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


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

Well, not quite. The fixation on owning and creating something makes sense because of the immigrant fabric of our nation and the general ethos that sacrifice and hard work will determine your future. Of course, the nostalgia for the American dream is not the systemic barriers that exist.

The work-for-itself idealization only seems to have intensified during the pandemic. Splashy content on social media shows former cogs in the corporate machine giving up the grind for their passion projects. Self-proclaimed business gurus scream about how you too can decide to work for the man. It’s no surprise that 45% of members of Generation Z report that they are very or extremely likely to start their own business one day, according to a 2021 Gen Z segmentation study by Ernst & Young LLP.

But before you consider giving your two weeks’ notice to jump into a life of being your own boss, it’s important to identify what’s so bothersome about your current employment situation. Will being your own boss really solve your underlying tension? Remember, employees still have a lot of leverage, and they can win concessions on the things that make self-employment so attractive. For example, if it’s the flexibility to work from home that you’re looking for, that’s something more employers are open to negotiating.

When I was 27, I decided to become my own boss after just five years of working as a traditional employee. As a generally risk-averse person, it took several years (along with building a significant emergency savings fund) to allow myself to bet on myself. So much of the decision to be your own boss and create 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 handle uncertainty and stress? The transition often means never knowing exactly how much you’ll make each year, which can make investing for growth or a personal financial plan tricky. Do you have the financial resources, time, patience and management skills to outsource and train someone, or are you more of a lone cowboy, which could stunt growth? Have you been slowly working on your dreams as a side hustle that has proven to be profitable, and now you’re taking a risk after already beta testing? Or are you taking a leap without a minimum viable product?

But perhaps the biggest consideration for the traditionally employed: Are you OK with giving up the benefits of work? Yes, it can be trying to work for a company, but there are certainly trade-offs.

Let’s start with the obvious. As a traditionally employed person, you receive a steady salary, unless you work on commission. The majority of traditionally employed people receive regular paychecks, which make it easier to budget and build a financial plan. It is easier to access credit and loans, especially a mortgage or car loan. A full-time job often comes with benefits such as health insurance, employer-matched retirement accounts, paid vacation time and parental leave (or a disability plan that can subsidize parental leave). Plus, you likely have access to an IT team if something goes wrong with your computer and HR to turn to with questions about benefits. You might even have access to an administrative assistant if you climb high enough on the corporate ladder.

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Maybe only some of these benefits apply to you, but let’s talk about taxes. Working a single job makes filing your taxes a simple process compared to running your own business, especially with potentially dozens of clients sending you a 1099 tax form. Self-employed people pay self-employment tax. The self-employment tax rate is 15.3% in 2022; 12.4% go to Social Security and 2.9% to Medicare. If you are traditionally employed, your employer pays a portion of what you owe in Social Security and Medicare.

Let’s just look at Social Security. A person with an employer will usually pay a 6.2% tax and their employer the other 6.2%. I have paid five times what a previous employer did because I have been responsible for all 12.4% for the last seven years and make significantly more than I ever did as a traditional employee. Sure, you can deduct the employer portion of your income tax, but there’s still an added cost to being your own boss.

Outside of the obvious benefits of the workplace and a paycheck, there are also emotional and relational benefits to being part of a workplace, such as mentorship. Entrepreneurs can and certainly do find mentors – but it often takes a lot more effort. It can be even more challenging if you don’t live in a town or city with access to networking groups, events or even a support system for fellow entrepreneurs.

Isolation is another under-discussed and seemingly rarely considered part of moving away from the traditions of the traditional office environment. Being your own boss can mean working long hours and many days without any real human interaction. Depending on your personality type, this could be a dream situation or a horror show.

Personally, I do not regret the decision to work for myself. However, there are many times when I stress about the trajectory of my career without the benefit of a more linear path laid out. There are moments I miss happy hours with coworkers or silly chats in the office kitchen. There are times when I wish I didn’t have to handle every element of my own business, with what feels like significantly higher contributions when I step up.

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While this all sounds like a propaganda piece for corporate America, it’s not meant to completely dissuade the next crop of bosses from packing up their desks and signing off Slack. Instead, it’s a request to sit down with your motivation and do the math about the true cost of living in a country with so little social safety net. The cost of financing your own health insurance on your own (especially if you are older than 30) could be a big financial burden in the early part of your endeavor.

There are many days when I am deeply grateful for the flexibility I have to be my own boss. But there are others where I’m just exhausted from the never-ending to-do list and realize that success or failure rests entirely on my shoulders. Sleeping for a few days means I don’t get paid. On the other hand, I rarely have to suffer through troubled meetings anymore.

More from Bloomberg opinion:

• Gen Z Has It Much Harder Than Millennials: Allison Schrager

• Quiet Quitting Is a Fake Workplace Trend: Sarah Green Carmichael

• Gen Z Thinks ‘The money will come back.’ Worth it?: 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. She is the author of the three-part “Broke Millennial” series.

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