Unemployment Benefits Extensions are Extending the Recession?
blogs.law.harvard.edu
blogs.law.harvard.edu
After meeting with business counselors and ensuring that your idea is sound, you file your business plan with the state (they don't share it) and can start receiving your normal unemployment benefits.
Here's the awesome part: they're giving you the benefits to work on your business full time. No need to do job searching. It's six months of runway. Pretty awesome.
Is the author saying that unemployment benefits keep consumer spending down? If the person's take home pay is about the same, as the article suggests, this should not be an issue.
Maybe the author is suggesting that unemployment benefits create a shortage of labor by discouraging workforce participation? This would be an even harder argument to make given the continued layoffs across all sectors of the economy.
My former room mate / business partner (see: iStoleYourStartup) was laid off of his iPhone game dev job and started collecting unemployment (while illegally trying to bootstrap iZenStudent).
They extended his unemployment benefits, so he continued to not look for a job and continued not tell the Texas Workforce Commission that he was trying to run his own business.
I had half a mind to turn him in because my tax dollars was funding his "start up."
The economy is changing and there seems to be a big disconnect between the people reading this board and the large majority of our population.
I've got mixed feelings about the legitimacy of someone collecting unemployment while attempting a bootstrap. For the startup-minded, trying to get a project to self-sufficiency is in a way "searching for a job". I'm not sure either they or the public treasury would be better served by them aggressively seeking a W-2 job, even though that may be the ostensible requirement of the unemployment compensation program.
(Unless the abuse is really blatant -- drawing a consistent documented salary-like payment -- I also doubt most state bureaucracies would or could do anything to cut off payments.)
The issue here wasn't that he was collecting unemployment while bootstrapping -- its that he simply didn't tell the Texas Workforce Commission.
If you have a start up, and you tell the unemployment office, they may still give you the full compensation (although I wonder if we would have received the maximum allowed benefit).
When you sign up for unemployment they ask you if you are current self-employed. He had his name on a DBA, had a fully functioning website up describing his business - and withheld this information from TWC.
This is illegal.
Even if attempting "self-employment", if there's no money coming in, it's arguable as to whether it should be called that for the purposes of some government form.
Trying earnestly to launch a new corporation isn't precisely "self-employment", either. If it succeeds, you get some mixture of capital gains, dividends, and W-2 income -- none of which may ever be classified for tax purposes as "self-employment income".
Scrappy bootstrapping doesn't map neatly into the fixed labels and "hours worked", "wages earned" boxes of a state bureaucracy. Unless I was an employment lawyer, a judge, or a TWC functionary, I wouldn't confidently pronounce someone else's self-reported status as "illegal".
(I know I felt differently in my 20s. I'm more tolerant of different routes to self-sufficiency, now, as long as they're in the right spirit.)