Gen Z, Keep Your Day Job. Being Your Own Boss Is Hard.


American work culture often places entrepreneurship on a pedestal. For many, building a successful company where they can be their own boss is the ultimate career achievement. Blame it on “Shark Tank”.

Well, not quite. Focusing on ownership and creating something makes sense given the immigrant fabric of our nation and this general ethic that determines your future dedication and hard work. Of course, nostalgia for the American dream does not account for the existing systemic barriers.

The idealization of work for oneself seems to have intensified during the pandemic. Crowded content on social media features former cogs in the corporate machine who have abandoned their passion projects. Self-proclaimed business gurus exclaim how you too can quit working for the man. According to a 2021 Gen Z segmentation study from Ernst & Young LLP, it’s no surprise that 45 percent of Gen Z members report that they are likely to start their own business someday.

But before you hand in your two-week notice to jump into your boss’s life, it’s important to know what’s bothering you about your current job situation. Does being your own boss really solve your underlying tensions? Remember, employees still have a lot of leverage and may be able to score points on what makes self-employment so attractive. For example, if the flexibility of working from home is sought, this is something that employers are willing to negotiate.

When I was 27, after five years of working as a traditional employee, I decided to become my own boss. As a generally risk-averse person, it took me several years (along with building up a sizable emergency savings fund) to bring myself to bet on me. A lot of making decisions about being your own boss and creating success and stability comes down to knowing yourself. Honestly, it’s not nearly as glamorous as the internet and “Shark Tank” would have you believe.

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How do you deal with uncertainty and stress? This transition often means you never know exactly how much you’ll make each year, which can make it difficult to invest for growth or create a personal financial plan. Do you have the financial resources, time, patience, and management skills to outsource and train yourself, or are you more of a lone cowboy that can stunt growth? Have you been slowly working on your dreams that have proven to be profitable and now you are taking a risk after beta testing? Or are you making a leap without a minimum viable product?

But perhaps the biggest tip for traditional workers: Are you okay with giving up the benefits of being employed? Yes, it may be trying to work for a company, but there are certainly trade-offs.

Let’s start with the obvious. As a traditional self-employed person, you receive a steady paycheck unless you work on commission. Most traditionally employed people receive regular paychecks, which makes it easier to budget and create a financial plan. Access to credit and loans, especially home or car loans, is easier. A full-time job often comes with benefits such as health insurance, employer-matched retirement accounts, paid time off, and parental leave (or a disability plan that may subsidize parental leave). Plus, you’ll likely have access to an IT team to turn to with questions about benefits when something goes wrong with your computer or HR. Even if you climb far enough up the corporate ladder, you may have access to an administrative assistant.

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Maybe only a few of those points apply to you, but let’s talk about taxes. Working a single job makes filing your tax returns a streamlined process compared to starting your own business, especially with dozens of clients sending you 1099 tax forms. Self-employed people pay self-employment tax. The self-employment tax rate is 15.3% in 2022. 12.4% goes to Social Security and 2.9% to Medicare. When you are traditionally employed, your employer pays part of what you owe to Social Security and Medicare.

Let’s just look at Social Security. A person with an employer usually pays 6.2% tax and his employer pays another 6.2%. I’ve paid five times what any previous employer did, because for the past seven years I’ve been responsible for all 12.4% and I’m making significantly more than I ever would have as a traditional employee. Sure, you can deduct the employer portion from your income tax, but it’s still an additional cost to be your own boss.

Outside of the obvious workplace benefits and paychecks, there are emotional and relational benefits that are part of a workplace, such as mentoring. Entrepreneurs can, and definitely should, find their own mentors—but it often takes a lot more effort. It can be more challenging if you don’t live in a city or town with access to networking groups, events, or even a support system for fellow entrepreneurs.

Isolation is another under-discussed and apparently rarely thought-about aspect of moving away from the traditional office environment. Being your own boss can mean long hours and several days of work with absolutely no real human interaction. Depending on your personality type, this can be a dream situation or a horror show.

Personally, I do not regret that I decided to work for myself. However, there are times when I stress about my career path without the benefit of a more linear path laid out. There are moments when I miss happy hours with colleagues or silly conversations in the office kitchen. There are times when I wish I didn’t have to juggle every element of running my business with things that seem significantly higher stakes if I travel there.

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While all of this may sound like a promotional piece for corporate America, it’s not meant to completely dissuade future bosses from packing up their desks and leaving Slack. Instead, it’s a request to sit down with your motivation and calculate the true cost of walking in a country with few social safety nets. The cost of financing your own health insurance alone (especially if you’re over 30) can be a huge financial burden early on in your endeavor.

There are many days when I am deeply grateful for the flexibility I have in my boss. But there are other times when I’m just overwhelmed by the never-ending to-do list and realize that success or failure rests entirely on me. Being slack for a few days means I won’t get paid. On the other hand, I rarely have to suffer through stupid sessions anymore.

More from Bloomberg Opinion:

• Gen Z is much tougher than millennials: Alison Schrager

• Quitting quietly is a fake workplace trend: Sarah Green Carmichael

• Gen Z thinks “money will come back.” Can it be?: Erin Lowry

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Erin Lowry is a Bloomberg Opinion columnist covering personal finance. He is the author of the three-part series Broke Millennial.

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