The COVID-19 pandemic has led to a surge in start-ups in 2020 and 2021, primarily in the e-commerce industry. This increase was driven by the new “at-home” lifestyle, with notable growth in areas such as home décor, food delivery, and virtual entertainment.
According to economist John Haltiwanger, this pattern doesn’t simply represent a survival strategy, but also signals a major shift in the American economy toward service-based sectors like bars, restaurants, and fitness centers. The majority of American workers now appear to prefer interactive, creative roles over traditional labor-intensive jobs.
We have seen a roughly 60% increase in new business growth annually over the past four years compared to the three years prior to the pandemic. This growth is largely due to a shift in work culture that emphasizes the importance of flexibility and remote working. This has resulted in a surge in entrepreneurship targeting different industries, significantly diversifying the economy.
Pandemic drives surge in U.S. startups
In fact, one in four startups is focused on technology or software development, indicating the growing importance of digital solutions in society.
Interestingly, the country is seeing an influx of startups across all sectors and regions. This wave of privately owned businesses and growth-oriented startups has the potential to create new job opportunities, even in sectors that have been previously underrepresented. This bodes rosy for our economy, which is full of diversity and potential growth.
In particular, we have observed a notable increase in startups within traditionally underserved and minority communities. This shift means less economic inequality facing these communities, greater financial inclusion, and social mobility.
This startup boom has created an urgent need for supportive policies aimed at nurturing and strengthening new businesses, stimulating economic growth, and reducing social inequality. Haltiwanger sees the startup surge as a path to greater national productivity, technological advancement, improved employment rates, and overall economic resilience.
As this wave of entrepreneurship spreads across sectors, it raises hopes that it will bring about a transformational change in the U.S. economy. Though we are navigating uncharted territory, the prospect of continued economic growth is fueling optimism about the future of the U.S. economy.
