This Spike of New Businesses is a Doozie, on Several Levels

People are massively striking out on their own. But new businesses with planned wages have been getting scarcer since 2007.

By Wolf Richter for WOLF STREET.

Early on in the Pandemic, as 30 million people lost their jobs and gigs, the number of new businesses exploded higher, perhaps fed by stimulus money and the extra $600-a-week in unemployment benefits that allowed people to strike out and go after their dreams, or fed by desperation, or fed by new opportunities that arose and that some people saw and grabbed.

Starting in late May, according to the Census Bureau, weekly business applications began to surge, and in the week ended July 18, at 123,000, were up 91% from the same week last year. They have now tapered off but continue to run at a hot pace. In the week through November 21, which the Census Bureau released on Wednesday, business applications, at 83,740 were still 33% higher than in the same week last year (chart shows the three-month moving average of weekly business applications):

Since the end of May, there have been 2.48 million new business applications, up 52% from the same period last year.

The Census Bureau’s weekly data on “business formations” is not survey-based. It’s based on applications by new business entities for a federal “Employer Identification Number” (EIN), the taxpayer identification number by which the IRS tracks businesses for tax purposes. When I started my Wolf Street media mogul empire, I first set up a corporation, then the corporation applied for an EIN (my bank did that), and a few minutes later, using the new EIN, the bank set up a bank account for the corporation.

The Census excludes from these weekly EIN applications those that are not related to typical business formations, such as EIN applications “for tax liens, estates, trusts, or certain financial filings, applications with no state-county geocodes, applications from certain agricultural, public entities, and applications in certain industries (e.g. private households, civic and social organizations).” What’s left becomes the data for business formations, as depicted in the chart above.

But there are also a large number of exits because it’s tough out there, and the risks are high, and it often doesn’t work out for small businesses. Even in a good year, the net total number of new small businesses minus the exits of existing small businesses is much lower – and falls into the negative during tough times, with exits outnumbering startups, such as during the Financial Crisis.

Applications by businesses with a “high propensity” of having a payroll.

Based on information in EIN applications, the Census Bureau estimates which of those businesses have a high propensity of having a payroll (“High-Propensity Business Applications” or HBA). These businesses are the hoped-for jobs-creating machines.

In the latest week, there were 28,980 HBAs, still up 23% from the same week last year. At the peak in mid-July, there had been 41,380 applications, up 71% from the same week last year. The spike in application started in the week ended June 13, and over the period since that week, applications have surged 42% year-over-year to 803,720.

But that huge spike over the summer only brought these high-propensity business applications back to where they’d been before the Financial Crisis in 2007, with 12 years of drought in the middle, and they’ve now dropped well below that level again:

Applications by businesses with “planned wages.”

This is a step further. Within the HBAs, the Census Bureau splits out which businesses already have a planned date for paying wages (“Business Applications with Planned Wages” or WBA), meaning they have people and funding in place, and they’re ready to hire and grow.

There were 10,120 applications by these businesses with planned wages in the latest week, up 21% from the same week last year. The surge in these types of businesses started in the week ended June 13. Since then, businesses of this type have filed 275,130 applications, up 33% from the same period last year.

Alas, that magnificent surge in applications was just a minor uptick, compared the number of business applications with planned wage dates before the Financial Crisis. These are the businesses that are deemed to have a good chance of turning into significant employers, and the drought that started in 2008 has effectively never ended:

Applications by businesses with a low propensity to create jobs.

Total business applications minus high-propensity business applications would be the businesses with a low propensity to create employment – businesses that have a good chance of remaining small, with just one employee, or maybe just a few employees. This is the most common type of business in America. And many of them don’t make it. Others allow their owners to do something fulfilling, be in control, draw a decent income, and enjoy the tax benefits that come with it, and they do important things, but beyond feeding their owners, they just don’t create a lot of jobs.

In the latest week, there have been 54,760 EIN applications by these types of businesses, up 39% from a year ago. The boom in applications took off in the week ended May 23. Over the months since then, there have been 1.68 million EIN applications of this type, up 58% from the same period last year.

Turns out, this type of business application – businesses with a low propensity to create jobs – has been soaring for years, having doubled from 2007 to 2019, and having spiked further since then:

What has happened during the Pandemic in terms of business applications and their projected propensity to create jobs, and what happened in prior years, and how the environment for new businesses has changed since the Financial Crisis, becomes clearer when viewed together – businesses with a low propensity to create jobs (red line), businesses with a high propensity to create jobs (green line), and businesses with planned wages (blue line):

PPP-loan fraud not involved in this surge of EIN applications.

Businesses that applied for the forgivable Payroll Protection Program loans had to submit documentation of wages paid over specified periods. The PPP program ended on August 8. The dates were structured so that it would be impossible to create a business entity after the announcement, pay wages for long enough to qualify for a PPP loan, and then apply for a PPP loan. Applicants had to submit historical wage documentation to the lenders whose job it was to sort through it.

Fintech companies and online lenders also piled into PPP loans, and apparently anything went with some of them. A Bloomberg analysis in October found that these companies were connected to 75% of the PPP fraud cases alleged by the US Justice Department, though they only arranged 15% of the number of total loans.

But the fraud didn’t require an EIN because these lenders didn’t check anything: “In many cases, a simple Google or state records search would have suggested an applicant’s business didn’t exist or was dormant.” Other companies “weren’t in good standing with the secretary of state.” In other words, these types of cases didn’t impact the EIN data here.

Most of the large banks prioritized their existing customers in order to avoid getting tangled up in fraud allegations. And these existing businesses already had EINs.

In short, there was plenty of shady stuff going on – but it didn’t require applying for an EIN. And with the PPP dates and payroll periods being structured the way they were, applying for an EIN after the announcement of the PPP would not have been helpful in committing PPP fraud. There were easier and more effective ways of doing this. So PPP fraud likely had little impact on the EIN applications.

The good and the not-so-good.

That people strike out on their own and start a business is a great thing and a testimony to the American spirit. That they’re doing it in historic numbers during the Pandemic is even better. That many may be doing it out of desperation is the dark side.

It may be a testimony of how tough the job market has become. Some people may not see any other options. For example, experienced and knowledgeable workers, permanently excluded from jobs by ageism, start their own one-man or one-woman show. And that’s great. If they can make it, they may be the happiest with their worklife they’ve ever been. But for many people, it’s very tough to pull off.

The disconcerting part is the thinning out over the years of business startups with a high propensity to create jobs, or with already planned wages at the time of the EIN application. This flies in the face of all the hoopla about the relatively minuscule number of startups with multi-billion dollar “valuations” that garner all the attention in the media.

Stimulus & extra UI dried up. But 16% of “proprietors’ income” in October was PPP money & Pandemic farm aid. Read…  The State of the American Consumer: Free Pandemic-Money Runs Low

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  162 comments for “This Spike of New Businesses is a Doozie, on Several Levels

  1. WES says:

    If you are too old to get a job, how does starting a business or company magically get you paid work?

    • cas127 says:


      That is a very good question.

      One answer is that it is much easier to go through the procedures of biz creation (incorporation, taxpayer ID filing, etc) than it is to create a sustainable business at all (people good at the work itself tend to *loathe* sales and its endless smoozing and rejection).

      So a *ton* of those 15 million, no employee businesses may flicker out of existence within a yr…yr after yr.

      My guess (somewhat supported by IRS and PPP stats) is that 5 million is much closer to being the number of semi-sustainable, multi yr businesses in the US.

      • WES says:


        Your thinking matches mine.

        Put out to pasture at age 47, I was too old. I got married late at 40 and my wife never worked.

        Everyone said I should start a business.

        I didn’t start a business because I couldn’t figure out how adding another layer of complexity to my life, made any sense.

        (I guess in a way, I did start a “family business” of not paying any income taxes!)

        Instead I became a stay at home Dad, raising my two young children who’s only memory is that I have always been at home. Now age 24 and 20, joyfully they are still living at home.

        We enjoyed long summers at the family’s modest island cottage.

        I am almost 68 now.

        I don’t regret my choice.

        • Mira says:

          On a daily basis I see men wheeling a pram past my house, cycling with a kid or 2 in tow, contained in a small bike trailer gadget or a draggle of dad on his bike & 1, 2, 3, kids riding behind & it looks great .. many men make great nurturers.. & the Mrs. is off earning the big bucks .. well done dad.

        • Mira says:

          One afternoon, a dad & his little girl passed, “But you said we could,” she cried. “I know, but we haven’t got time today,” he replied & she howled. so .. he sat on the footpath & face to face they discussed the fact that he was being fair & the sometimes ..”
          It was lovely & funny to listen to.

    • Wolf Richter says:


      You may be aged out at 55 or even at 50 not because you are too old to do a job, but because you’re 20 years older than your potential boss, and that’s a no-go. Age discrimination is REAL, particularly in Tech. It’s accepted and part of the program. But you may be perfectly able to excel at a job till age 79 or 85 or whatever. So you should monetize your experience and knowledge and have a blast doing it by going out on your own once you get excluded by age discrimination. It’s not easy, and not everyone can pull it off, and it may take a lot longer to get off the ground than expected, and it’s not everyone’s cup of tea.

