The Rise in Entrepreneurship Often a Mask for Unemployment

The Rise in Entrepreneurship Often a Mask for Unemployment

Robert Reich contributed an op-ed piece for The New York Times yesterday, commenting on the rising numbers of entrepreneurs starting new businesses.  American, yes?  A symbol of optimism for the economy, right?  Well, maybe not.

The age range of the entrepreneurs, and other anecdotal information, make analysts believe that many of these new ventures are makeshift substitutes for what their founders really want, a job.  That is, people having trouble finding a new job have hung out their shingle as a consultant.  Some are rehired by their old companies as temporary or free-lance personnel, usually earning less and nearly always ineligible for benefits.  Others are hampered by the credit environment and the teeming numbers of unemployed people from making at true go of it.  In the meantime, by characterizing themselves as “self-employed” these laid off workers are often not in the unemployment count.

Under Maryland law, though, a “self-employed” individual can collect unemployment benefits for the weeks that he or she is not actually making any money from the new business.  In the meantime, the effort to make self-employment work may pay off even for people who want a steady job, not to create a startup company.  To get contract work, one has to fan out into the network and meet new people; those contacts may lead to employment.  Before that happens, the resume does not look as empty of enterprise as does a gap in dates.

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