Self-employment, the cash-starved Canadian Dream: Don Pittis

Instead of the economy having to create jobs for young people, young people use their sparkle and drive to create jobs for the economy. It's an appealing concept, but is it the reality, Don Pittis writes.
Entrepreneur Stuart Hickox holds a compact fluorescent lightbulb. As much as 16 per cent of Canada's workforce is self-employed, a figure that may move higher. (The Canadian Press)

"What I find most interesting is the number of students who are not looking for a job at graduation." 

That slightly outrageous comment from the outspoken Sean Wise, professor of Entrepreneurship at Ryerson University, came before we got the latest jobs numbers from Statistics Canada, which showed the economy shed 46,000 jobs in December. As has been the case for a while now, the number of unemployed — especially those in the 15 to 24 age bracket —  remained stubbornly high.

Wise wasn't saying kids nowadays are lazy. Instead, he's suggesting they want to work for themselves, not for somebody else. They want to be self-employed.

Do it yourself

"Amongst Millennials there seems to have been this paradigm shift where less students are looking for the credentials leading to a full time job and more students are looking for the knowledge, skills and experience they need to start their own businesses," says Wise. 

The concept is appealing. It turns responsibility on its head. Instead of the economy having to create jobs for young people, young people use their sparkle and drive to create jobs for the economy.

It is the New Canadian Dream. Rather than walking into the jungle at 17 and finding a diamond mine like Uncle Ben in Death of a Salesman, today's 17-year-old Canadian walks into Waterloo and invents a million-dollar app. 

The model certainly fits with the modern business-driven ethic celebrated by right-of-centre governments and the business press. But you don't have to be right-of-centre to benefit if Wise's "paradigm shift" is a success. Self-employment makes up about 16 per cent of all jobs in Canada. And people whose self-employment ventures grow eventually become employers themselves, employers who provide half of all Canadian jobs.

Harsh reality

Every business journalist has done at least one enthusiastic story about youthful start-ups and successful entrepreneurs. The CBC show Venture used to specialize in the genre. And while there are many anecdotal success stories, the reality is harsher.

Herbert Schuetze is an economist at the University of Victoria who studies self-employment, and while he too celebrates its successes, he knows there is a downside.

"A lot of self-employment that we see going on in Canada is sort of employment of last resort," says Schuetze, "I can't find a job and so I strap a lawn mower to my pickup truck and now I'm doing lawn services."

Let's help people who want to be self-employed and are willing to take that route- YES president Nancy Schaefer

That's exactly where Mike Jamieson fits into the equation. Jamieson went to college to become a municipal firefighter, a great job with a high wages and good benefits. But two years after completing his Seneca College course, he has yet to find a real job.

This autumn he strapped a ladder onto his car and set up a Facebook site called TroughGuys that does various handyman jobs outside the home. When the ice storm hit he went out and bought a chain saw. 

"The ice storm ruined a lot of trees in the city. It's kinda sad. But it's given me a lot of business," says Jamieson. Of course he only earns a small fraction of what he'd get in his "dream job" as a fire-fighter. That's why such jobs are called "employment of last resort."

"Its tough", he says, "but it pays the rent and puts food on the table."

In fact, Canadian statistics over the last several decades confirm that as the economy weakens, self-employment grows. The author of the Statistics Canada report Self-employment in the downturn Sébastien LaRochelle-Côté says the data is incomplete, but it appears that the people who are successful at starting new businesses are men over 55. Those are also the people who are also more likely to create jobs for others.

LaRochelle-Côté says it does not appear they are starting the new businesses because they are being pushed into it by job loss. Instead they often leave a good job to start a dream project. They are pulled.

Experience pays off

That's the story of Toronto's David Himel, who five years ago started Himel Brothers Leather. There are no brothers, but he sells his high-end leather coats in New York and Tokyo and employs four full-time workers.

David Himel of Himel Brothers Leather raised his own capital before starting the business. (Don Pittis/CBC)

One of the secrets of Himel's success, beside years of experience, is that over half a lifetime he had accumulated his own capital, something young entrepreneurs just can't manage.

Nancy Schaefer is president of Youth Employment Services, a non-profit charity founded decades ago by the Rotary Club with the happy acronym YES. Having seen youth employment close up she is suspicious of the new Canadian Dream.

YES runs a variety of programs to help young unemployed people create their own jobs but she says their motivation is quite different from Himel's.

"We have definitely seen a trend towards people having to become self-employed because they have no other option," says Schaefer. "There is definitely a trend toward that out of necessity, not out of passion."

YES teaches young people how to do a business plan, but the majority come across a serious stumbling block. While interest rates remain low with the stated intention of stimulating business investment, aspiring young capitalists just can't get access to that cash.

"It's highly unsuccessful, it is highly unlikely the bank will provide start-up capital for a new business," says Schaefer. She insists that if we want want the "paradigm shift" of youth self-employment to work, that is the thing that has to change. 

"Let's help these young entrepreneurs. Let's help people who want to be self-employed and are willing to take that route," says Schaefer. "I'm all in favour of leadership by the federal government and large corporations to loosen up the money and help this sector of young people."


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