Stateline Story

Obama Asks States to Encourage Entrepreneurs

  • October 06, 2011
  • By John Gramlich

Touting the role that small business owners play in the nation's economic recovery, President Obama wants states to do more to turn laid-off workers into entrepreneurs.

Obama is highlighting programs in seven states — Delaware, Maine, Maryland, New Jersey, New York, Oregon and Pennsylvania — that allow laid-off workers to collect unemployment benefits even if they are not looking for jobs, provided the workers are in the process of setting up new businesses themselves.

The idea behind so-called Self Employment Assistance programs is simple: give laid-off workers more of an incentive to launch their own companies in the hopes that they will eventually succeed and hire other unemployed workers. Program participants generally must prepare a business plan and prove that they are starting a viable company; in exchange, they receive 26 weekly benefit checks for the same amount that they would otherwise receive while looking for regular jobs.

Advocates say such programs can serve as a lifeline to unemployed Americans who have business experience and the desire to start their own company, but may need an extra push during tough economic times.

"Let's take this safety net program and turn it into a trampoline to get people more opportunities in the private sector," U.S. Senator Ron Wyden of Oregon recently told The (Portland) Oregonian . Wyden is sponsoring legislation in the Senate that would help expand Oregon's program nationally, and Obama included the idea in the $447 billion American Jobs Act he sent to Congress in September.

While Self Employment Assistance programs have won bipartisan backing in many of the states where they exist, skeptics question whether they will help enough people to drive the unemployment rate down in any noticeable way. A relatively small number of laid-off workers qualify for the programs in each state, and of that total, even fewer successfully start companies. Others caution that a national expansion of Self Employment Assistance would increase the possibility of waste and fraud, with government benefits potentially going to those who have no real desire to start a company.

Self Employment Assistance is one of several state jobs programs that Obama wants to replicate on a national scale.

As Stateline has reported , Obama also wants to expand a Georgia program, Georgia Work$, that pairs unemployed workers with companies in short-term, unpaid apprenticeships in the hope that such stints will lead to full-time work. The president also would like to build more wage-subsidy programs, which encourage companies to hire unemployed workers by subsidizing their salaries for a short period of time before the employer steps in. National Public Radio profiled Mississippi's wage-subsidy program earlier this week.

Tags: Safety Net