      Age discrimination is a terribly common thing. It’s essentially standard procedure. Yeah, every major company has a token old guy somewhere that’s being held up as sign that they don’t discriminate by age. So people need to be prepared for it.

      • WES says:


        You are correct about the ages of the bosses who decided I was too “old” at 47!

        Late 20s early 30s. I was the second oldest in my robotic engineering department!

        As noted in my reply to cas127 above, I did strike out on my own!

        But not in any conventional way!

        I wanted to be my own boss!

        I chose to stay home and raise my 2 children!

        • Wolf Richter says:

          That’s a great choice. Not everyone can afford to do that though.

        • Paulo says:


          47 is pretty young if you ask me. At 68 I am sure your aching bones remind you that often enough. :-)

          Those that discriminate against someone who is older simply display their own ignorance, and/or insecurities.

          I am sure there many many people on this site who have had the unfortunate luck to have worked for someone not fit to carry their suitcase. It does make for a long day.

          One thing I have noticed is that sometimes people are just dinks if they think you are under their control. Nice you could walk away from it.

        • Mira says:

          Years ago a working mother on ABC radio told how ..
          “All he has to do is say it & she obeys without any fuss, he has come kind of magic happening.”

      • Cas127 says:

        One thing about the idiocy of age discrimination…it empowers companies to make the same mistakes…over and over…since the people who have been to the rodeo…are canned/not hired…just before the next one rolls into town.

        In other words, a *lot* of historical knowledge/perspective is lost.

        You have to wonder if this isn’t playing a role in companies bidding up asset values to idiotic heights…because few in management have ever lived in a non ZIRP environment.

        • WES says:


          I saw and suffered from that repeatedly!

          I called it change for changes’ sake!

          The young bosses make changes hoping to gain something for nothing!

          “Nothing for something” is exactly what they got!

          What surprised me was none got fired for it!

        • Kenny Logouts says:

          I left an SME to go it alone.

          My boss started wearing a black polo neck, dressing like Steve Jobs did in his later years, despite knowing very little about him (or even how to pronounce his second name lol, jobes)
          And generally just being a pain in the arse who wouldn’t listen to experience.

          I now have clients who use me exactly because of my experience.

          Finding clients is hard work though.

        • Joe Saba says:

          age discrimination is rampant in big companies with so called HR depts
          HR is really gate keeper to KEEP EMPLOYEE COSTS DOWN
          which is why I went to contract work
          figured if they never intended on me getting the match to 201k plan then I might as well get paid handsomely(in cash) while all the dot bomb babies took fake paper called stock options

          now I have 3 LLC’s(more to come hopefully) as I use the warren plan for tax purposes

        • polecat says:

          Yes. Nowadaze, they just shoot for the Moon with a minimum of backup standards, without the legacy engineering to get safely back to Earth .. and are surprized when they crashland … with Fed GroundCONtroll offering a Solid to any and all rocketing boosters .. T-minus the functional O-rings of course!

          .. leaving us antlike speck taters to cleanup the mess.

      • Sir Eduard R. Dingleberry III says:

        I’m a 53-year-old tech worker in Seattle and it has often been painful to have these “smart idiot” young people as bosses. (I don’t mean to sound derogatory but I’m not sure what else to call them. They know everything about tech and very little about life. And the only mature ones tend to be from foreign countries.) I got laid off during the pandemic because the old guy is always a target. So I sat in my basement coding/interviewing 10-12 hours a day until I got a new job. Took 2 months. My new boss is 45. A grownup. I am so happy. Not sure what I will do when I get put out to pasture.

        • Rg says:

          “Smart idiot”… we used to call it “arrogant ignorance.”

        • Mira says:

          When it rains heavily my landline cuts out, I call Telstra & a guy come to fix it, the problem is the “junction/connection” two streets down. Each heavy downpour I called at least once a year, year after year.
          Around year 13 I asked the Telstra man. “Why does this keep happening & why can’t it be fixed.”
          “It can but the bosses don’t let us come for the half day to get it done.”
          It was a money saving method of providing service according to Telstra.

      • Beardawg says:

        Got (effectively) fired from my 3 career white collar jobs at 41, 50 and 51. Did not go back to the trough since it seemed pretty clear I could not follow rules or work for other people.

        Started 5 LLCs between ages 37-57. Retired at 51 (7 years ago) and self-employed. Do not make what I used to make but happier than a pig in S***. Will never work for the man again. Have tried to free others, but rat race debt slavery is powerful.

        • Paulo says:

          Amen, Bear.

          I always had some eff U cash squirreled away and retired at 57. I think I was treated well at work because I did my best, but was also willing to walk and smile at the same time. I took the lesson from an older co worker. One day he was getting some shite at work and he told the boss he was now on a 30 day plan. She asked, “Just what is the 30 day plan”? He replied, “If the bullshit continues I give you my 30 day notice and will retire, right after I use 30 days sick leave”. And that was the end of that! She backed off and he retired anyway….just because. He had enough of it.

          The secret is not to be in debt if at all possible. When you’re young it is unavoidable, but by the time you age you have to be able to back them off.

          Plus, there are indeed real workplace psychopaths who often rise to management. If they smell blood in the water…. I’ve worked for one for sure. There was absolutely no doubt about it.

      • David Hall says:

        As people get old they may start to suffer mild cognitive impairment. They need lens implants after getting cataracts. I was at a 55+ community pool and one person told of having an artificial knee, another told of having two artificial knees. Another has a bad back. The body weakened with age. Some people can not work in their seventies if they wanted too. Employers would rather train young workers.

        • Wolf Richter says:

          David Hall,

          You just gave us a perfect example of age discrimination, listing some of the silly prejudices that are used to rationalize age discrimination.

          You don’t need your original knees to use your brain in an office-type job. Any knee will do. Or no knee. You might need your fingers to use a keyboard, and your eyes, but to use your example, cataract surgery is no big deal these days, it’s done on an outpatient basis, and works very well, and a day or two later you’re back at work, with great vision (if the lens is for distance vision, you might need $25 reading glasses). Serious vision problems are different, and they can happen at any age, and some people are born with them — but cataracts are not a debilitating vision problem these days because they can be fixed.

          And this, “As people get old they may start to suffer mild cognitive impairment,” takes the cake. That doesn’t happen at 50 or 55 or even at 65. Sure there are people that are ill, but there are people who are ill at 30. I’ve met lots of young people with what seemed to be pretty severe “cognitive impairment,” based on how they acted, what they said, and how they performed.

        • RightNYer says:

          Wolf, exactly. I’ve had many family members go through cognitive impairment, and without exception, it didn’t start until after 80, at the earliest.

          How many 80 year-olds are even looking for office type jobs anyway? I’ve seen some do things like work at Walmart as a greeter just to have something to do. But that doesn’t require much cognitive ability anyway.

        • MonkeyBusiness says:

          Young workers are easier to fool. They don’t know their worth. Give them some “free” food and top it off with slogans like “Making The World A Better Place”, and you can get them to destroy the world with fervor.

          Talk about cognitive impairment.

        • John says:

          That’s just horsec**p. I’m in my early 50s, building my 4th tech startup while working full-time for a $2B robotics company. Tip: It’s got nothing to do with age. For instance, I’ve run into a lot of 20-30 yr olds who are mediocre to C-grade at best / huge performance problems. In all these outfits, HR is clueless and so are many hiring managers.

        • CRV says:

          How is cognitive impairment worse than not having any life-experience, job-exprience, or being ‘arrogantly ignorant’?
          Every age-group has it’s pro’s and con’s.
          When i was young, some wise dude told me why older people seem to work less hard: they don’t make so many mistakes any more and therefore don’t HAVE to work hard to put right those mistakes.

        • roddy6667 says:

          Physical impairments like the ones you mention are a problem if you unload trucks by hand or fly a commercial airliner. For most jobs, no. I have trifocals and bad knees and bad back. In July I drove from LAX to CT to avoid flying. It was a piece of cake. All the people I know half my age can’t do this. I’m 72.
          And get off my lawn.

        • Right. Cuz being young doesn’t come with ANY cognitive impairment.

      • Lisa_Hooker says:

        At 50 I was hired into a Fortune 50 company to do software engineering after 25 years of self-employment. I was eventually let go after 12 years and 4 promotions (ended at Senior Project Manager) when the entire division was shut down in late 2009 (GFC). When you are older the issue is to bypass Human Resources (an oxymoron if there ever was one). I understand that is not easy to do these days. It wasn’t easy then.

      • sfgjf says:

        The exception is Presidential candidates this cycle

      • Mike says:

        Age discrimination may have changed a bit in the age of the virus. Work from home, now commonly available in tech, probably helps mask those obvious differences all other things being equal.

      • Morty Mc Mort says:

        True Wolf – our experience indicates that the failure rate for new businesses is in excess of 95% in the first year.
        The Culling process is brutal.
        We work with a range of organizations that help create systems and disciplines that improve the odds..
        With so much free Education on line.. start learning and never ever stop..
        You can find a niche.. grow.. and never ever look back..

    • polistra says:

      In some of these cases the business may be a gig-ification of a wage job. The corporation can’t justify keeping a fulltime job but still wants to use your services, so you become an “independent” contractor with just one client.

