Self-Employment Assistance
The COVID-19 pandemic’s tremendous impact on the United States economy, will continue for the foreseeable future. The self-employed workforce has been undeniably damaged. A combination of surveys from the U.S. Census Bureau shows that self-employed adults working in the states that have been hardest-hit by the pandemic are more likely to face economic hardship than workers who are not self-employed.
Also, self-employed individuals often have less access to economic relief and assistance in comparison to those who are employed in the public and private sectors.
For instance, the only state program geared toward self-employed workers in California is the EDD’s Disability Insurance Elective Coverage program. Under this program, people who do not pay into State Disability Insurance through wages can still receive Disability Insurance and Paid Family Leave benefits.
Other efforts throughout the years have tried to expand access to government assistance for self-employed individuals. In 2013, CAMEO advocated for California to apply for $5.3 million from the U.S. Department of Labor to initiate, administer, and market a Self-Employment Assistance (SEA) program to help the unemployed to start their own businesses. Under a SEA program, unemployed workers would have been able to maintain their unemployment insurance benefits while they started their own small businesses without having to look for other full-time work. Unfortunately, the bill languished in the Assembly Appropriations Committee and never made it. The proposed SEA program would have created 5,200 new businesses and 15,000 new jobs.
Why Self-Employment is Important
The self-employed is the largest category of business establishments in the country. Researchers are trying to understand this segment of the labor force. The main takeaway is that this is a significant part of the labor force and growing – and we must find ways to help them succeed.
- The latest U.S. Census numbers show that more than three-fourths of the nation’s businesses do not have any employees. In 2016, the U.S. had 32.6 million business establishments; 24.8 million of them were what the Census classifies as non-employer businesses.
- Lawrence Katz & Alan Krueger, two ivy-league economists write, “The percentage of U.S. workers engaged in alternative work arrangements—defined as temporary help agency workers, on-call workers, contract workers and independent contractors or freelancers—rose from 10.1% in February 2005 to 15.8% in late 2015 —from 14.2 million in 2005 to 23.6 million in 2015.“
- The Federal Reserve studied independent workers and found that 36% of the American workforce are engaged in independent work. That’s 70 million people… let this number sink in. Some other key highlights of the study are:
- 65% are engaged in informal paid work to earn extra money
- 50% spend 1-20 hours a month in their ‘gig’ / independent work
- 25% say that informal work is somewhat or very much part of their income
- And if we look at 1099 filings versus W2 forms, we find that W-2 growth is leveling out but the number of 1099 filings are growing at an increasing rate.
The Gig Economy
The on-demand economy is growing with hundreds of new platforms that have inspired new thinking and practices. Attention is being paid to how these companies are disrupting commerce, solving logistic problems, and creating a new sector of the labor force– and a new era of entrepreneurs. Couple that with a trend toward independent work and the words ‘work’ and ‘job’ take on whole new meanings.
The concern is that while these trends may be good for some, they could result in a race to the bottom for entrepreneurs in lower/moderate income sectors. The challenge is to help this population manage their multiple income streams so that they can survive and thrive and achieve viable incomes—and ultimately create wealth.
Resources on the Gig Economy
- Institute for the Future published Voices of Workable Futures: People Transforming Work in the Platform Economy. They interviewed 31 on-demand workers and identified seven archetypes of the on-demand economy. They describe what entrepreneurs, policy makers and platform developers need to ensure success.
- To better understand the independent workforce and what motivates the people who participate in it, the McKinsey Global Institute surveyed some 8,000 respondents across Europe and the United States. The resulting report, Independent Work: Choice, Necessity, and the Gig Economy, finds that up to 162 million people in Europe and the United States—or 20 to 30 percent of the working-age population—engage in some form of independent work.
- Freelancing in America is the most comprehensive study of the independent workforce. Commissioned by Freelancers Union and Upwork, this study analyzes the size of the growing freelance economy and provides insights into the lives of independent workers.
- Etsy released a policy paper – Economic Security for the Gig Economy: A Social Safety Net that Works for Everyone Who Works. The paper outlines four federal policy proposals that Etsy believes would bolster economic security for the 21st century workforce.