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Squandering An Employment Opportunity in the Unemployment Insurance Debate

posted Jan 9, 2014, 1:35 PM by Ann Sullivan   [ updated Jan 9, 2014, 1:37 PM ]
January 9, 2014
By Ann Sullivan

Lost in the debate over unemployment insurance is an opportunity to look beyond a simple extension of the federal benefits to include meaningful reforms that could increase employment options for the more than four million Americans who are unemployed.

One of those much-needed reforms is that job-training centers, funded by the federal government and run by the states, recognize that entrepreneurship is creating a job and likely jobs for other people too.  These employment centers follow an outdated, 20th century workforce model that no longer exists – namely, that employment means a job at a large company.  Today’s work force looks nothing like that.  In today’s economy, which some are calling the independent workforce, 92% of all American businesses are microbusinesses – businesses zero to five employees. Of those, 90% are self-employed.  In addition, there is a whole group of individuals (37%) who supplement their income by running a business on the side, according to the Association for Enterprise Opportunity’s Bigger Thank You Think: The Economic Impact of Microbusiness in the United States Report.  All told, microbusinesses employ more than 41 million Americans.

AEO has been advocating for a simple fix that the Department of Labor (DOL) has encouraged but not mandated – recognizing that starting a business is creating a job. It has been a successful employment option for millions of Americans.  With a little imagination – and at no cost – the federal government could easily free up small business training resources at these job-training centers.  After all, the Small Business Administration has a robust curriculum and offices all over the United States that counsel individuals who want to start a business.  Why not encourage people to start their own consulting firm, for example, instead of applying for jobs that don’t match their skills just to keep unemployment benefits?  Why not encourage unemployed individuals to research starting a business by undertaking training a worthwhile employment activity?

There is a pretty simple explanation – government regulations discourage employment centers from doing this because they do not allow them to count someone who starts a business as an employment “success.”  Yes, that’s right – if you create your own job, that is not, in the federal government’s eyes, successful employment.  It is not hard to understand that an employment center would not offer training or use staff resources to encourage entrepreneurship when they can’t count it.  And funding for these centers depends on good result numbers.

The answer is simple.  Tweak a few words in the existing law to encourage these centers by allowing them to count entrepreneurship as a success.  There is no better place to do this than in the unemployment benefits legislation (S. 1845) that is currently being debated in the Senate.  Something so simple could yield impressive results.

To read more about AEO, click here.
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