      • Olivier says:

        “so you become an “independent” contractor with just one client.” In some countries that may be illegal. Germany for instance has the concept of Scheinselbstständigkeit.

        • Thomas Roberts says:

          It’s extremely common in America to be such an independent contractor. And only work for one company. It helps them avoid giving you benefits and saves them money. Sometimes, like in the case of Uber, it helps avoid regulations. These not really independent contractors are the most likely cause of all the new “businesses”.

          It’s worth noting that in many circumstances, it’s not actual legal in America, but, that doesn’t stop it.

    • George says:

      When your over 45 it extremely hard to get a good corporate job, and when you get over 50 its is virtually impossible. That is also not counting the newbie HR millennial that hate older people and actively discriminate to the point of laughter when they ask you an illegal question about your age through tactics like (“when did you graduate high school”) at your interview. They knowingly broke the law but didn’t care. SO yeah I got forced to retire and now i am actively looking to open a business and hire all of the brilliant talent they discriminate against. I wont hire lazy millennial’s that want me to pay them just for showing up and being self righteous leftists. They are clueless of the word earn. I am also an inventor, always was and always will be and age accelerated that process and did not hinder it.

      • Tony22 says:

        Lie. Add 10 years to your h.s. graduation date.
        Mention a premature aging gene in your family or some such.

        Check off the African American or Latino or both boxes for race. The one drop rule and the ability to self-identify with and change your actual race, even your gender, at least in California, means that you just got a huge leg up as it helps the business fulfill their numerical and press release quotas.

        That is not illegal, nor is it wrong within the abandonment of all responsibility to our fellow citizens.

    • John Beech says:

      What makes someone too old to get a job? I have a 72 y/o friend who, when his pension was shifted to the Pension Guarantee Corporation (and slashed in half), started flying corporate gigs again (pilot). At present, he flies aircraft owned by three different car dealers (middle America) and is in enough demand he hired three other pilots (lots of laid of pilots available right now). So do you consider 72 too old start up? In addition, because he obtained his A&P to be able to care for his own aircraft, he does minor wrenching for others (but almost none, mostly he supervises and signs off). Added to which, he manages the Part 129 operations for two other entities. He laughs he’s making too much money to retire again and there’s more than a germ of truth in what he’s saying because he pays hefty taxes and is stashing it away for whenever.

      Similarly, I also know a guy who retired after a career with a car dealership as a service manager (84 y/o now). Cancer wiped out his savings (I hate the American health care ‘system’). While he’s in still in remission, he unfortunately had had to remortgage their home to pay medical bills (did I mention I f-ing hate how America does health ‘care?). Since he didn’t want his life-long stay-at-home wife to become one of those 75 y/o ladies you see working a checkout register at Wallyworld after he passes (he’s fatalistic about how long he’ll be in remission plus he’s no spring chicken) added to which he’s of the view (which, I must admit I put said idea in his head) regarding the Waltons being so enamored of customer self-checkout and how this seems to be the way the wind is blowing in that register-buggy whip industry), the point being even that menial job may not be around much longer, that he took his remaining saving and hired a vacant auto dealership’s service building (the dealer had moved to the popular part of town and the entire place has been an eyesore for approaching ten years). He may have gotten a favorable rate due to local connections, I don’t know.

      Then I loaned him a Freightliner to park out front (and called in a favor to have another friend put a vinyl sign on the side because our county officials are largely composed of asshats when it comes to trying to make our little city another in a line of bland and innocuous let’s-fit-in places when it comes to business advertising), you know, where a Wendy’s sign is so small and low it’s virtually hidden by required planting (shrubs, in fact) so if you don’t know it’s there you miss it and have to make a u-turn t return).

      Next, I called on another friend, this one in the radio business (a DJ) and they ginned up some commercials in their studio (in exchange for lifetime oil changes, which push come to shove just won’t amount to much dough in the grand scheme of things) and began inserting them in the flow. FYI, for local businesses, radio is where it’s at, not the Internet.

      So you’re thinking, 84 y/o man working on cars again, right? Nope, not exactly. Instead, he began hiring kids out of the local trade school to do the work whilst overseeing them and teaching them the little tricks of the trade (like dabbing a spot of grease on the door hinge latch as the ‘wait, one last thing’ after the customer has paid his bill and is about to drive off). You know, to leave them with that warm feeling.

      And thus, he continued doing what he knew how to do but as the owner, instead. Today, three years later he’s developed an informal feeder network where local shop mangers come to hire from him a more finished product than the trade schools output – understand? He’s defacto playing the same kind of the role as the minor leagues who sit between high school and the majors! e.g. where they can get seasoned and gain experience.

      So back to my original question, when is someone too old? Me? As someone self-employed since 1991, and in my 60s, I’m thinking it’s never too late to give it a shot – but only if – you know something worth a damn. Granted, if you’re a worthless f-ck who has spent a lifetime shuffling paper in some government job you’re probably screwed. Then again, ‘your’ pension is safe on the backs of people like me, and my friends, who pay taxes and battle government dragging us down where it can with onerous regulations.

      Bottom line? It’s not just what you know and who you know but having the gumption to start over. Age truly is a state of mind.

      • sunny129 says:


      • Olivier says:

        “a worthless f-ck who has spent a lifetime shuffling paper in some government job” You might want to rein in your prejudices. Paper pushers are paper pushers whether in government or in the private sector and private bureaucracies are constantly expanding.


      • Tony22 says:

        I wish this guy had a garage around here.
        Since private citizens cannot write off car repairs, make sure and pay cash at his place, no receipt needed!- unless you are having a routine service done as part of your warranty and common sense protection.

        You do not have to go to a dealer to keep your warranty up for routine maintenance. Save the dealers shop for invoking covered warranty repairs which the car company pays for, not the dealer. Wolf, as an ex dealer, that statement is completely accurate isn’t it?

        • Wolf Richter says:


          Yes, seems to be correct with most brands I’m familiar with, and that’s how I do it.

          But the warranty’s terms and conditions vary by manufacturer, and there can be big differences.

          For example, 20 years ago, I bought a BMW and ALL maintenance work was included in the purchase price and had to be done by the dealer for the duration of the powertrain warranty, which was for, I believe, 42,000 miles or three years.

          In fact, there was no scheduled maintenance outside of “check and inspect” and “refill” such as washer fluid. The car used synthetic oil that didn’t need to be changed for the first 100,000 miles or so. The dashboard told you when to go to the dealer to do the free maintenance. I sold the car with 30,000 miles on it, had all maintenance done at the dealer (just “check and inspect” while you wait), and never paid a dime for the maintenance, and there was zero upsell. I was impressed with that system.

          I was also very impressed with synthetic motor oil, which is what we now use in every car. You can kiss those oil changes goodbye.

          I’m not sure if BMW is still doing this type of maintenance-included warranty. BMW owners with recent purchases, please chime in here.

      • Morty Mc Mort says:

        Or run for office.. President seems to be very popular with the Geezer Set…

      • Heinz says:

        Great story about 72 year old corporate pilot. However, I would not want to be one of his passengers.

        He may appear fit for his age and be proficient in piloting skills but he still has an aging body and mind. Cognition, alertness, reflexes, cardiovascular fitness, and other mental faculties unavoidably decline after 40 or so– but of course some people ride that down slope faster than others.

        But a 72 year old executive, doctor, teacher, or artist can still be in mostly top productive form. More power to them.

        • TruckMan says:

          You are neglecting two very important factors, firstly that one becomes much more aware of one’s limitations and state of alertness as one ages, and secondly that one has much more wisdom and experience as one ages. Three of my fighter weapons instructors were over 50, and they could make an opposed 3 target pairs mission look like a Sunday afternoon stroll. I have flown with many over-70 civilian commercial pilots, and all of them had something to teach me. Conversely, I’ve also worked in education for over a decade, and there are very few good grade school teachers over 60 – kids wear you out! Use can be made of retired teachers if they are restricted to 2 days work a week, but school scheduling tends to want them for 2 hours 5 days a week, which doesn’t work at all.

    • kk says:

      The majority of new businesses fail. The number of businesses which hire more than a few people is very very low. Young people need jobs and discrimination against the old is favouring the young, a good thing. The real problem is the lack of good jobs, not the nature of the contract.

    • raxadian says:

      If you have a skill that’s on demand but people won’t hire you because of you age, for example.

      Any former IT guy can go and do repairs of computers for example.

      And unlike companies, private citizens won’t care if you are ild or not, they just want their stuff getting fixed as soon as possible.

    • christopher spisak says:

      Everyone becoming a mask maker!!

  2. Cas127 says:


    Just when I was ready to harrumph you on business creation size,

    (50k to 70k per wk – or about 2.5 million to 3.5 million per yr, when only about 5 million businesses took PPP?!! Harrumph harrumph!!)

    you did your usual excellent job and dug very deep into the innards of the Census and came up with the obscure “Planned Wages” metric

    (which at 10k per wk – or 520k per yr – is much, much more consistent with the 5 million biz number suggested by the PPP program).

    You are making it hard for us professional complainers, Wolf.

    One retrospective point.

