As of 2023, one in three Americans had a side hustle — of those, 52% were started in 2022 or later. From picking up an extra job in the gig economy to igniting an exciting entrepreneurial venture, millions of people started a side hustle, and People of Color were part of this wave. One of the causes of the side hustle boom was the rising cost of living and the need to counter the effects of inflation. Nearly one in four Americans depended on their side hustle earnings for their everyday expenses.
While side hustles have helped many people get by with their everyday needs, they’ve also helped build Black wealth, especially amongst Black women, who have been one of the fastest-growing groups of entrepreneurs in recent years. Nearly one in three Black women have taken up part-time work or a side hustle alongside their full-time job. However, as a result of pursuing a side hustle, many People of Color have suffered from a lack of work-life balance (or work-life blend, as I often say in my diversity, equity, and inclusion (DEI) consultancy). Ultimately, are side hustles helping or hurting People of Color in their pursuit of entrepreneurship and wealth? I’d say it’s a mixed bag.
Side hustles have helped People of Color manage job loss
While the pandemic inspired a new generation of technology workers to join the ranks of Google, Apple, and Microsoft, the bust of tech’s hiring spree and subsequent cutbacks in 2022 and 2023 have affected workers of color. Many companies sought to diversify their workforce, and People of Color began joining the ranks of the country’s top-performing companies. However, significant layoffs in 2022 and 2023 caused many people’s dreams of tech careers to come crashing down. With the rise of side hustles, many people could stay afloat despite the looming layoff atmosphere. I personally know of several individuals who started a side hustle, experienced a job loss, and managed to make it through that period of hardship with relative security because of their side hustle income. In this sense, side hustles may have saved people who would have otherwise fallen through the cracks.
Related: After Her Unexpected Layoff, This Founder’s Love of Fragrances and Self-Care Helped Her Cope. Now She’s Disrupting the Fragrance Industry.
Side hustles have become tools for long-term wealth-building
There are numerous examples of minority business owners who have not only started side hustles to earn a few extra dollars every month but have effectively scaled their side hustles to full-time roles. For example, Cassiy Johnson started a print-on-demand business through Etsy and scaled it to $800,000 in annual revenue since 2020. Or even Jayson Siu, who started a car accessories brand in his parents’ basement and scaled it to a $500,000 business.
What’s even more powerful is the impact that minority-owned businesses have on the overall economy. Black business owners in the United States reportedly own 3.5 million businesses and employ more than 1.2 million people. Therefore, Black-owned side hustles-turned-businesses have helped employ more people than previously thought. Its ripple effects have helped individuals who may have faced various types of systemic racism in the workforce to focus on building wealth for their own families instead of building wealth for a large company. For many people, starting a side hustle that turned into a sustainable business has elevated their family’s wealth trajectory in meaningful ways.
Related: How to Build Wealth Through a Side Hustle
Side hustles may have harmed the mental wellbeing of People of Color
Like with all new businesses, working around the clock can cause many people to experience higher stress, increased risk of burnout, and potential mental health challenges. Entrepreneurs of color are just as affected by mental health challenges as anyone else. Unfortunately, one report has shown that People of Color experienced worsening mental health because of the pandemic and disproportionate barriers to mental health resources. In addition, the fear of failure and imposter syndrome can also hold entrepreneurs back from achieving their business goals and create roadblocks for their mental wellbeing. On top of wearing multiple hats in their business, Black entrepreneurs, in particular, were denied loans nearly twice as often as white business owners. All that said, starting a side hustle while working a full-time job and trying to scale with loans and other capital can be a mental and emotional challenge for entrepreneurs of color.
Related: Why Black Entrepreneurs Should Consider Therapy
Side hustles didn’t improve the wealth gap between People of Color and white Americans
Despite the positive gains in financial resources at the individual level, the increased prevalence of side hustles didn’t improve the wealth gap for entrepreneurs of color. Black Americans faced more debt during the pandemic than their white counterparts, and the gap between Latino and white wealth also lagged behind that of white Americans. Entrepreneurship and creating a side hustle may have helped line the pockets of some entrepreneurs, but it ultimately didn’t change the balance of power or improve the larger issue of wealth inequality in the United States.
Final thoughts
While side hustles have had a powerful impact on communities of color, they’ve also had their drawbacks. The median net worth of Black households increased by 60% between 2019 and 2022, and other promising trends were found in Latino, Asian, and immigrant communities partially because of side hustles. Building wealth has become even more accessible for People of Color than in previous decades. In addition, being resilient in the face of frequent layoffs and job uncertainty has been a source of stress for many people. Side hustles have helped in that regard. But at the cost of mental health and the stress of not acquiring the capital necessary to scale, not everyone has been able to thrive in their side hustle. The rise of minority-owned businesses is only increasing. However, the more we can support entrepreneurs of color in their pursuits, the better our economy and communities will be.
Read the full article here
