The rise of side hustles has become a defining trend in recent years, especially since the COVID-19 pandemic. With the rising cost of living and inflation squeezing many Americans, People of Color (POC) have increasingly turned to side hustles as a way to bolster their income, build wealth, and secure financial independence. In fact, as of 2023, one in three Americans were participating in side hustles, with more than half of these ventures launched in 2022 or later.
While side hustles have proven to be a vital financial lifeline for many, the question remains: Are they truly helping People of Color build wealth, or could they be doing more harm than good in the long run? In this post, I’ll dive deep into the pros and cons of the gig economy and side hustles, exploring how these opportunities are shaping the future for minority entrepreneurs.
Why People of Color Are Embracing Side Hustles
The rise in side hustles can be traced back to several economic pressures, including skyrocketing living costs and the instability of traditional job markets. For People of Color, the side hustle has become a means to counteract not only inflation but also systemic economic barriers.
- Financial security: Nearly one in four Americans now rely on side hustle earnings to cover everyday expenses.
- Entrepreneurial spirit: More people, especially Black women, have been able to use side hustles to build businesses, with Black women entrepreneurs being one of the fastest-growing groups in the market.
In many cases, these side hustles started as part-time gigs but have scaled into full-fledged businesses. The gig economy has enabled many POC to forge paths towards entrepreneurship, allowing them to build generational wealth while simultaneously pushing back against the racial wealth gap that has plagued minority communities for decades.
Side Hustles: A Lifeline During Job Loss and Economic Uncertainty
When the pandemic hit, millions of workers were laid off, and tech workers of color were among those most affected. The layoffs in 2022 and 2023 impacted minority communities significantly, undoing years of progress in workforce diversity. For many, side hustles became a safety net during this period of economic uncertainty.
- Job loss resilience: A side hustle allowed workers to stay financially afloat during layoffs, particularly in industries where People of Color were overrepresented. For example, tech and retail saw massive layoffs, but many who had side businesses managed to weather the storm without falling into debt.
- Pivoting to entrepreneurship: The ability to quickly pivot to a side hustle in the wake of job loss has become a vital tool for entrepreneurial minorities to regain control of their financial futures.
I know people personally who started a side hustle only to face job loss shortly after. Yet, thanks to the additional income, they managed to navigate a turbulent period with much less financial strain.
Side Hustles as Tools for Building Long-Term Wealth
The stories of Black entrepreneurs who started side hustles and scaled them into successful businesses are inspiring. Take Cassiy Johnson, for example, who began a print-on-demand business on Etsy and grew it to an $800,000 annual revenue within just a few years. Similarly, Jayson Siu started a car accessories business from his parents’ basement and turned it into a $500,000 business.
These success stories aren’t isolated. Across the U.S., minority entrepreneurs have leveraged side hustles to build businesses, not just for themselves but for others as well:
- 3.5 million Black-owned businesses in the U.S. employ more than 1.2 million people, according to recent reports.
- The impact of Black-owned businesses extends beyond wealth accumulation, contributing significantly to local economies and providing jobs in communities that have traditionally faced discrimination and economic inequality.
Thus, side hustles have played a crucial role in helping POC build long-term wealth, create jobs, and contribute to the economic fabric of their communities.
The Mental Health Cost of Side Hustles
While the financial benefits of side hustles are undeniable, they come with significant drawbacks—particularly in terms of mental health. As an entrepreneur myself, I can speak to the stresses of juggling multiple roles, but this reality is even more pronounced for minority business owners.
- Burnout: Many entrepreneurs, especially People of Color, work tirelessly around the clock to make their side hustles successful. This often leads to high stress and burnout.
- Imposter syndrome: Many minority entrepreneurs struggle with feelings of insecurity or self-doubt, made worse by systemic racism and lack of access to resources like funding or mentorship.
- Mental health disparities: People of Color are often disproportionately affected by mental health challenges, especially in the face of barriers to mental health care. The fear of failure, coupled with the constant grind of managing a business while working full-time, can leave them vulnerable to emotional exhaustion.
On top of this, reports show that Black entrepreneurs were denied loans nearly twice as often as their white counterparts. These systemic barriers make it harder for minority business owners to access the capital they need to scale their businesses, contributing to financial stress and emotional strain.
Side Hustles Aren’t Closing the Wealth Gap
Despite the financial success stories, side hustles have not done much to narrow the racial wealth gap in America. While some entrepreneurs have built successful businesses, the overall disparity in wealth between People of Color and white Americans remains vast.
- Debt disparities: Black Americans saw a significant rise in debt during the pandemic, with many finding it harder to manage financial obligations than their white counterparts.
- Wealth gap: Even as side hustles have helped some people of color build wealth, they haven’t shifted the broader systemic issues of income inequality and wealth disparity between racial groups.
The reality is that side hustles alone are not enough to solve the larger economic issues facing People of Color. To truly make a lasting impact, larger systemic reforms are necessary—particularly around access to capital, business loans, and financial literacy education.
Conclusion: Side Hustles—A Mixed Blessing for People of Color
The rise of side hustles has been a game-changer for People of Color, offering a pathway to financial stability, entrepreneurship, and wealth-building. However, as we’ve seen, there are significant downsides to the gig economy, including mental health challenges and the inability of side hustles to address the broader wealth gap.
The gig economy has provided an avenue for many to overcome job losses, build businesses, and employ others—but it has not solved the deeper issues of systemic inequality. As we continue to support minority entrepreneurs, we must also push for systemic reforms that enable them to thrive in their businesses, not just survive.
By focusing on both individual entrepreneurial efforts and larger policy changes, we can create a more equitable future for all.
Relevant links for further reading:
- Gig Economy and Side Hustles
- Minority Entrepreneurs in the US
- Racial Wealth Gap in America
- Mental Health Resources for Entrepreneurs
Photo credit: Kit