    Back in Covid March or so I remember a fair amount of debate about the number of businesses in the US. About half the posters were in the 20 Million+ camp and about half in the 5-6 million camp.

    I think your discovery of the fine gradations of Census business counting techniques helps reconcile the two numbers…businesses with employees (beside self) are about 5-6 million in number (thus PPP results) but there are another 15 million or so businesses that are essentially one man bands (perhaps even flickering in and out of operation in a given yr).

    If so, with just 5 million 1+ employee businesses around, the DC/MSM really, really needs to stop vilifying business owners…otherwise the US economy really *is* finished.

    • polecat says:

      According to old SantiClaus Schwab, by 2030 Everyone who’s nothing will supposedly get their lumps .. but without the means to heat that coal .. and Like It!

      DC/MSM are but useful baggage handlers.

  3. Hmmm says:

    I wonder how many of these “new businesses” were just attempts by people to scam the CARES act for money for a non-existent payroll?

  4. MCH says:

    Wait… Wolf, is the data inadvertently implying that entrepreneurship is being driven by pandemic? That perhaps the next Apple could come from this. I know the data didn’t say that, but you have to remember companies like AirBnB came out of the last crisis.

    You know, I think we have the formula to drive the economy going forward, whenever things are going ok, but more in the doldrums, we should have a crisis. That’ll shake things up, build out the next Apple, the next Google, the next Snowflake.

    Along the current melt up that has to eventually end, I think the conclusion is obvious, we need to start planning for the next crisis. Let’s call it 2031, how about that? Can we mark that date down on the calendar?

    • GrassRanger says:

      Martin Armstrong says it will be 2032. December 13th to be exact. So you are close!

    • Illumined says:

      I recall reading somewhere that after 2008 and the economy tanked a bunch of laid off people in Silicon Valley went out on their own. There was a lot of optimism but nothing came of them and people went back to The Man ™.

      • Crisis always builds innovation. AirBnB, Uber, Bitcoin – all of these came out of the 2007-2010 period – and much more.

        • MJ says:

          Err BnB is causing instability because of turn-over in residential communities; in major capitals city apts become sometimes illegal hotel substitutes. Being somewhat lessened by pushback these days.

          No roots, no commitment while taking community services. How is that better?

          Uber – false employment status taking down old-time taxi services.
          Good for someone working 2nd or 3rd job; what abt people who used to drive for a living?

  5. Cynical Seattle Guy says:

    The EIN’s are needed now — so they can milk the next set of PPP loans and have the paperwork all completed in anticipation of the next big SBA giveaway.

    The $600 million Washington State Unemployment funds paid to the Nigerians and the $140 million California gave to their inmate population did not require an EIN number.

    I also admire the forward-thinking that see an upcoming opportunity.

    • Wolf Richter says:

      Cynical Seattle Guy,

      That’s not how it works with the PPP. The next PPP (if it shows up at all) will only cover a portion of payroll and maybe a portion of other expenses. So you cannot make any money on PPP if you start a real business in order to defraud PPP because you actually have to spend this money first, and you have to spend more than what the PPP will lend you.

      To defraud the PPP profitably by setting up a fake company, you do NOT want to set up a real business with an EIN and real expenses. You don’t want to create a company at all. You just submit fraudulent documents to a lender that doesn’t care and doesn’t check — and then hope that you don’t get caught later.

      Your Nigerian and California examples were unemployment benefits fraud, which is a completely different ballgame. They involved SS# and not EINs. They involved individuals and not companies. The involved unemployment claims by those individuals, and loan applications by companies.

      • buda atum says:

        “The $600 million Washington State Unemployment funds paid to the Nigerians…”

        Yawn! Or rather, this is discrimination. You shouldn’t blame me for Washington State’s sloppiness in safeguarding your tax, or debt, to be more precise. As we say back home, man must wack.

        You got to wonder how they know it was me that defrauded them when I’m roaming free and haven’t been caught yet and never told I was unemployed in Lagos!

  6. Early in the pandemic, I started making contact with a lot of people I’d known way back in high school. I pretty quickly learned why I had never kept contact with most of them – but – there were a couple of them who were spouting different stories – one of them was espousing that as an accountant, he was aware that all those people who were collecting unemployment would be liable for big unexpected tax bills in 2021 due to stimulus and UI payments – the solution that he was suggesting everyone employ was to start a small business because it would give enough of a write off to cover the cost of the taxes.

    Now, I’m not an accountant – but it sounded like pretty good advice. After reading your column Wolf, I can’t help but wonder if many of these new small businesses were created with just this purpose in mind.

    I’d love to hear from anyone who knows more about this than I do since all I know is what I heard from a ‘Facebook expert’.

    • Petunia says:

      Having your own business is a good way to mask long periods of unemployment or underemployment. You always have a job if you have a company.

    • Wolf Richter says:


      The “accountant’s” story is BS. The reason: you must incur actual expenses that then form the loss that you can write off against your personal taxes. For example, you create a small business and spend $10,000 and have no revenues. So your loss is $10,000 cash out the door. You could include some expenses that you have anyway and that your normally cannot write off, such as your broadband connection or home-office expenses. Then you can write off that $10,000 loss against your other income, which reduces your taxable income by $10,000. If you’re in the 20% tax bracket, that $10,000 cash loss will save you $2,000 in taxes, and you’ll be $8,000 in the hole.

      Unless you can shuffle $10,000 in normal expenses (that you cannot write off) into your business where you can write them off, this would be a total loser. And you cannot do that for long either, because you’ll get audited and ripped to shreds if you don’t have a real business.

      If accountants actually recommended starting a fake business and spend money purely to generate a cash loss in order to save on taxes on unemployment benefits, they should be sued for malpractice.

      If they recommend starting a business because it has the potential of being a money maker, then it’s great; but that’s not what the accountants you cited said.

    • Beardawg says:


      I already had several working LLCs before the Rona and the G-cheese. As a musician, work did stop and I receive the UI bennies, but ongoing musician LLC expenses will show a 2020 loss, so your Accountant’s theory works for me.

      That said, I question whether a Gig (or other) worker who becomes unemployed and takes UI benefits would spend the $$$ to set up a NEW Biz doing what he/she was already doing just to capture losses to offset UI income taxes.

    • Kasadour says:

      Now, I’m not an accountant – but it sounded like pretty good advice.

      nothing spells stupid like committing tax fraud by material misrepresentation on a legal tax form and signing your name to it, as a plan A.

  7. WES says:


    I think you may have stumbled upon one of the hidden unintended consequences of governments handing out “free” money!

    Even when money is free, the ingrained habit of not wanting to give any of it back to the government, naturally kicks in!

    • Again…I’m not an accountant but it sure seems silly to give money and then demand a part of it back. Maybe they should call it an unemployment loan.

  8. BuySome says:

    1) Excludes…”certain industries”…private households–>>Suzie Homemaker unloading the family possessions on her new site?
    2) What’s to say there isn’t already a business that they expect to take a Corona dive and are just setting up a new isolated front for the planned rollback in their future?

  9. Kasadour says:

    if people market their business in a serious way, it could be successful. market to the rich and well-connected. when my husband and i started our automotive service center business back in 2004, we never referred to it as a “shop”, we advertised german and italian autos only, bought all metric tools, got a dealers license so we could bid at the Portland Mannheim auction, and made a killing in the first year. our customers rarely asked for what i later termed the “love you, bro” discount. that was then. today is a whole different ball game.

  10. “the number of new businesses exploded higher, perhaps fed by stimulus money and the extra $600-a-week in unemployment benefits that allowed people to strike out and go after their dreams”

    No phone, no home, no food, no hope. BUT with a little cash miracles can happen when you see a spark of daylight. a little cash goes a long way when you have nothing.

    The poor getting ahead is what made america great, and largely thanks to immigrants. who work like hell–cause that’s what’s chasing them.

    Billions more for billionaires is pissing into the ocean, but paying for a few steps up for the truly motivated is money well spent.

    You can raise a million motivate souls (voters) up a level or pay for a another billionaire’s castle.

    choose, america.

  11. Geno says:

    Starting out on my bachelor degree in business in one early class the instructor indicated the failure rate of a new business was 80% sometime within the first 5 years. Of the remaining two within 5 more years only 1 was left. So, 90% failure rate. Hmmmm….

    Started out as carpenter ending up a general contractor. After a highly successful patio business crashed I returned to school to prepare for the CPA/Tax Law track looking to help people navigate the IRS/State Tax. Worked in a high powered firm with White House Alumni….Very interesting indeed auditing businesses seeking credit lines. after a few years I knew tax accounting was not my forte.

    By accident, I also worked in government as a wood shop high school teacher for about 10 years and then during the summer off I trained to become a horseshoer (farrier) overting to being a full-on cowboy with a ranch boarding horses, working as a farrier from rodeos to Olympic level dressage shows in LA and developing horse ranches with Bobcat construction equipment. Now am “retired” on the ranch but still manufacture the NIMBLE™ Shedding blade, the PhoneBuddy™ smartphone stand and ranchworx saddle racks at a number of retail outlets in Southern California to keep interested and make some pocket change in the process of meeting interesting people all over.

