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7 States Have Unemployment Benefits for the Self Employed

By February 22, 2009

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This piece on the American Express OPEN forum talks about the Self-Employment Assistance program sponsored by the U.S. Labor Department, which can allow unemployed individuals who are starting or want to start their own business to collect unemployment benefits. The Labor Department's site has this to say about the program:
Under these programs, states can pay a self-employed allowance, instead of regular unemployment insurance benefits, to help unemployed workers while they are establishing businesses and becoming self-employed. Participants receive weekly allowances while they are getting their businesses off the ground.
The catch is that right now the program is strictly voluntary, and as such only 7 states offer it:
  • Delaware
  • Maine
  • Maryland
  • New Jersey
  • New York
  • Oregon
  • Pennsylvania
Unlike traditional unemployment benefits, individuals may be eligible even if they are engaged full-time in self-employment activities - including entrepreneurial training, business counseling, and technical assistance. Participants work full-time on starting their business instead of looking for wage and salary jobs.

The importance of these programs can't be overstressed in times of high unemployment and growing layoffs, such as we are seeing right no. As the OPEN article points out, in 2002-2003 during the last economic downturn, the U.S. Census Bureau found that the number of new non employer firms (those with no paid employees except the business owner) increased by about 5% per year.

I wished my state had opted into this program when I lost my job in 2002. Instead of spending 39 weeks chasing down job leads that all turned out to be dead ends, I could have started my home business earlier and in some cases, may have had some counseling and free help to do so, even while I was collecting unemployment. When my benefits ran out, I might have had a stream of income in place instead of having to start from scratch.

While the jobs that are likely to be created through the latest economic stimulus program will be a great relief for many in construction related trades, layoffs are occurring across the board. Programs like the Self-Employment Assistance Program should get greater attention and additional funding as they can help displaced workers start supporting themselves through a home business. In other words, give them a "hand up" instead of a "hand out".

Source Article on American Express OPEN
Self Employment Assistance - U.S. Department of Labor

March 22, 2010 at 11:30 pm
(1) Ingrid says:

I have taken care of myself for 32 years and now I am in trouble.
I’m in construction sales, very good at what I do, sales are depressing and I need help…never had a hand out….nor a food stamp in my life….but I am in trouble…can you help..please

March 23, 2010 at 8:35 am
(2) homebusiness says:

Your first step is to contact your local and state agencies that provide assistance. These agencies go by different names in different states, sometime Health and Human Services, some Public Assistance, etc. Once you make contact with a social worker from one of these agencies you should begin getting the guidance you need. You can either look for these agencies in your phonebook, call your local city hall or town hall or you can search online for your state’s official website and start from there.

Times are very tough for many of us out here. You are not alone.

Best of luck to you,

Randy D.

October 3, 2010 at 9:18 am
(3) derek says:

I was just laid off from my job, but now they want me to come in three days a week to work freelance, at an hourly rate, now can I file a claim for regular unemployement or wait until , they either hire me back or gave no more hours for me, can I file a claim for working there, or can I not file one cuz I’m self employed technically after I was laid off, are they trying to screw me out of benefits?

October 3, 2010 at 2:54 pm
(4) homebusiness says:

Every state’s unemployment compensation program is different. You need to check with your local unemployment office for advice. I wouldn’t wait for anything that might never happen.

Randy D.

October 14, 2010 at 2:03 pm
(5) Mike says:

I am own a retail collectible store in Rochester, NY that I opened in 1991. Sales and the economy have pushed me to the brink. What happens to a guy like me?

October 15, 2010 at 10:55 am
(6) homebusiness says:

This post was about giving assistance to those who were unemployed but wanted to start a business without losing unemployment eligibility. As a self-employed business person, you wouldn’t qualify and were probably not paying unemployment insurance taxes in NY anyway.

If your personal finances are in dire straits, you could look into whatever NY state programs might be available that provide assistance (food stamps, medicaid, etc.) to the needy.

To try to get your business back on track and resuscitated, you might try hooking up with a counselor from score.org for suggestions.

Times are tough out there for many of us – you’re not alone. I hope these suggestions help you in some ways.

Randy D.

October 21, 2010 at 2:25 pm
(7) Liz says:

Unemployment benefits for self employed in AZ

I am an owner of an S-Corp. Since 2003, My company has paid in unemployment taxes on my wages.
I work in the construction industry drafting steel for the commercial building industry. I have had no new work in a month.
Do I have to close my business to collect benefits?

I am assured that when my clients have new work it will be sent my way. Even then, I have to do the work before I can bill. Once I do bill, I will have to wait as much as 90 days to get paid.

The real issue is, that if I am here to do the work when it comes in, I will earn more than if I seek a job. There are no jobs in my field available because construction is down. So,
I would be seeking low paying jobs and be unavailable to do new work when it comes.

Any good advice?

Thank you

October 21, 2010 at 2:40 pm
(8) homebusiness says:

The first thing I would do is check with your unemployment office as each state is vastly different. I know here in New Hampshire, you can’t get unemployment if you have a business, although if you are an independent contractor between jobs you can.

This post was about people who want to start a business being able to get unemployment in certain states, even though they are starting a business. It’s not about what happens when the business goes south.

The so-called “Great Recession” was supposed to have ended last year. But people like you and me know better, don’t we. I’m finding my clients are now taking their sweet old time paying me – yet I still have to eat and pay my mortgage.

I accepted employment while I was self-employed once, for less than what I was making on my own. I liked the thought of a steady cash flow, and I still do. 89 days later (I was supposed to get benefits after 90 days) I was laid off with no unemployment after sending all of my clients elsewhere. It took a long time to recover from that. So, being the independent type, my suggestion is to wait it out if you possibly can, and see if you can find other sources of business by diversifying, trying new markets, finding new customers, etc. But in the meantime, since taxes were paid for your unemployment I’d check with your local office to see what advice they can offer you.

Best of luck to you – I (and many others) feel your pain.

Randy D.

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