[Congressional Record Volume 142, Number 117 (Friday, August 2, 1996)]
[Senate]
[Pages S9572-S9573]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. WYDEN (for himself and Mr. D'Amato):
  S. 2029. A bill to make permanent certain authority relating to self-
employment assistance programs; to the Committee on Finance.


                the self-employment reauthorization act

  Mr. WYDEN. Mr. President, I rise today to introduce legislation with

[[Page S9573]]

Senator D'Amato to reauthorize the Self-Employment Act. As waves of 
economic change turn our economy into a high-wire act, the Self-
Employment Act has helped turn the unemployment safety net into a 
trampoline of opportunity for the unemployed. The Self-Employment 
Assistance Program takes an innovative and cost-effective approach to 
helping eligible dislocated workers become self-sufficient; it enables 
them to use their weekly unemployment checks to start their own 
businesses.
  Harvard Business School reported earlier this year that from 1978 to 
the present, 22 percent of the work force, or 3 million workers, at the 
country's top 100 companies had been laid off, and that 77 percent of 
all the layoffs involved white-collar workers. Many of these highly 
skilled workers will never be able to return to their former positions, 
but some are highly motivated to start their own firms. In 40 out of 50 
States, however, those who start their own businesses are forced to 
give up their weekly unemployment compensation checks as soon as the 
company starts generating revenue--but before it provides enough income 
to support the worker. It is exactly this problem the Self-Employment 
Assistance Program is designed to correct.
  In a few short years, the Self-Employment Act (Public Law 103-182; 
title V) has already enabled thousands of unemployed Americans to use 
their unemployment compensation to establish new businesses. Two 
experimental programs, in Massachusetts and Washington, have already 
shown that self-employment programs can create jobs at no cost to the 
taxpayer. Using existing funds, the Massachusetts program created 
dozens of new businesses but actually paid $1,400 less unemployment per 
worker than the State average. The Washington program created more than 
600 new jobs and the firms were paying an average of $10.50 an hour to 
workers they had hired.
  The legislation we introduce today reauthorize a program that 
allows--but does not require--State to establish self-employment 
assistance [SEA] programs as part of their unemployment insurance [UI] 
programs. It permits States to provide income support payments to the 
unemployed in the same weekly amount as the worker's regular 
unemployment insurance [UI] benefits would otherwise be, so that they 
may work full time on starting their own business instead of searching 
for traditional wage and salary jobs. In effect, this legislation 
removes a high hurdle facing those who have the ingenuity, motivation, 
and energy to start their own businesses. It eliminates a barrier in 
the law that has forced workers interested in self-employment to 
choose between receiving UI benefits and starting a new business.

  Self-employment assistance has not only proved to be a viable 
reemployment option for unemployed workers; its benefits have exceeded 
its costs as well. While the law is not a panacea for all of our 
Nation's unemployed, it's an opportunity for many skilled workers to 
get back to work faster and helps create new jobs as well.
  In a recent tour around Oregon, my State SEA officials found 
tremendous enthusiasm for this program. They reported to me: ``* * * 
the SEA Program in Oregon is meeting the goal of providing Oregon 
dislocated workers--as identified through worker profiling--with access 
to entrepreneurial training and financial assistance while pursuing 
self-employment and the establishment of a business.'' Among the 
examples of businesses developed under the Oregon SEA Program this year 
are a marine maintenance and repair company, drop-in day care centers 
at shopping malls and a handmade hats, quilts, and bags business 
working to develop a mail-order firm.
  The 1993 SEA law is based upon self-employment programs that have 
worked well in 17 other industrialized nations. As the author of two 
laws, in 1987 and 1993, that have promoted self-employment, I can 
attest to the dramatic success of the self-employment concept. 
According to a June 1995 Department of Labor [DOL] evaluation of the 
Washington State and Massachusetts pilot programs, the two projects 
``clearly demonstrate that self-employment is a viable reemployment 
option for some unemployed workers . . . about one-half of those 
interested actually do start a business and an average of two-thirds 
were still in business 3 years later.'' In addition, the DOL report 
found that self-employment assistance programs increased business 
starts among project participants, reduced the length of their 
unemployment periods and increased their total time in employment. Both 
the Washington and Massachusetts models proved to be cost effective for 
the participants as well as for taxpayers.
  Over the past 2\1/2\ years, 10 States used the 1993 legislation to 
create self-employment programs: California, Connecticut, Delaware, 
Maine, Maryland, Minnesota, New Jersey, New York, Oregon, and Rhode 
Island. To date, DOL has approved six State plans--California, 
Delaware, Maine, New Jersey, New York, and Oregon--and four of these--
Delaware, Maine, New York and Oregon--have actually implemented their 
SEA programs.
  Let me briefly describe how the program works. The law directs the 
DOL to review and approve State SEA Program plans. In States that 
operate SEA programs, new UI claimants identified through worker 
profiling--automated systems that use a set of criteria to identify 
those claimants who are likely to exhaust their UI benefits and need 
reemployment assistance--will be eligible for self-employment 
assistance. State SEA programs provide participants with periodic--
weekly or biweekly--self-employment allowances while they are getting 
their businesses off the ground. These support payments are the same 
weekly amount as the worker's regular UI benefits. The SEA participants 
are required to participate in technical assistance programs--
entrepreneurial training--accounting, cash flow, finances, taxes, 
etc.--business counseling--business plans, marketing, legal 
requirements, insurance, etc.--and finance--to ensure they have the 
skills necessary to operate a business. Finally, SEA programs are 
required to operate at no additional cost to the unemployment trust 
fund: The law stipulates that the payment of SEA allowances may not 
result in any additional benefits charges to the unemployment trust 
fund. Individuals may choose at any time to opt out of the SEA Program; 
they may resume collection of regular unemployment compensation until 
the total amount of regular unemployment compensation paid and the SEA 
paid equals the maximum benefit amount. States are responsible for the 
costs of providing basic SEA Program services, like business counseling 
and technical assistance, but may allow participants to pay for more 
intensive counseling and technical assistance.

  Mr. President, as we move into the global economy of the 21st 
century, it is imperative that the Government adopt fresh strategies so 
that our many skilled buy unemployed workers can start anew in the 
private sector. Congress should extend the Self-Employment Assistance 
Program so that States will have the continued flexibility to help 
unemployed workers create their own businesses. Our bipartisan bill 
promotes the spirit of entrepreneurship. It carries forward a 
reasonable, and sensible reform of the unemployment insurance system 
that bears no cost to the taxpayer.
  I would like to thank Senator D'Amato for joining me as an original 
cosponsor of this bill. New York has a very active and successful Self 
Employment Assistance Program, and I look forward to working closely 
with him to see this important program reauthorized.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 2029

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SELF-EMPLOYMENT ASSISTANCE PROGRAMS.

       (a) In General.--Paragraph (2) of section 507(e) of the 
     North American Free Trade Agreement Implementation Act (26 
     U.S.C. 3306 note) is hereby repealed.
       (b) Conforming Amendments.--Subsection (e) of section 507 
     of such Act is further amended--
       (1) by amending the heading after the subsection 
     designation to read ``Effective Date.--''; and
       (2) by striking ``(1) Effective Date.--'' and by running in 
     the remaining text of subsection (e) immediately after the 
     heading therefor, as amended by paragraph (1).
                                 ______