    At age 65, I see age discrimination is for real and I must be careful to make people feel like I am not telling them what to do so I do all I can to be humble and let them know I want them to be successful because that means I will be too. Note: I am able to beat and compete with the Chinese product equivalents and make my own retail display to make sure I get good store placement. Type in “San Diego Saddlery” and look for the NIMBLE blade when you scroll down.

    The cowboy western way of life is rapidly disappearing as nearly all the young are future oriented with no interest in the ranch metaphor of life.
    The past means nothing except that the women are passionately attracted to horses and some do have them usually if they make lots of money and can afford what it takes to keep a horse(s).

    • Tony22 says:

      Women purchase 85% of the world’s manufactured goods. Women is where here your ad dollars should go.

    • ground says:

      I think the 90% failure rate is not correct for one person service businesses. Without any statistics to back me up, just having known many in service work- farriers, construction, housecleaning, landscaping, plumbing, etc, I’d say the failure rate is much much lower. Of course some of them are under the table for some of their working lives.

  12. roddy6667 says:

    The statistics on small businesses are dismal. Over 5 years, 4 out of 5 fail. Of those that succeed, 4 out of 5 fail in the next 5 years. The ten year survival rate is 20% of 20%, or 4%. FOUR PERCENT! That’s a 96% failure rate.
    Of the survivors still working, many are limping along on a small income just so they can say “I’m my own boss”. They don’t have subsidized health insurance, contributions to a 401K. a pension, paid sick days, or paid holidays. They would be better off working at Walmart.

    • Wolf Richter says:


      “They don’t have subsidized health insurance, contributions to a 401K. a pension, paid sick days, or paid holidays. They would be better off working at Walmart.”

      Walmart doesn’t exactly lavish its hourly store workers with benefits either. But many of them do get to apply for food stamps :-]

      And if your own business is halfway successful, it can be immensely rewarding in many ways. There are quite a few commenters here who are running their own businesses. Ask them if they would be better off or happier working at Walmart.

      • Geno says:

        Working for yourself does provide a satisfaction that working for others does not. If my wife had not had medical I would have been toast. Even though she had it I, until this year, paid 728 a month for Kaiser HMO. now with Medicare I pay 280 for both Medicare and the Senior Advantage group plan with my wife’s former school district.

        On last thing, I sold military surplus along with the other things due to the billions of war gear that came home at all the California Gun Shows including Daly City, near you Wolf. That was an adventure like no other. Imagine going to place where every criminal type and every law enforcement type from the Cartel to the FBI were in a “convention-like” atmosphere while I sold USMC battlefield gear.
        I have so many memories and experiences from this especially since I wrote a guide on how to buy and sell military surplus (the greatest treachery you could imagine in good old Capitalism). The people who bought my book were amazing individuals with interesting results from reading and acting on my advice. One Chinese buyer most of my military main packs at a gun show including mulitple copies of my guide. Not long after the prices for main packs and deployment bags went through the roof to higher than I sold them for!!! My logistic person told me they were picking up alot of this gear for the Chinese. WOW. You will never get this experience by working at WalMart. One last thing, I developed a Can of Whoop Ass that was a great seller. Woman bought it the most.
        Nothing like a Big Can of WhoopAss to start your day LOLOLOL>

      • roddy6667 says:

        The successful business owners are among the 4%. Yes, life may be good for them. Most fail. Just saying’.

      • Kasadour says:

        exactly. set your own hours and spend half the year abroad while your employees rake in the money FOR YOU. this is our life for 15+ years (haven’t been abroad in 2020 tho)

    • Stephen C. says:

      I’m self employed. Not only would I never work at a Walmart, I would never go shopping at a Walmart.

    • Serge says:

      Just because 96% of business fail doesn’t mean it a bad thing. I tried many businesses before I found the one I like and makes me plenty of money. It doesn’t matter how many times you fall its how many times you get up and keep going that matters.

      • Nate says:

        Now that’s the right attitude. Gotta learn how to fail properly, which is pretty easy – just get back up.

        I’ve been self employed for 30 years with three legs to stand on most of the time (3 bizs) so it’s worked out ok. And I didn’t waste my blood sweat and tears making some other guy rich. That right there is what works for me. :)

  13. George W says:

    I’m 53 and work as an Amazon delivery driver.
    There is work available but you have to be willing to do it and accept the dismal pay. Call center work is also readily available.

    I hate delivering in downtown SLC. Lots of tents in the back of parking lots of closed businesses.

    The IRS is now after me. An IRS CSR told me that if I missed a payment, they will immediately seize my bank account. If that happens, I too will be homeless. What kind of self respecting parasite, immediately kills its host?

    Thinking of obtaining a CDL and becoming an OTR truck driver. At least I would have a place to stay, most nights, in the truck.

  14. GirlInOC says:

    I know a lot of economists online were interested in the experiment that the extra UI would be on labor markets, specifically the implications for a UBI. If people were able to leave low-wage jobs they were stuck in & ventured out to start a business in something they had a passion for? Good for them. I’m basically sold on UBI, but if not forever at least during times like these when whole industries are dead (travel, tourism, performance art, etc).

    • Old School says:

      I don’t like UBI. I think all the incentives are wrong. I like good incentives to try to get good outcomes as most of us usually try to do what is good for us. Income taxes and capital gain taxes discourage productive activities. Would like to see those replaced with taxes on things we want less of.

      • Kent says:

        “Would like to see those replaced with taxes on things we want less of.”

        Private equity billionaires?

      • flashlight joe says:

        I agree. Taxing jobs and then whining that there aren’t enough jobs is ridiculous. Tax what you want less of because that’s what you’re going to get.

      • Lisa_Hooker says:

        It’s being done. Apparently “we” want less of the Middle Class.

        • MCH says:

          Middle class is bad, the bourgeoisie has to be eliminated in order for there to be a true paradise. They must be removed so that the proletariat can thrive.

          This can be best achieved by taxing the living bejesus out of them and redistributing their wealth to the proletariat through a system of government incentives. We must destroy the bourgeoisie first, because unlike the uber wealthy, they have no real means of protection, strategies such as tax shelters are usually not effective given the limited amount of assets this class holds, and the uber wealthy are unlikely to aid the bourgeoisie because it is not in their intrinsic interest.

          Once, the bourgeoisie is converted into the proletariat, we can simply mass together and remove the uber wealthy by whatever means deemed necessary, at that point, their voices will be hated anyway.

          Alright, I’m on a roll of this manifesto crap. If only I remembered where I put the last one, I can string enough of these together to put out my own little red book. I’m sure I can sell that stuff online.

      • taxpayer says:

        “Income taxes and capital gain taxes discourage productive activities…” says OS. True for income taxes, but the last time anybody looked at it afaik, most capital gains are increases in land value, not on anything produced. See Levy Economics Institute Working Paper #187, “Real Estate and the Capital Gains Debate.”

    • endeavor says:

      A UBI may work if it is modest and with a minimum wage job provides a living wage with full time work. But a UBI that allows people to sit around and manufacture trouble without working is probably what we would wind up with in this country.

  15. Geno says:

    Alex Tocqueville wrote with amazement at how Americans would start businesses, fail, and start them again, fail, and do it all over again. This, I believe, contributed to the rapid and successful rise of out country. Bankruptcy and being able to move to another part of the country allowed many with a great sense of adventure and powerful drive to succeed were able to do what is so hard nowadays.

    • Old School says:

      I am trying to wrap my head around the idea that we may cross 3666 on the SP500 next week when 12 years ago we were at 666. It would be dangerous to predict what the next 12 years are going to be. On a valuation basis you could make the case to sell the US and buy the rest of the world, but although cheaper usually when USA crashes rest of world crashes too. I think the Covid hit will eventually will be the straw that takes stocks down.

      • Old School says:

        Just punched out numbers for last 12 years. US stock market up $30 trillion, US debt up $17 trillion and Fed asset purchase up $6 trillion. So $23 trillion tailwind. Maybe another way to look at it is a whole year of GDP brought forward over the last 12. Stealing from future production it looks like to me to run up asset pricing.

        • Cas127 says:


          But one worrying way to look at it is the the $30 Trillion stock mkt increase is wholly dependent upon the valuation of the highest marginal valuator (tm..) – that is, the entire mkt cap is determined by the “loosest” evaluator of equity cash flows

          In contrast, every single dollar of the $17 trillion in increased debt is out the door…unlike mkt cap, it isn’t a theoretical construct made by multiplying a marginal price by a huge, untransacted base of shares.

          Every single dollar of debt was spent.

          So, whereas the mkt cap increase can vanish in an instant (as the marginal valuator changes) the total increase in debt is immutable (no bk for DC).

          So I think the comparison might be apples and oranges.

          It is kinda like those depressing analyses that point out that the US requires ever more gross levels of debt, to prop up ever shrinking increases in GDP.

        • lenert says:

          The CEO who put me out to pasture turned around and spent $2B , roughly 20,000 yearly incomes, on a basketball team.

        • sunny129 says:

          The Year-end coming turbulence and volatility

          – MFunds start distributing Gains/Div during the first 2 wks of Dec. Apparently their cash level is low!
          – How many want to sell out before Biden’s new tax rates next year?
          – Covid infections/hospitality and deaths keep rising until mid January (Feb/March?)
          -Logistical problems with Vaccine, assuming they are efffective and credible(?)
          – The usual sell off during the last Dec!?

