Independence has fallen from favor in America

Posted on | July 31, 2009 | 2 Comments

One of the interesting phenomena you see when you watch the doings in Washington is the way the various Cabinet departments and federal agencies become important, depending on the crisis du jour.

So, for example, when the housing market crisis hit, former SBA Administrator Steve Preston became the star of the show in his new gig as Secretary of Housing and Urban Development.

When the financial markets crisis hit, and in the months since them, the Treasury Secretary (Paulson and then Geitner) commanded center stage.

In the wake of Hurricane Katrina, all eyes were on the Federal Emergency Management Agency (FEMA) and what a good job Brownie was not doing.

And when we were on our way into Iraq, the spotlight was on Don Rumsfeld and Colin Powell in their roles as Secretaries of Defense and State, respectively.

So, since everybody is preoccupied with this recession (at least, the ones who aren’t preoccupied with health care reform) and the number of jobs we’ve lost in the last 18 months, and the assumption that the recession won’t be over until the jobs come back, it is kind of surprising that there is relatively little attention being paid to the Labor Department.

The U.S. Department of Labor is interesting to me because, from where I sit, it is public enemy number one. That is because the Labor Department is hostile to self-employment. They don’t want Americans to go out and start their own businesses. They want people to go out and get jobs.

So, the Labor Department is the federal government’s bastion of discouragement when it comes to new business formation (except new employer businesses) and the self-employment option.

New ventures in self-employment are not counted in their monthly job creation numbers although the self-employed are captured in the household survey and, therefore, in the unemployment rate.

I’ve had data wonks telling me for years that there are legitimate reasons for that (and I’ll grant you that some of this is about whether nonemployers are firms or workers or some sort of hybrid that we haven’t figured out yet) but all that means to me is that nonemployer businesses get no credit for their contribution to job growth.

Meanwhile, if you get laid off, you can collect unemployment insurance benefits until they run out — which, under current circumstances — can be up to 72 weeks in some states. But if you lift a finger to become self-employed, you get cut off without a dime.

And the Labor Department’s so-called Self-Employment Assistance Program is not much help either, by the way.

I first wrote about the SEAP program here and it sounded like a great deal, even though only seven states participate. If you are otherwise eligible for unemployment benefits and you want to try self-employment instead, you can get UI-like payments in the same amount as you had been receiving, if you can qualify for the SEAP program.

What they don’t tell you is that qualifying is not as simple as telling them that you can’t find a regular job. They have to create a profile of you and assign you to a job category and, depending on what that category is and where you live, they will tell you whether you “ought to” be able to find a job or not.

If the state decides that you should be able to find a job, then nobody cares that you haven’t been able to find a job. You don’t get the help.

Even if you do get the help, you don’t get very much of it. SEAP runs out after 26 weeks, even though Congress has extended the regular garden variety unemployment insurance to cover an additional 46 weeks.

In addition, the Labor Department very specifically limits the percentage of these benefits that can go toward helping would-be self-employed individuals, and the percentage is pretty minuscule.

Now, it’s not my intention to pick on the Labor Department here. To tell you the truth, there is no agency in the government that is particularly encouraging to those who elect to pursue self-employment — including the Small Business Administration, whose job is supposedly is to encourage that sort of thing.

The bottom line for all these folks is that they only seem to be interested in self-employment if it leads to business growth and, yes, job creation.

Our nation’s leaders and, even more so, our nation’s bureaucrats have not taken that concept to its logical conclusion — that if small business owners create jobs for other people, don’t they also create jobs for themselves?

Or even … if the economic tea leaves are not encouraging firms to hire more workers, then isn’t it a good thing if the people in need of jobs create their own instead of waiting for somebody to do it for them?

Shouldn’t we be applauding that sort of thing? And, since we don’t (or at least, the government doesn’t), why don’t we?

Do you agree with the premise that the government prefers wage and salary workers over independent workers? Why or why not? Do you have a story to tell? Do you have a theory that would explain it?

Please share you ideas and experiences in the comments.

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