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Will two parallel economies develop in 2022?

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A trend toward supporting smaller businesses could have significant implications for farmers.

I’ve been reading a lot on LinkedIn about the so-called “Great Resignation,” a term coined by Texas A&M University professor Anthony Klotz to describe current employment trends in the U.S. As Abhinav Chugh of the World Economic Forum explains: “Managers are now navigating the ripple effects from the pandemic, as employees re-evaluate their careers and leave their jobs in record numbers.”

Some 4.4 million Americans, or 3% of the total workforce, left jobs in September, according to the U.S. Department of Labor. But they’re not collecting unemployment; the number of Americans on state benefits recently fell below 2 million for the first time since the pandemic began, and layoffs around the U.S. have fallen to their lowest level since 1993.

So instead of a Great Resignation, it’s more like a Great Migration. Where are workers going? Some are finding refuge by joining, buying or starting their own small businesses. The payroll giant Paychex reports that average hourly earnings at small businesses increased more than 4% in November, to $29.88, the highest wage ever reported by the decade-old survey.

For some, the attraction of a home-based business – or at least a business closer to home or with more flexible hours – is tied to the explosion in homeschooling. Fully 19.5% of U.S. school-age children were taught at home by choice as of May, up from 3.3% before the pandemic, according to statistics cited by the Home School Legal Defense Association. Given the state of public education nowadays, I think that number will keep rising as people find jobs that will accommodate the activity.

Along with luring workers, small businesses – which still represent 95% of U.S. employers – are attracting customers. According to a recent QuickBooks survey, 93% said supporting small businesses is more important than ever because of the pandemic’s impact. “This willingness to try new businesses dovetails nicely with increased consumer awareness around the importance of shopping small, creating a massive opportunity for small businesses,” noted QuickBooks, an accounting software package developer.

It’s not hard to understand why. Major big-box stores and shopping apps certainly have made our lives easier, but they made loads of money last year while most small businesses were locked down. For every dollar spent at a small business, 67 cents stay in the community, according to American Express. So communities want to support these businesses now that they’re reopened.

'Saving society'

Hannah McDonald, a contributor to the Erie (Pa.) Reader, goes as far as to suggest small businesses could be instrumental in "saving society." She notes these businesses form "networks" in cities and towns.

"These networks are far from insular," she recently wrote. "Shop owners, managers, and employees have the opportunity to further strengthen and diversify economies.

"One store doesn't carry what you're looking for? More than likely, the individual running the shop will have a recommendation as to where you can find the product you're in search of at a neighboring business," she wrote. "And chances are, the business they recommend will be locally owned as well."

The resulting distribution of wealth could make local economies stronger, she argued.

I believe the trend toward supporting small businesses is part of a sort of decentralization of the economy that could have significant implications for farmers, who could take advantage of new distribution channels. Direct sales that skyrocketed during the pandemic could continue to present income opportunities as supply-chain issues prompt consumers to seek out local food sources.

In time, Main Street businesses can rebuild for themselves a sustainable ecosystem that operates as a sort of parallel economy to the world of Wall Street, Big Box and Big Tech.

TAGS: Business
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