      • David Hall says:

        20 yrs ago the S&P 500 was at 1500. It little more than doubled since Y2K. It is up more than 5X from its 2009 bottom.

    • polecat says:

      I see the inevitability of new countries coalescing from parts of these formerly ‘United States .. hell, maybe even encompassing All of Norte America!

      In-migration, and out-migration will be all over the map! Job City!

    • Apple says:

      Think how many more entrepreneurs there would be if health care was not tied to a job.

  16. George W says:

    Grow up already, entrepreneurialism in the USA is dead.

    Nobody, that works for the US Government fails and yet they are always rewarded as if they are wildly successful entrepreneurs.

    How many small business owners, lofty aspirations ever match what is guaranteed to Govt. employees?

    $100,000 a year with full benefits, guaranteed. Retire in 20 years with a guaranteed 80% of their working income. Lifetime healthcare, lifetime everything.

    What I have learned and what should be the only thing taught in public schools, is that your only goal should be to work for the Govt. Everything else is folly.

    • George W says:

      I tried my hand as an entrepreneur and as a result I am now to
      be hunted by those that would never try.

      • Cas127 says:


        See my point about political vilification of business above.

        The truly obscene thing about Elizabeth Warren’s “You didn’t build that!” comment wasn’t that that it didn’t contain a small fraction of truth (15%, because nobody builds anything wholly alone) but because Warren herself has never built sh*t…and things built by the G are almost always rotted through with a corruption that dwarfs the scale of the most crooked capitalist.

        To build a successful business in contemporary America is to become the opportunistic prey of every bullsh*t spouting politician, whoring for blindly short sighted political support (meaning all of them).

        They are like drunken, degenerate jockeys whipping their horses to death.

    • KGC says:

      Your post begs the questions, George; what’s your GS pay scale or are you foolish?

      While I can’t comment on State or local government positions, I have some experience with Federal employees based on my military time. Pay over $100,000/yr is relegated to the GS-13 and above and those are usually individuals with hard to find skill sets (Physicists, Doctors, Techs, etc) or individuals with over 20 years of experience in a specific field. There are not a lot of these people, and in fact, the average employee is a GS-9 making $55-$65k/yr. (I was making more than that 20 years ago working in the private sector.)

      This is easily verified. The website for Federal jobs is There’s thousands of jobs out there waiting for you to take them. You may notice that the one’s paying over $100,000/yr tend to be jobs where, if you’re successful at any level in the private enterprise system, you can make a lot more money than you would working for Uncle Sam.

      Retirement in the Federal service is no longer set on years, nor is there a guaranteed pension. There is a fund matching savings which means the retirement benefit is entirely based on what the individual contributes from their pay (like a 401k). This is true for all Federal Employees, including the military. It’s true there are some folks out there under the old systems, but fewer every year.

      Lifetime benefits for healthcare? Please, go ask any Veteran how that works. This was a joke back in the post Vietnam era and it has not improved. You have to pay the VA, and or Tri-Care, if you qualify. And it takes years to get anything done. Federal employees get the same, without the VA.

    • nick kelly says:

      Bumped into a a city worker I knew from poker games. maybe 50 at most. After ‘hi how are ya’ he tells me he’s quit. Oh, so what are you doing? Nothing. Oh, so why did you quit? Because I get a hundred dollars less a month on pension.

      He was just a laborer/ truck driver (hired in 20s) so he would have been spared the BIG downside of gov employ at higher levels: a steady diet of BS, toadying,
      politically correctness in spades, ( oh oh,. I meant to say in clubs) and a major scourge….meetings.

      There is however, stress leave.

  17. Viktoria says:

    These Low Propensity Business Applications probably come from people that in the past used to employed with a proper work contract. Now they’re outsourced (clickworkers and the like) and depend on very few customers, perhaps only one. In Germany, we call them “Scheinselbständige”, which could be tranlated as “fake businesses”.

    • Olivier says:

      Exactly (although not all of them). You beat me to it; I should have scrolled down first.

  18. Tom20 says:

    Sounds right.
    When 08 hit, we started a second
    Business to supplement the one
    tied to the construction industry.

    10 yrs later we sold it. At 58 we are always on the lookout for another startup. No shortage of possibilities,
    Just time and people.

  19. Paulo says:

    My son has a small side business doing electrical work. I occasionally hire his partner/employee who is also a very good carpenter and 20 years younger than I am. I pay him either by the job or cash $500 per day. The last job he made $1000 for one days work. He wanted to return some of the money but it was still a ‘deal’ for me and I wouldn’t let him. At 65 I no longer feel comfortable working heights and I just don’t have the ‘gas’ anymore to bust ass for 8-10 hours. He does. I could pay a ‘cruiser’ 1/2 as much, but ultimately you get what you pay for, imho.

    It feels pretty good to hand a good worker an envelop full of cash and sit down and have a cold one before he heads home.

    His work philosophy is this: His wife has the legit job with full benefits. We already have universal medical coverage in Canada, so he doesn’t have to worry about poor health care or no health care. He used to run a big contracting company and went bankrupt once before. (His words) “I like to make 70K per year and am comfortable declaring 10-20K. I’ve done the big employer thing and I wasn’t any better off than I am now. In fact I went bankrupt. This suits me fine”.

    I don’t see how his work life is any different than past employers I worked for. They had their accountant siphon every bit of expense they could off the receipts, and somehow managed to have a daily business lunch to boot. Company trucks. The occasional company soiree.

    Seems to me the people carrying the can for everyone else are those workers who have taxes deducted at source. But of course many states do not even have income tax. Me? I always taxed out at least 30%. My son is close to 50%. Does it stifle entrepreneurship? Not in the slightest. You just do work on the side to get ahead. Cashies. Or hire the good accountant for a different kind of cashie. It’s all the same. If a working person wants to get ahead they just have to work more hours until they get a stake to stand upon.

    • VintageVNvet says:

      You last paragraph is EXACTLY KEY REX!!! AKA, ”you hit the nail on the head…”
      By the time I got my GC license I had come to realize that even though I could support my family with less than 40 hours per week focused on working, IF I wanted the brass ring, I had to do more, and gradually worked up to 0330-2130 five days, then 0330-noon Sat and noon to whatever it took Sunday,,, almost always spent most of the 24 off in or near bed or playing with the kids, (who BTW both have similar work ethic.)
      Retired three times and was really bored the first two times and watched a lot of my age peers kick the bucket quickly when they retired early ”to play golf” or go fishing…
      Finally, at mid eighth decade am able to enjoy anything but not everything as the saying goes, but still very tired of the covid challenges now everywhere, etc…

  20. Mad Dog says:

    The IRS requires your small business to show a profit 2 out of 5 years. If you continue to show losses year after year you will be flagged for an audit. You may have to pay a fine for the unpaid taxes including compound interest at 14%. I do the taxes for my spouses appraisal business. Even when she has a tough year I always show either a profit or zero net income. I never show a loss. I don’t take the home office deduction even though we’re entitled to it. With home offices, the IRS algorithm throws you into a bucket of high probability audit candidates. In addition, why would you want to depreciate your house and then have to pay a re-capture tax at the rate of ordinary income if and when you sell your house. As I posted before. The government gives you a deduction and then takes it away later. When you hear that the government is here to help you, look out! Hold on to your wallet!

    • Lisa_Hooker says:

      Mad Dog has it about right. If you are using cash books rather than accrual and a calendar year you can do quite a bit of creative work in December with income and expenses. A small loss every few years if needed isn’t a big flag.

  21. KGC says:

    Everyone should try being their own boss some time. I’ve done it a couple times, failed, and currently have a small business as my second job.

    What I take from all of this is there’s a will to run a profitable business, and the innovation and initiative to figure out how to do that, buried within the psyche of the average American. And this is exactly why zombie companies should be forced into bankruptcy and closure.

    Someone will figure out how to run an airline, a bank, a manufactory, etc., if there’s a demand for it. It saddens me no end to see how institutions, politicians, and people who should know better have become deathly afraid of failure.

    • Sam says:


      Case study: airlines, broadcasting, transportation (marine, rail, trucking, ect) made money on the buildout. Not on operation.

      Addendum – Will Rodgers noted that that we [subjects] should be thankful that we only receive half the gov’t we (sheeple) pay for.

      • nick kelly says:

        The railroads in Canada were built out over a century ago and have been very profitable. Buffet did not buy his railroad to build it out.

        A railroad is the perfect example of an investment protected by a ‘moat’. You can buy rails, locos etc. but you will never get another right- of- way like the big interstate or interprovince lines have.

  22. joe2 says:

    My experience with new small businesses is 1 in 10. Luck plays a predominate role. Hard work to the tune of >100 hour weeks is a given. You need a crazy techie, a numbers guy that can work the financial markets, and a salesman. The salesman is the most important and the hardest to find.
    2 good startups got killed by random bad luck – the gas crisis in the 70s and the crash in 2008.
    The one that was a winner almost got killed by the lockdown scam.

