Program pays unemployment aid as it trains jobless to run a business
10/12/2009PORTLAND, Ore. - Until this summer, salesman Jorge Ocampo was what he calls a W-2 man. But he always had longed to be his own boss.
"Almost every day, I thought of it," the 54-year-old said.
The opportunity came June 2 when he was laid off from a high-tech company. Unlike the millions of people drawing unemployment checks, he enrolled in a little-known program approved by Congress that gives the jobless the weekly cash benefit but also trains them to run their own businesses.
And the newly minted small-business owner gets to keep the profits.
The Self-Employment Assistance Program is available only in Oregon, Washington, Maine, Pennsylvania, Delaware, Maryland, New Jersey, and New York.
"They can't buy a job, so they get to make one up," says Pat Sanderlin, who runs the program in Oregon. "Right now, you've got people coming into this in survival mode." Maine and Washington, which added the program in 2008, report strong interest.
But the program has languished elsewhere because of opposition from businesses, a shortage of money for training and counseling, and a lack of interest on the part of the unemployed.
Business opposition often focuses on the taxes that employers pay to provide unemployment insurance.
"They're paying for the privilege of financing someone who would be going into business against them," said David Clough, lobbyist for the National Federation of Independent Business in New Hampshire. A bill in the state to establish self-employment aid died this year over fears about its impact on the state's unemployment trust fund.
Legislation ratifying the 1993 North American Free Trade Agreement allowed states to offer such aid, an idea widely used in Europe and Canada.
The program was crafted to help primarily white-collar and service-sector workers who weren't likely to get their old jobs back. The reasoning was that they could use their transferable skills to start their own businesses.
States that offer the program say people start a great variety of businesses. Restaurants are common, as are landscaping services.
Mr. Ocampo runs his freelance sales operation from a home office in suburban Portland and can draw half a year of unemployment benefits. He is also excused from the requirement that he look for a job.
Mr. Ocampo said he's doing well with his business plan, a focused group of high-tech clients with overlapping customer bases.
He said the aid is "basically a little bit of wind beneath my wings," and said he's bringing in enough to give him confidence.
"Frankly, the way it's going, I don't know if I'll ever go back to be a W-2 employee," he said.