Home Turning the Unemployed Into Entrepreneurs

Turning the Unemployed Into Entrepreneurs

The dreaded pink slip – it’s still an all-too-common occurrence in America today. Despite an economy that appears to be on the road to recovery, there are still too many Americans being laid off every day. So what are we going to do about it?

Most unemployed Americans have only a few options. Most spend their days applying for jobs, not just because they need the opportunity to work and earn a living, but also because job searching is a prerequisite for collecting unemployment compensation.

Get a Job – or Start a Business?

But thanks to Senator Ron Wyden (D – Ore.) and several other U.S. senators, Americans in some states have another option. Self-Employment Assistance (SEA), a provision in the Middle Class Tax Relief and Job Creation Act of 2012, legislation passed by Congress and signed by President Barack Obama in February, allows the states to “empower unemployed workers to start their own businesses.”

Although the U.S. Department of Labor just announced that $35 million in funds were available to “develop, enhance and promote SEA programs in all 50 states, the District of Columbia, Puerto Rico and the U.S. Virgin Islands,” five states – Delaware, Maine, New Jersey, New York, and Oregon – already have active SEA programs.

To entrepreneurial types this seems like a no-brainer. Scott Gerber – ReadWriteWeb contributor, founder and president of the Young Entrepreneur Council, and a leader in the movement to #Fix Young America (Senator Wyden, in fact, wrote a chapter in Gerber’s #Fix Young America book addressing this topic) – says SEA is “just common sense… and a simple realization of the new reality of the startup economy.”

Big Government – or Small Business?

There are, of course, those who say SEA won’t work, that it’s just another “big government” program. Gerber counters that argument this way: “Government can’t cure all woes. But there are certain things the government can do, like remove barriers.” More to the point, he continues, “It’s obvious that long-term unemployment solutions like sending resumes isn’t working.”

Actually there’s more fodder to support SEA, which isn’t exactly a new idea. Wyden first wrote legislation to “empower states to provide unemployment compensation to individuals for the purpose of funding self-employment” back in 1985.

And just a few years later – in the early 1990s – two demonstration projects (allowing people to start businesses with their unemployment benefits) were created in Massachusetts and Washington state. The results? Researchers concluded SEA projects “increased the likelihood of self-employment and the amount of time participants were employed.”

Additional research looked at SEA programs established in the late 1990s in Maine, New Jersey and New York. That study showed SEA participants “were 19 times more likely than non-participants to be self-employed at any point after their period of unemployment, and were four times more likely to have obtained any type of employment.”

There’s more. Oregon has been operating an SEA program since 1995, and a survey shows nearly half of its program’s participants have created an average of 3.12 new jobs. SEA programs, says Senator Wyden, turn unemployment insurance into “job multipliers.”

Who Qualifies?

You can’t just say you’re starting a business to qualify for the SEA program. Those eligible to collect unemployment must have a “viable business plan” and “be working full-time” to launch “a sustainable business.” If you qualify, you will be able to collect your unemployment benefits for a maximum of 26 weeks, even though you are not searching for full-time employment.

To further help startup entrepreneurs, the Department of Labor is calling on the resources of the Small Business Administration, SCORE and the Small Business Development Centers to provide technical assistance and training in the participating states.

To some startups an unemployment check may seem too small and trivial to make a difference. But during startup, every dollar counts. And as Gerber says, “A lot of little somethings will help move the economy forward.”

The White House and the Department of Labor want to encourage other states to adopt SEA as soon as possible. States must apply for the grants by June 30, 2013.

About ReadWrite’s Editorial Process

The ReadWrite Editorial policy involves closely monitoring the tech industry for major developments, new product launches, AI breakthroughs, video game releases and other newsworthy events. Editors assign relevant stories to staff writers or freelance contributors with expertise in each particular topic area. Before publication, articles go through a rigorous round of editing for accuracy, clarity, and to ensure adherence to ReadWrite's style guidelines.

Get the biggest tech headlines of the day delivered to your inbox

    By signing up, you agree to our Terms and Privacy Policy. Unsubscribe anytime.

    Tech News

    Explore the latest in tech with our Tech News. We cut through the noise for concise, relevant updates, keeping you informed about the rapidly evolving tech landscape with curated content that separates signal from noise.

    In-Depth Tech Stories

    Explore tech impact in In-Depth Stories. Narrative data journalism offers comprehensive analyses, revealing stories behind data. Understand industry trends for a deeper perspective on tech's intricate relationships with society.

    Expert Reviews

    Empower decisions with Expert Reviews, merging industry expertise and insightful analysis. Delve into tech intricacies, get the best deals, and stay ahead with our trustworthy guide to navigating the ever-changing tech market.