    • Sam says:

      re ‘crazy techie’: actually a team [consisting of an Asian, Caucasian, Indian male and a female UX designer) is necessary [bankable] to develop & (successfully) release an app.
      Wisdom obtained from multiple vc’s i’ve connected with on my project.
      Tech evangelicals become crucial as your team expand.
      All The Best in your journey.

  23. Yancey Ward says:

    When I started my Wolf Street media mogul empire


  24. Heinz says:

    Is there much of a future for the ‘little guy’ entrepreneur business person in Wolf’s ‘weirdest economy ever’? Well, I am a tad skeptical. Let me wax a little philosophical about this conundrum .

    An economy leveraged on huge debt levels everywhere you look is inherently unstable and unpredictable. Yes the fools in charge have worked apparent miracles with extend and pretend but eventually their pixie dust will lose its mojo.

    Just how many individual retail knickknack and gadget sellers we really need is a perfectly good question. How much real value these ‘entrepreneurs’ add to the economy is debatable– many are just middlemen providers taking a cut for providing a service or good that many people already have plenty of choices to choose from.

    Perhaps many of us should have prepared for this brave new world long ago by sacrificing and saving until it hurt, and developing individual skill sets that will give us means for more independent, self-reliant living. I am talking about real life skills and not ‘learning to code’.

    I think frugal ‘off grid’ homesteaders (just used as one example of the ‘rugged individual’ type ) among us stand a good chance of weathering any storm. That lifestyle is not for everyone, though.

    Of course a vast majority of us will clutch at their current elevated material standard of living (and living beyond their means) until it is wrenched from their clingy little hands by the winds of economic and societal fates.

    I know of course that idea is unpalatable to most. Let’s hope I am too pessimistic. But I prefer hard-eyed realism to hopium, just in case.

    • Gene says:

      I am the rugged individual you describe. I do all my own maintenance (like cutting down up to 60 foot trees on my own at age 65). Cutting down and cleaning up my own green waste saves me thousands my neighbors pay each year. I took a/c classes at the local community college to avoid paying the 8 to 15K air conditioning contractors charge to replace a system that does not need replacement. In the class I took one of the display a/c models was the exact unit I have in my house. Bottom line? I fot it fixed for 300$. My wife showed me how google has multiple training videos (which she used to fix the garbage disposal).
      It is the frugal penny pincher that will rule in the days to come. Hunger Games anyone?

      • joe2 says:

        A lot of how you react to current events depends on how you grew up. The people I know who grew up scrambling find a little retrenchment to raman noodles, rice and beans, and misc casseroles is not a big deal. I really like the simple food my mother used to cook. Look how poor folks beans pasta, hamburger turned into expensive gourmet meals.

        And you are right about using local school courses. I don’t know if you can still use machine tools at high schools off-hours anymore – liability rules have probably changed.

        BTW, before I bought my first house, I got a RE Brokers license and grabbed 3% of the commission as the selling broker. The bureaucrats got wise to that and added an apprenticeship requirement.

  25. Clete says:

    FWIW: I do SCORE mentoring as a part-time endeavor in a couple of midsize communities. We are seeing an uptick in people looking for help getting started, but as Wolf outlined, most are one-person operations that could provide an income, but will probably never scale.

    Most of the people with whom I’m working are coming in trying to turn an idea or a side hustle into a real business — mostly they have not been “released to the marketplace.”

  26. nick kelly says:

    Sorry WR: Second time I’ve done that in a week.

  27. Prof. Emeritus says:

    Seems like a regular spike of forced entrepreneurship to me, quite common all around the world, especially in times of crisis.

    • Xabier says:

      In pre-Industrial times, ‘forced entrepreneurs’ were known as bandits and outlaws.

      A different kind of business formation. ……

  28. Sam says:

    Good luck fixing modern (last twenty years) cars….irrespective of youtube.
    You’ll need software diagnostic equipment and parts.
    Past three years all auto mrfg. have precluded independent shops from integrating parts replacement via OEM specific software that’s accessible only from dealer.
    Class action “right to work” lawsuit in play by aftermarket trade groups & parts mfg.
    Btw China Inc. auto parts [in American mfg boxes] are crap.
    +3x price for US mfg parts, +2x if MX sourced, over China sourced price.

    • Geno says:

      In the ranching farming world you will not find a group more self-sufficient than those like myself. Farmers/Ranchers are fighting John Deere on the “Data Software” front. I believe someone will figure out people just want a high powered tractor that THEY CAN FIX THEMSELVES.


      Yes, I cannot fix the new trucks but I can the old for the time being unless Gov. Neusom outlaws them like they did the older diesel trucks/construction equipment.

      I paid $8,343 for a cherry 2001 F250 with heavy duty towing capacity with lumber racks and and tool box meticulously maintained by government mechanics. I can do a lot with the 62K I saved by avoiding what my friend bought for 74K. In other words, what you say is true from here on out but what I say is true for the 20 or so years I may have left which to me is all that matters.

      Corporate “America” has decided the USA has seen it best days and China is the future. This is our greatest enemy on all fronts. I would prefer fighting to the bitter end and would rather die than live in Corporate “America’s” vision of what the USA is now. For those who remember the scene in the original Wizard of Oz when Judy Garland actually meets the Wizard and finds him to be not what he appears, I have seen the Wizards.’ They are mostly gargoyles in my mind’s eye after what I have seen….

      I was amazed to read Peter Theil’s ariticle on competion:
      Type in: “Competition Is for Losers
      If you want to create and capture lasting value, look to build a monopoly, writes Peter Thiel” to see the WSJ article that is the answer to what is happening worldwide.

      That answer is a certain small group of people will own the world and most will not be able to ever get to any wealth to speak of. Every type of big business entity buys the competition. The little people, even the mom and pop stores will not make it. The are sopping up every last drop of profit anywhere and anyway they can like Chewy the fund that will sell it’s food at less to push competition out.

      In sum, almost everyone here with any wealth is cruising on the last vestiges of the Old Way and there is nothing that can be done about it.
      Even my wife’s pension as solid as it is no guarantee of security. There really is nothing more than a figment of our imagination.

      I wish all well here and hope you prevail but likely most of use will suffer to some degree NO MATTER WHAT YOU DO…

      • MonkeyBusiness says:

        Surprised to see it written so directly I suppose. What do you think Warren Buffett meant when he wrote about liking businesses with “wide moats”?

    • joe2 says:

      There is a definite push to eliminate small businesses. They hate the freedom you have and the difficulty they have policing the many many taxes they have. Much easier to collect from a few big companies. Collecting pennies from many small companies on each of the 5 or 6 different taxes is too costly. And the big companies hate the undercutting in price and want your customers.
      Biden’s stated plans for another lockdown, destruction of the coal and oil industry, increased taxation, and increased trade with China will kill a lot more.

      • Cas127 says:

        The G’s palpable antipathy for smaller biz really shows in finance.

        In 1990, there were 15,000 banks.

        Now there are about 6000.

        (In a way, the business of taking in and then lending money back out is pretty simple – in theory – so it is a simple startup for well heeled locals who provide the start up core capital…that is why there were 15k banks…)

        But contrast the unconstitutional lengths that DC will go to hold harmless the Mega 4 banks (perhaps 50% of all bank capital and assets now) to the indifference (or outright regulatory malice) that DC shows for local banking (15k->6k banks in 30 yrs).

        Some of it is natural consolidation and community bank ineptitude..but neither explains the microscopic number of new banks since 2008. (Regulatory hostility does).

        As mentioned above, it is just easier for the G to monitor/regulate/control a tiny handful of mega institutions than thousands of independent thinking operations.

  29. sunny129 says:

    All these above comments remind me of two books I have read and re-read more than once:

    – Your LIFE or your WORK
    – What’s the color of your parachute

    3rd one is an eye opener : How we choose to be happy

    In the end it is – To each His/Her own

    Best of luck to all those ‘enterprenurs’ who trying to start own their business

  30. Anthony A. says:

    I worked for Big Oil in California after the second oil embargo (1978). I have a degree in mechanical engineering and an MBA in finance, all school bought and paid for by the G.I. Bill (Vietnam stuff) and my part time work funds. No loans or help from parents (they were broke anyway).

    In 1985, when oil went in the tank (~$8/bbl), and oil companies were flushing employees, I went down the drain with 6,000 others in the company. Lots of companies threw out the middle tiers, mostly experienced guys and gals. Hey, they certainly weren’t going to can any executives!

    I had a wife, a big California style mortgage and two young daughters at the time. Well, no jobs were to be had, so I went out on my own as an engineering consultant. Fortunately, I was good at what I did for Big Oil…..assess potential companies for acquisition (due diligence). And there were A LOT of energy assets for sale (cheap) at the time.

    I teamed up with some other ex oil guys I knew and we started (on a shoestring) a firm that specialized in helping companies acquire depressed assets. We formed a Sub S corp and six of us hit the phones, streets, law firms, contacts we had in other oil companies, the API, etc and marketed our skill set. We made up a set of marketing materials, professionally printed. We worked out of one of my partners condo (used as an office). Within a year, we leased about 2,000 square feet in a downtown high rise office building.

