepared before quitting her full-time architect job last summer. She saved about 6 months. She currently works part-time with a small company and a non-profit organization called the River East Design Center.Started in Washington DC

After that, she adapted her life to less income. She cooks at her home, subscribes to her one streaming service, and does her own hair and nails. On Friday, she may go home on Google “for free what you can do near me this weekend.” She hikes and visits free museum exhibits. She can’t afford to eat out as much as she’s used to, but she said her trade-offs are worth it.

“Covid-19 has become more enthusiastic about pursuing something that will satisfy me,” McCorby said.

Abbey Regan, 42, also made a sacrifice after starting a part-time home physiotherapy business. Her increased autonomy resulted in a 90% wage cut compared to her previous physiotherapy job she lost in May 2020. She had the opportunity to sign up for another site owned by her employer, but she declined.

“I didn’t feel like working for anyone anymore,” said Regan, the mother of three young children in Melbourne, Florida.

She and her husband decided to live primarily on the salary of a software engineer. Families can save enough on childcare costs without making financial sacrifices. Says Regan, who works about 10 hours a week.

Leon Ondieki, who has 1.6 million followers on TikTok, has no plans to rely on salary.


Photo:

The Wall Street Journal Kendrick Brinson

Some say they make a living differently before they start their careers. 19-year-old Leon Ondieki is studying for a degree in Management Information Systems from the University of Georgia. According to him, he’s paying college and saving on Tesla Model Y by creating content for 1.6 million TikTok followers rather than a backup plan.

Ondieki is currently devoted to planning, shooting, editing and posting videos for over 40 hours a week. In this video, you’ll usually hit a passerby on campus or in a shopping mall, take a trivia quiz, or play a weird game with a small bounty. He says the combination of paid sponsorship from the brand and the Tik Tok Creator Fund can cost as much as $ 30,000 a month.

“I can’t see myself working for the company or anyone else,” says Ondieki.

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Write to Julia Carpenter at Julia.Carpenter@wsj.com, KathrynDill at Kathryn.Dill@wsj.com, VeronicaDagher at veronica.dagher@wsj.com

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