Great Resignation, gig economy bring a surge in new DC businesses

Great Resignation, gig economy bring a surge in new DC businesses


Call it Great Hustle.

Despite unemployment and concerns about business closures early in the coronavirus pandemic, the number of people wanting to start their own businesses in the DC area has risen, a Washington Post analysis shows.

Even more than 1,000 businesses in sectors including food, construction, entertainment and retail jobs disappeared during the first quarter of 2020 in the DC metro area, the number of new brick and mortar businesses will continue to increase in the next few quarters and exceed the number of closings, Bureau of Labor Statistics. data displays. That growth — much of which came in education, health care, construction and finance — doesn’t include online shopping, which economists say has also grown.

Covid shut down downtown DC businesses. Many also opened – in the villages.

Combined, the District, Maryland and Virginia saw applications for business licenses jump from 176,000 in 2019 to 219,000 in 2020 and 262,000 in 2021.

The explosion was a surprising result of the pandemic, experts said, as new business owners came out looking to increase cash flows, switch interests to become professionals or start new businesses.

This was the case for Teresa Padilla and Geraldine Mendoza, who lost their jobs as a baker and a restaurant manager, respectively, after the outbreak ended in March 2020. Companies that disappeared in the months after the outbreak spread across the DC metro area, according to data of BLS.

But in the summer of 2020, Padilla and Mendoza started selling sandwiches from a Capitol Heights pop-up kitchen and food truck, they found success, and then they got their own house. In October 2020, they opened their brick-and-mortar restaurant, Taqueria Xochi, a traditional Mexican restaurant in a region called Xochitecatl ruins in central Mexico.

Padilla now serves as executive chef and Mendoza as operations manager. The business grew quickly, Mendoza said.

“It happened out of the blue and naturally,” he said. “Fortunately, we had many friends who told us about our food in the town. And that’s what gave us the confidence to push and say, ‘Okay, this is going to work.’ “

An increase in local businesses, experts say, could lead to an increase in innovation and a shift in workplace culture, forcing companies to reassess their relationships with workers, who may have left their jobs for new jobs or self-assessments.

“As time went on, we realized that the pandemic had led to economic restructuring,” said John Haltiwanger, a professor of economics at the University of Maryland in College Park. “I think we were surprised by [application growth] because at the beginning of the epidemic, our economy was very high – but it started to change. “

During the first year of the pandemic, DC leaders expressed growing concern about the low number of business licenses that were filed — which could lead to less business tax revenue in the city.

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

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New habits began to develop. Among them: Many workers gained valuable hours back into their days when they started working from home in early 2020.

“The pandemic has given us a lot of time and energy,” said web developer Nameer Rizvi, who lives in Ashburn, Va., but works in D.C. “My commute to the office was two hours there and two hours back. So having four hours of the day back, it really helped.”

The new time allowed Rizvi and his partner, Naomi-Grace Panlaqui – and the creator of the site – to follow the idea that they planted at the beginning of 2020: a program that combines lists of concerts from. on DC

Rizvi and Panlaqui called DC Music Live. For now, they said, they are still self-employed and working full-time while negotiating with the program, which is still in its infancy and unprofitable.

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Experts say the pandemic has fueled the rise of self-employment, which has been fueled by the rise of Etsy, Uber and Lyft. A 2019 US Census report published by a group of economists said that self-employment had held a steady share of the labor force for nearly 50 years – until rising within the last decade.

“I think we’re seeing, in many ways, an economic boom that’s been expected for a long time,” Haltiwanger said. “I think it really started the epidemic, maybe because we realized we could do it.”

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DC’s Small Business Development Center, located at Howard University, assists potential business owners with introductory classes in areas such as financial literacy, business development and international development. In 2019, Executive Director Carl Brown said, the center helped 800 people. The following year, this number doubled, to 1,640, and then hit 1,665 in 2021, he said.

“I’ve never seen anything like this,” Brown said. “There is no sign that this is slowing down.”

Some in the area, like DC resident Will Deatherage, started their own businesses because the pandemic made it difficult to find work. Deatherage bound Catholics to work – a group of media advisers – after his studies disappeared when the pandemic lockdown began.

“I had about 10 or 15 job applications that I was looking for,” he said. “Everything was going very well. I was getting a lot of callbacks, a lot of interviews, and suddenly the epidemic hit and every opportunity for this job – gone. A decrease in employment, a decrease in the budget. Total financial risk.

He and his team are now helping clients with web design, video and podcast production, art and music. Mentoring college students and providing them with career opportunities is also important.

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Some of the new businesses were part of an epidemic that also changed the workforce: the explosion of layoffs. From April 2021 to May 2022, more than 4 million people across the country were displaced. their jobs each month, the highest rate recorded since 2000, according to BLS data.

Elizabeth O’Donnell was part of the unemployment epidemic. O’Donnell, 31, was a DC Public Schools teacher for seven years, but when her daughter Aaliyah was born at seven months old in 2020, O’Donnell said she was denied paid leave. (DCPS did not respond to a request for comment.)

The incident pushed O’Donnell to leave DCPS and found Aaliyah in Action, an organization that provides support to families after the death of a child, of which she also serves as CEO.

If employers or industries don’t support workers, O’Donnell said, “people leave the job, or they leave and find something else that they feel is more important.”

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Local governments play an important role, Montgomery County business coordinator Daniel Koroma said, in creating an environment that provides support for new businesses — with tools like startup capital, office space and software that help business owners run their businesses. But some local areas and business development hubs, Montgomery among them, are struggling to keep up with the recent influx of new businesses.

In Montgomery, where it was previously difficult to do business, officials say they are seeing a nearly 30 percent increase in demand for business licenses and services since the start of the pandemic.

“We have to be understanding, and if we do this, then we can help small businesses to succeed in this business because it is important that we give it to them,” said Daniel Koroma, who is the head of business coordination in the government. .

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However, Mr. Haltiwanger said, many licenses do not turn into businesses or, if they do, they do not follow through. In Virginia, more than 30 percent of business licenses scheduled for 2020 have already been revoked or revoked, according to state Corporation Commission data reviewed by The Washington Post.

This is common, however, Haltiwanger said, and such failures often drive innovation. The willingness of people who want to start a new business 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 trying and doing business,” Haltiwanger said.

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