    Well 30 years later, we had three thriving U.S. offices and sales of a several million per year. At one point, we had about 40 employees and a list of contractors we used on occasion. Our profit margins were over 60% most years. And since we were a Sub S Corp, profits were distributed to the shareholders and taxes paid on those distributions. I retired a few years ago and we had sold the firm to an international consulting firm just before I packed it in.

    Yeah, starting a business is easy, but getting one off the ground and making money plus growing the business is really hard. For instance, you need to have a good grasp of what’s needed to sell your product (or service), how to deliver consistently with high quality, how to legally protect your business from a variety of crap that can be thrown at you, and how to differentiate your business from the competition. It’s not easy for one individual to do all this on his own. That’s why individual proprietorships become a “one man ” show until they go under or the owner gets hired on somewhere.

    It was very hard for several years. The hardest part was building a client base, finding qualified and experienced folks to do asset assessments and pulling together deals that made sense for both the buyers and sellers. A funny thing about the good times and the bad times….during both periods, there are always buyers and sellers of business assets. I’ll bet half the Permian basin in West Texas is for sale right now. And when oil picks up again, those assets will go on the block again!

    Looking back, we worked for all the major oil & energy companies (U.S. & International), major U.S. law firms, banks, PE firms, etc. But we never worked (or wanted to) for any state government or and federal agency. We saw that as a conflict of interest as our work was exclusively with business and industry. I could explain why we thought this way, but I would use to much of Wolf’s bandwidth.

    Wolf, thanks for this great unbiased and informational website you provide for us folks!

  31. Winston says:

    “The disconcerting part”

    Is that in normal times:

    “According to data from the U.S. Bureau of Labor Statistics, about 20% of U.S. small businesses fail within the first year. By the end of their fifth year, roughly 50% have faltered. After 10 years, only around a third of businesses have survived.”

    Hopefully these businesses aren’t being created using lots of borrowed money.

    • Anthony A. says:

      Funny thing about trying to start a business with borrowed money……banks generally won’t lend it to you (unless, of course you have enough collateral). Many startups are financed buy the bank of Mom and Dad, or other suckers.

      • Wolf Richter says:

        A bank will lend to a startup, but only two types of loans: personally guaranteed loans (you’re personally on the hook and your credit needs to be good and you need to have income from other sources), and secured loans, such as to buy vehicles, equipment, or property with a big down payment.

        But the funding you really need for a startup, such as funding a year’s worth of wages, rent, and other operating expenses, because you won’t have revenues for a while – that kind of loan you cannot get. That has to be equity funding.

    • Anthony A. says:

      To add… can get SBA loans, but qualifying is tough these days, and you would be better positioned for one if you are a minority. Even then it’s not easy.

  32. Sam says:

    Aka “bootstraping”.

  33. Micheal Engel says:

    1) Small business rate of change in the first few years is high.
    Partners switch sides, owners are looking for a new direction, for a new business plan, until they find enough customers and stabilize.
    Fail is too harsh.
    2) The Nasdaq spike is a Doozie on several levels.
    3) It doubled in size in 6M. NDX linear looks like 1962 to 1966, between Mar 2020 and Sept 2020.
    4) Dec 2018 is Sputnik 1957 and between 2016 and Jan 2018 the Nasdaq surpassed 1929 peak.

  34. My retirement plan: Avoid Women.

    • Bet says:

      Dunno I would be so much more ahead if I had stayed away from men. They were high maintenance and expensive

      • Wolf Richter says:


        I just knew this would be coming… ?❤

      • I’m trying to imagine a “high maintenance” man, Bet.

        Are you talking about a needy, stay at home,
        house husband ?! I don’t get it, sorry.

        • Ann Tecklenburg says:

          All men are high maintenance: Expensive pickup trucks, fancy restaurants, most expensive sports and sports equipment, biggest most expensive bed, high end giant recliner chair with giant screen TVs, maxed out cable TV bill with full $$ extra subscription sports, hobby farm (always losing money), guns and pallets of ammo, expensive fishing and hunting trips…it never quits!

          I am a (retired tech) woman and I live on a fraction of what my hubby thinks he can’t live without.

        • Ann Tecklenburg told me:
          > All men are high maintenance:
          > […]
          > hobby farm ( always losing money ),
          > guns and pallets of ammo, expensive fishing
          > and hunting trips…it never quits!
          > I am a (retired tech) woman and I live on
          > a fraction of what my hubby thinks he
          > can’t live without.

          Who pays for it, you ?
          Would you be better off financially, without him ?

          > Expensive pickup trucks,

          I don’t even own a bicycle.
          I rarely take the bus, much less Uber. I walk.

          > fancy restaurants,

          I buy groceries and prepare all my meals.
          I can’t remember the last time I tasted fast food,
          much less a nicer restaurant.

          > most expensive sports and sports equipment,

          I own a desktop PC and handyman tools;
          I need them for work — no “toys”.

          > biggest most expensive bed,

          I sleep on a twin-sized, 9″ foam mattress, on the floor.
          Amazon delivers it super-compressed.
          20 $ polyester mattress encasement.

          No spring mattress, no boxspring, no frame;
          it’s the most comfortable bed I’ve ever known.

          > high end giant recliner chair

          I don’t need that.
          I’m typing this from my bed right now,
          upper body propped up against a cabinet-baseboard.

          My keyboard is virtual; to wit:

          My 30′ 4k curved monitor swings out over my bed.

          My right hand naturally rests on my mouse,
          on a hard mousepad,
          on the lowest shelf of my bedside-bookcase.

          > with giant screen TVs,
          > maxed out cable TV bill with full
          > $$ extra subscription sports,

          The last time I had a TV was a 13″, back in 1989.
          YouTube is more than enough for me.

    • Sunny129 says:

      “I’m not opposed to the idea of marriage,” he said. “But statistically, if half of all marriages end in divorce, and of the ones that remain married many are unhappily married, the odds are stacked against you.”

      Tony Hseih ( recently diceased CEO of Zappo)

    • Heinz says:

      Reminds me of a recent quip by Peter Schiff about Janet Yellen being selected as next Secretary of US Treasury.

      He said something like (and I am paraphrasing): ‘Yellen is a good choice because women are great at spending money’.

      Behind every man is a woman spending loads of money (some on credit) to ratchet up their ‘standard of living’.

      • Wolf Richter says:


        If Schiff actually said this, he’s full of it. Congress is the one that “spends” the money. The Treasury Department only makes sure it does get spent as Congress decided it should get spent, and that it borrows enough money to spend the amounts Congress decided to spend. Yellen might lobby Congress to spend more, but that’s all she can do.

        • Heinz says:


          However, Schiff (and I don’t necessarily with all he says) may be thinking ahead to an adoption of overt MMT in Biden administration, and thus potential consolidation of the Treasury and Fed to facilitate MMT in practice.

          We shall see.

  35. On one side of the floating bridge,
    across Lake Washington,
    lives Bill Gates and Jeff Bezos,
    on the other side, is the University
    of Washington, where I live.

    I was born into this neighborhood, 1960;
    so I know that ordinary single-family
    homes here sell for 1.5 million $.

    Thanks to the eviction moratoriums,
    and soaring lawlessness,
    “multifamily” ( shared housing )
    is worth nothing, you can’t even sell it.

    Oh, the contrast.

    Bill Gates’ (Ptolemaic) “science”
    is -horribly- misinformed;
    rich people have no clue.

    Jeff Bezos would ” forgive and forget ”
    crimes committed by poor people and
    drug addicts because -he- is not the victim.

  36. Sam says:

    “Red pill”.

  37. Brad Tifman says:

    The vast majority of new businesses fail. So much so in the coming inflation-depression.

  38. MonkeyBusiness says:

    I wonder how our consumers did during Black Friday.

  39. chase metz says:

    for what it’s worth, my short story; was gainfully employed in 1982 at 27 as the National Videotex Coordinator for Radio Shack. Videotex was the forerunner of what is now the “internet”. I was present at a large executive dinner meeting at the Plaza Hotel in New York in early June 1982. The then president of Radio Shack, a Mr. Jon Shirley (who had been hired away from his position as President of Microsoft), asked me during this meeting of some 20 executives what should be done to improve Radio Shack’s position in the burgeoning microcomputer business. He did so because I had started as a retail sales floor employee in a Computer Center in 1981. I replied “Mr. Shirley, change the name”. He asked what name. I replied “Radio Shack, the name is associated with hobby electronics and not the higher end microcomputer field now being dominated by IBM and their Personal Computer”. There was dead silence. Then Mr. Shirley replied, “thank you” and I sat down. The next day I flew back to DC where my office was located and found all my belongings from my office in a box with my name on it and a regional representative present to inform me that I was no longer employed by Radio Shack. I left and while looking for another job in that admittedly difficult post double dip recessionary environment, I decided to use my programming skills and business knowledge of online and started “Jobfinders” which was the first online job database which I sold to the forerunner of From there, I joined forces with other programmers in developing and marketing industry specific software for real estate property management. And then went on to co-found and co-develop ARGUS software, which is presently the global standard for commercial real estate analysis. Moral- I did not again have a paycheck until 1992 but sold ARGUS to Realpulse in 2000 and have been retired ever since. Thank you Jon Shirley because you gave me the kick in the a– without which I might have just now retired at 65. True Story.

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