The COVID-19 pandemic gave birth to a remarkable rise in business startups during 2020 and 2021, primarily in the e-commerce industry. A rise sparked by the new ‘at home’ lifestyle, with noticeable growth in sectors like home decor, food delivery and virtual entertainment.
As per Economist John Haltiwanger, this pattern doesn’t just represent survival strategies, but signifies a considerable shift in the American economy towards service-based sectors like bars, restaurants and fitness centers. The majority of the American workforce now seems to favor interactive, creative roles rather than traditional labor-intensive tasks.
We find that over the last four years, the growth rate for new business ventures has increased by almost 60% annually compared to the three years pre-pandemic. This growth is largely due to a change in work culture that highlights the importance of flexibility and remoteness. Consequently, we’re seeing a surge in entrepreneurship, targeting various industries and significantly diversifying our economy.
Pandemic fuels US startup surge
In fact, one in four startups are tech or software development centered, displaying the growing prominence of digital solutions in our society.
Interestingly, the country is witnessing an influx of startups across all sectors and regions. This wave of proprietorships and growth-centric startups has the potential to fuel new job opportunities, even in sectors previously considered as underrepresented. This offers a bright landscape for our economy filled with diversity and potential growth possibilities.
In particular, a notable uptick in startups within traditionally underserved, minority communities has been observed. This shift has implications for reducing the economic inequality faced by these communities, fostering financial inclusion and leading to social mobility.
This startup boom brings an urgent need for supportive policies aimed at nurturing and strengthening new businesses, aiding economic growth, and reducing societal inequalities. Haltiwanger Views this upsurge in startups as a runway for increased national productivity, technological advancements, improved employment rates, and overall economic resilience.
As this entrepreneurial wave spills across various sectors, it kindles hope for a transformative impact on the U.S. economy. While still navigating uncharted waters, the prospect of continued economic growth fuels optimism for the future of the U.S. economy.
