It's a common complaint that the government doesn't do enough to support the self-employed and the complaint is not without justification.
On the other hand, though, maybe the government is not quite as clueless as many of us believe.
The economy has lost close to 3 million jobs since the beginning of the recession, declared to have started in December 2007. And, as we all know, self-employment increases in times like these.
For example, in 2002-2003 during the last economic downturn, the U.S. Census Bureau found that the number of new nonemployer firms (those with no paid employees except the business owner) increased by about 5% per year. That is a sizable jump over the previous average of 3% population growth per year.
Those newly self-employed individuals are often confronted by a problem, though, if they are receiving unemployment benefits. You are not allowed to collect unemployment if you are (or are trying to be) self-employed. As I witnessed one official telling a newbie nonemployer wannabe, "If you spend even one hour a week working on starting a business, you lose your unemployment benefits."
As far as it goes, that is accurate. But it doesn't tell the whole story.
Buried in obscurity on the Labor Department web site is information about a little known, little used type of unemployment insurance, specifically created for unemployed people who can't find work and opt for self-employment. It is called, very simply, Self-Employment Assistance and, to use their own words:
Self-Employment Assistance offers dislocated workers the opportunity for early re-employment. The program is designed to encourage and enable unemployed workers to create their own jobs by starting their own small businesses.
There is a catch. This is a voluntary program that state governments can participate in if they want to and, so far, only seven states have opted in. Those states are:
- New Jersey
- New York
To qualify, you would have to be eligible for unemployment insurance and the benefits under this program are the same, in terms of dollar amounts the beneficiary receives. In addition, you have to be identified through their State's profiling system as "likely to exhaust regular unemployment benefits" to be eligible to participate.
So, this isn't the type of thing that will take all the pressure off those "forced" entrepreneurs because, so far as I know, nobody has ever gotten rich off unemployment insurance benefits. But it does offer laid-off workers who want to start their own businesses something of a breather at least, it does in those states that offer it.
Finding out about this sort of thing makes me feel a little better about the government's attitude toward self-employment, although it is distressing to see how few states have opted into the program and how little publicized it is.
So, if you live in one of the magical seven states that has the program, you can encourage family and friends and neighbors facing employment to consider starting their own businesses. And, if you live in one of the other forty-three states that don't offer Self-Employment Assistance, it may be time to contact your state department of labor to ask why.
The federal government is large and complex and has more programs than you can shake a stick at. The federal government is also terrible at marketing most of those programs. But, given the situation in the labor market, it's irritating to discover that they have this form of support for self-employment and nobody knows about it.
Maybe, if word about it spreads, more states will be forced to sign on. And maybe, if enough people start using it, the federal government will finally begin to see that self-employment is an economic trend that isn't going to go away.
* * * * *
About the Author: Dawn Rivers Baker, an award-winning small business journalist, regularly reports and analyzes small business policy and research as the editor and publisher of The MicroEnterprise Journal. She also blogs at The Journal Blog.