AI could make more people their own boss
Many Americans have long yearned to be their own boss. The ideal is as old as the Republic itself: Thomas Jefferson saw the yeoman farmer—economically independent and therefore free to participate fully in civic life—as the model citizen. For decades, around 60% of Americans have said they want to be self-employed. Yet in recent years fewer than 10% actually have been.
That is now changing. America is in the midst of a small-business boom that began during the COVID-19 pandemic and has since gathered pace. It is being fuelled by artificial intelligence, tight labour markets that discourage hiring, and the growing ease of launching online shops on platforms such as Etsy, Shopify and TikTok Shop. In June the Census Bureau recorded more than 531,000 new business applications—an 81% increase on the average monthly figure for 2019. Similar forces have lifted self-employment in Britain and France, according to the payments firm Stripe, but the trend is most pronounced in America. It is a welcome development.
Small businesses enjoy political popularity, yet economists have often been sceptical. Many fail. Those that survive tend to lag in productivity: American small firms are only about 70% as productive as large ones. In recent years much of the economy’s innovation has come from a handful of “superstar” companies. Small firms frequently lack the digital tools and administrative efficiency that scale provides.
There are signs, however, that AI can help close that gap even as it automates some roles inside big employers. Basic chatbots can already assist with registering a business, drafting plans and marketing to customers. More advanced AI agents can handle repetitive administrative work and extract insight from sales data. Many of America’s new firms are one-person operations that the government classifies as unlikely to hire in their early years. With AI agents performing the work of employees, some may nevertheless be able to scale.
This raises the intriguing possibility that self-employment could offer meaningful alternative work for people whose jobs are displaced by AI. Pessimistic voices in Silicon Valley warn of a “permanent underclass” of people with little capital who are left performing only menial tasks once professional roles disappear. A more hopeful scenario is that the technology democratises the ability to turn ideas into viable businesses. Early evidence is encouraging: Bank of America data show a rising share of new entrepreneurs coming from lower-income backgrounds.
Becoming a “solopreneur” will not restore the manufacturing jobs that populists crave, nor will it recreate the predictable 9-to-5 corporate ladder. Most of the new startups are service businesses—many in technology, retail or health care. Their founders, however, report high satisfaction with this kind of work. Encouragingly, many of these firms are appearing in places once hollowed out by deindustrialisation; Shopify notes that the share of new businesses starting in rural areas has been rising.
Government can still make entrepreneurship easier. Although the Affordable Care Act improved matters, self-employed Americans often still struggle to obtain affordable health insurance; people should not have to cling to traditional jobs simply to stay covered. Large parts of the economy remain burdened by occupational-licensing rules that raise barriers to entry. These should be pared back.
No one can predict exactly how AI will reshape work. Across-the-board pessimism, however, is unwarranted. An economy powered by individual entrepreneurship—with AI handling the tedious back-office tasks—could prove both fulfilling and lucrative for many. It might even help more Americans realise Jefferson’s old ideal: self-reliance as a path to liberty.