Entrepreneurship in the U.S. is slowing — and other happenings in the world of work

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• Record high gas prices rained on holiday weekend plans. The average cost of a gallon of gas hit an all-time high of $4.60 last week, an increase of 51% over last year, certainly stalling some travel plans.
• A wave of layoffs hit the tech sector, with venture-backed firms being hit especially hard as investors abandon risky bets. Fintech unicorns Bolt and Klarna announced cuts along with giants like Netflix and PayPal.
• College enrollment is falling. This spring’s number of enrolled undergraduates dipped below pandemic levels, according to new data. The decline suggests many are weighing the value of college against its cost. Meanwhile, separate research just found that most student loans are “small,” with 53% of borrowers owing $20,000 or less.
• Company loyalty could be costing you. According to new research, job-hoppers’ salaries are 7% higher on average — and existing employees are realizing it. To curb that discontent and retain workers, some companies like Apple are raising pay.
• Remote job postings are most plentiful in a handful of industries, with technology, information and media leading the way. Read more in LinkedIn’s latest edition of Workforce Insights.

Take a closer look at recent trending topics — and engage with meaningful conversations happening on LinkedIn.

Why's small business formation slumping?

• Entrepreneurial activity, measured by LinkedIn’s Company Formation Index, has declined in the U.S. for three consecutive months (-2.65% year-over-year in February; -3.6% year-over-year in March; -9.2% year-over-year in April). That’s in line with recent Census data around business formation. Small business job postings did also start to slow after the Fed raised interest rates earlier this month.
• The slowdown could be attributed to the general economic outlook. “If I were thinking of starting my business over or venturing anew, I’d say no way,” entrepreneur Gary Spedding commented. The mom-and-pop shops “who barely have a dime to spare,” he said, are mostly at the mercy of the markets these days.
• This suggests entrepreneurial activity is cooling, but it’s not all bad news. Company formation levels still remain higher in 2022 than during the same time period in 2020, indicating that businesses are still getting off the ground at a higher rate than before the pandemic.
• “Long hours and low pay discourages many,” entrepreneur Bill Fetke commented, alluding to why entrepreneurial efforts seem to be losing steam. For those looking to venture out on their own anyway, he recommends keeping a primary job at first to ensure a steady paycheck. For other tips to help those making the jump, check out LinkedIn’s Big Trends in Small Biz newsletter.
• Note: LinkedIn’s Company Formation Index is the 3-month average count of unique companies on LinkedIn, measured by the number of LinkedIn members who added a new founder position to their profile indexed to the level in January 2016 (100).

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What's happening with the economy?

• Gross domestic product dropped 1.5% in the first quarter on an annual basis — its worst showing since the pandemic-caused 2020 recession. The pullback was caused by a wider trade gap, with the U.S. importing more than it exported during that time period.
• The news comes at the same time as initial jobless claims edged downward, leading some to ask how the economy can contract while firms continue to hire. “It’s important to note that employment recovers in fits and starts, not a straight line,” financial advisor Andrew Wang commented.
• Meanwhile, a key measure of consumer prices showed that inflation slowed slightly in April, although still hovering near a four-decade high. “We continue to anticipate strong consumer spending activity and resilient business investment growth through the summer,” Gregory Daco, EY-Parthenon’s chief economist wrote. “But high inflation, rising interest rates and depressed financial markets will no doubt weigh on sentiment and demand as we approach year-end.”
• Economic growth is expected to resume, albeit at a slower pace, and it’s still too soon to tell if a more dramatic drop off is on the horizon. “Slower growth is almost inevitable after last year’s blockbuster performance, and inflation is likely going to take time to cool,” economy reporter Sarah Foster explained.

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How's the job market right now?

• Despite data showing there are about two open jobs for every unemployed American, many are pessimistic about the job market. According to a new McKinsey survey, most Americans feel worse about their level of access to economic opportunity now than they did in 2021. Those surveyed cited limited open roles, current physical and mental health, and needing different credentials or experience as the greatest barriers to employment.
• About 34% of those surveyed pegged limited job availability as the single greatest hurdle to employment. “The problem is not a lack of jobs,” exercise specialist Kyle Honcharik commented. “The problem is a lack of jobs that pay enough for a single person to afford necessities like food, shelter and transportation.” Accountant Mary K. agreed that the escalating costs of living, from housing to gas, is what makes her weary of the job market.
• No matter the public perception, it’s “still a strong job market for jobseekers,” according to LinkedIn’s senior economist Kory Kantenga. Employees are still in the driver’s seat, with the power to demand a higher salary and more flexibility from employers, but it could start to level out in the coming months.

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• Wednesday, June 1: The Bureau of Labor Statistics will release the Job Openings and Labor Turnover Survey for April, which measures job vacancies across industries.
• Wednesday, June 1: LinkedIn Senior Editor at Large George Anders will release his latest edition of Workforce Insights, focusing on worker confidence in employers.
• Thursday, June 2: The Labor Department will release initial jobless claims for the previous week. The report, a proxy for layoffs, tracks the number of people filing for unemployment benefits.
• Friday, June 3: The Bureau of Labor Statistics will release the May jobs report. The monthly release tracks the unemployment rate and how many jobs were added to the economy.