Statements on introduced Bills and Joint Resolutions

Floor Speech

Mr. WYDEN. Mr. President, I rise today on behalf of myself, Senator Carper and Senator Casey to introduce the Startup Technical Assistance for Reemployment Training and Unemployment Prevention Act of 2011, or the STARTUP Act. This bill would allow unemployed Americans to use the unemployment insurance, UI, system to create jobs for themselves and for others.

In too many cases, the current unemployment assistance programs allow the experience and expertise of America's unemployed workers to sit on the sidelines. The STARTUP Act promotes an alternative approach that gives the unemployed the ability to start their own businesses and get in the game, self-employment assistance, SEA.

In Oregon, we have got this program up and running and think other states should be encouraged to do the same. By failing to take advantage of self-employment assistance, we are missing an opportunity to not only help currently unemployed workers but also to help our economy grow and create more jobs. I know this program works, its record in Oregon is strong and can be found in letters and testimony from individuals who have used the program.

Take, for example, software developers Adam Lowry and Michael Richardson who joined the ranks of the unemployed when the tech startup they worked at went under in 2009. With little capital, they turned to Oregon's self-employment assistance program which allowed them to draw unemployment benefits while they and two friends launched the mobile software development company Urban Airship, which is now one of the best-known technology startups to emerge in Oregon in recent years. Just yesterday, Urban Airship announced $15.1 million in strategic investment from Salesforce.com and Verizon, among others. Last week an additional acquisition brought the company's total payroll to 51 employees and an additional 22 open positions. At the root of Urban Airship's success are four entrepreneurial-minded individuals and a jump start from self-employment assistance.

Expanding self-employment assistance is a creative way to use the current unemployment insurance structure to create new businesses and additional jobs beyond that of the immediate beneficiary. We often talk about the benefits of small businesses in this country, yet our unemployment insurance programs actually prevent aspiring entrepreneurs from putting their ideas to work. Under the unemployment insurance systems in most states, if you stop looking for a job or you turn down a job, you lose your unemployment benefit even if you are working to start your own business. States with active self-employment assistance programs, like Oregon, allow a small percent of the unemployed to focus full time on starting their own business while drawing down their unemployment benefits in the form of self-employment assistance. Anyone who has started a new business knows that getting it off the ground is a full time job in and of itself, and allowing would-be UI recipients to focus full-time on their new business vastly increases their likelihood of success. Rather than rely on others to create jobs for them, self-employment assistance allows determined entrepreneurs to create jobs for themselves and others.

The President's proposal in the American Jobs Act is a step in the right direction; it allows states to quickly enter into an agreement with the Department of Labor and allow the long-term unemployed, those on extended unemployment compensation, to draw down their UI benefits in the form of self-employment assistance. However, this does little to encourage states to make self-employment assistance a part of their permanent strategy. We must be more far-sighted. We ought to provide states with a little assistance so that they can start self-employment programs of their own, not just for periods of extended unemployment compensation.

I want to be clear: this is no giveaway. In order to get this benefit, unemployed workers have to meet the same wage and hour requirements as they would to receive UI and they must prove they have a viable business plan. The beneficiaries of self-employment assistance really have something to offer, they have solid work experience and solid ideas; and put into action, that combination can snowball into a successful business with multiple employees.

There are 2.5 million micro businesses in the U.S., representing 88 percent of all businesses. They generate $2.4 trillion in receipts, account for 17 percent of GDP, and employ more than 13 million people. If one out of every three of these businesses hired just one additional employee, the U.S. economy would achieve full employment. Expanding self-employment assistance helps us get there.

A study by the Department of Labor found that self-employment participants were 19 times more likely than eligible non-participants to be self-employed at some point after being unemployed. Moreover, they were four times more likely to obtain employment of any kind. The average cost to create each of those jobs is $3,350. According to estimates from Princeton economist and former Federal Reserve Board Vice Chairman Alan Blinder, it takes about $93,000 worth of garden-variety fiscal stimulus to create an average job. It is not hard to see that job creation through SEA is an incredible bargain.

This program has been creating jobs and businesses in Oregon for nearly two decades. Earlier this year, Pat Sanderlin, who coordinates Oregon's program, conducted an informal ``census'' of enrollees since 2004. He found that 77 percent of businesses started by SEA beneficiaries are still up and running. According to Mr. Sanderlin, the companies' combined annual payroll totals $7,888,210.

Despite widespread support for self-employment and entrepreneurial programs, only a handful of states offer SEA, and those that do take advantage of it typically administer benefits to a small share of the unemployed. Only about 2,400 Oregonians have used the program since its inception in 1995. Though states currently have the option of taking advantage of self-employment assistance, the administrative costs to start a new program often prevent them from doing so. Because Federal law prevents self-employment benefits from being paid out while an individual is in a period of extended unemployment, the long-term unemployed cannot take advantage of the program.

The STARTUP Act encourages states to utilize self-employment assistance by: allowing the long-term unemployed who remain eligible for regular or extended unemployment benefits to draw down those benefits in the form of self-employment assistance; providing technical assistance and model language from the Department of Labor for states that create new self-employment programs; and providing financial assistance to aid states in establishing, implementing, improving and/or administering self-employment programs.

Self-employment benefits can serve as a guaranteed source of startup capital for businesses. And unlike traditional unemployment insurance, workers who successfully exit this program by starting their own business can create more new jobs as business expands. When unemployment is high and workers face extended periods of joblessness, this is exactly the type of program we should embrace.

I encourage my colleagues to support this legislation to expand self-employment assistance programs so that more unemployed workers have an opportunity to create jobs for themselves and for others.

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