Though this program is geared toward people of all ages, young people are the best suited to maximize its advantages. Older generations tend to have families and other financial obligations, making it more difficult for them to transition into the roles of entrepreneurs.
I am married with a young child, and my salary covers all of my family's expenses, so my husband doesn't have the pressure to get cashflow-positive out of the gate. Contrast that with my younger, single self, when I burned through the start-up capital in a matter of months and had to take consulting gigs just to stay afloat on office expenses.
Young people can more easily adapt to less expensive lifestyles.
Young people care a lot more about what others think, the very foundation of "expensive lifestyles".
Further, young people have access to a wide range of resources, such as Income Based Repayment (IBR), SCORE, Startup America, [...]
IBR is a student loan repayment program, nothing to do with entrepreneurship. SCORE is open to all small businesses (and a waste of time, in my experience). Startup America targets young companies, not young people. And so on...
I read those statements as demographic, not judgemental. A median 40-something does indeed tend to have a family, more financial obligations, a more expensive lifestyle, etc... Those are just presented as facts, and while I don't have the statistics handy they jive pretty well with my 39-year-old intuition.
Nothing is saying entrepreneurship is impossible for the middle-aged, just that it's harder.
Isn't it okay to make general statements? I mean, if you grabbed 100 random 20 year olds and 100 random 40 year olds, wouldn't the 40 year old folks have more financial obligations?
Certainly you can find counter-examples-- older folks who are financially secure and young people with bad attitudes or bad burn rates... But I don't think if you say, "Tall people are better at dunking basketballs" that you're really being unfair to all of the shorter people who are great at dunking, are you?
1. I run a business. Therefore I make jobs. Or don't.
2. If I fire an employee, a portion of the cost of that person's unemployment claims is charged back to me. The employer. It isn't government largesse that funds unemployment claims. It's me.
3. Will this program be yet another potential cost to me? Hard to tell from the PR and press-gab. We'll have to see the law and how it is implemented. Devil in the details, etc.
4. My payroll is suddenly $100K/year lighter than it was. Am I going to replace that guy with another full-timer? Fuck, no. Hello, independent contractors.
5. By the way. I pay 100% of the medical costs for all my employees.
Hi Phil, I've been following your blog about US taxes, but didn't know you post at HN. Small world.
I also have my doubts about this program. Employers are humans, and humans never associate "quality" with "discount".
Right now, the people who are unemployed face the real risk of exiting the economy altogether, along with their knowhow, and this will cost the economy as a whole in the long term.
Meanwhile, businesses are not going to hire if the consumers aren't there.
The problem with trying to restart the economy with government stimulus is that people are maxed out on their debt. The debt is acting like a sponge, sucking out any additional money that come from the government. The NPR Planet Money talked about how Japan's economy entered its longest growth period post the crash when the PM forced the banks to clean up its bad loans and recapitalize. Subsequently, government stimulus started to take effect. The government has been reluctant to do this, and it will cost the US in terms of its economic dominance as competing countries race ahead on its capital.
I believe any government money is better spent not trying to put people back in employment through incentives, but instead keep these people "engaged" in the economy. Be it through reimbursement of expenses in attending job interviews - fuel is expensive when you are out of work; Making the pool of "consultants" and "contractors" that you allude to more visible.
The mainstay of jobs post crash is going to be a small pool of permanently employed plus casualized, short term contract work. The sooner the government recognizes this, the better.
This law will be written in a week by Whitehouse interns without any experience running a business or employing individuals. And it will be constructed to be applicable across vast swaths of the US economy, or else it would not be "stimulative". And this administration's previous attempts to meddle in business resulted in the largest VC loss in history, namely Solyndra.
"2. If I fire an employee, a portion of the cost of that person's unemployment claims is charged back to me."
Can you elaborate on this? It's something I've long heard and failed to grok. How can an employer, as normal business practice, have to still pay a fired employee any amount?
"My payroll is suddenly $100K/year lighter than it was. Am I going to replace that guy with another full-timer? Fuck, no. Hello, independent contractors."
From this country? That matters much more than whether they'd be contract or full-time.
I like the spin on this. Sounds like something that could be very useful.
I must note, however, some phrases that set off my bullshit detector.
>SEA participants were 19 times more likely than eligible non-participants to be self-employed
Either I'm missing something or this says that people who are in a self-employed assistance plan are likely to be self-employed. Perhaps this is an editing error?
>In Oregon, nearly half of the successful SEA entrepreneurs have each created an average of 2.63 new jobs
Ok, but what kind of filter does "successful SEA entrepreneurs" imply? 1 in 100? 20%? Once again, the language is loose and circular.
Money is not an answer to everything. In fact, funding at high levels can be the worst thing ever to happen to a good team in a startup. At small levels, like this, it perhaps can make a big difference. Perhaps.
There is a great big giant humongous gap between something that sounds good in an editorial and something that actually does something useful. I'd want a lot more data on this before passing judgment one way or another.
With regards to the "more likely … to be self-employed": I think the problem is that "eligible non-participants" is kind of vague. If we take it to mean "people who tried to start their own business without help from the program," it makes more sense — the people in the program managed to stick with it 19 times more often than people who had to fully bootstrap their business.
The ignorance displayed in the comments on that article is scary. It's quite obvious a lot of people have never been in the position to actually need this sort of aid before, so it's easy to knock everyone using it as "an illegal" or "lazy."
Of course people will abuse this, too, just like they abuse the unemployment insurance we have now. But to me, the net positives that come out of this will outweigh the (probably minor) fraud that will happen. Adding benchmarks (e.g., you have to legally register a business, you have to prove some sort of business activity to a case worker, and so on) will keep a lot of the fraud out, even if they're token requirements.
After they just wasted another $535M of taxpayer money in crony capitalist payments, why do you think it's "ignorance" to evince strong opposition to these kind of attempts at meddling in the economy?
VCs and angels fund selectively and with their own money. The govt funds politically and with other people's money. That selects for Chris Gronet and George Kaiser, not Mark Zuckerberg and Peter Thiel.
I've long stopped reading comments on news sites specifically because they are obviously overrun by trolls. The problem is the trolls are winning as I can see by some comments I see on facebook by people who believe the bullshit.
To me the true significance, more so than this money, is the milestone of the federal gov't finally recognizing "entrepreneur" as a third category of employment status and not just the unemployed/employed binary.
Hopefully this leads to further help for folks starting a company (that will in-turn create more jobs when successful) like healthcare coverage.
EDIT: This will also help with mainstream cultural and social acceptance. Less weird looks when explaining to Joe Shmoe your employment situation!
It will also help massively to "massage" unemployment figures in a positive spin by reclassifying a million or two of them as "entrepreneurs". (And hey, the debt ceiling can be raised indefinitely so no problem re costs. We finally arrived in The Future: the perpetuum mobile exists.)
The policy of forcing a decision for laid off people between 1) sitting around doing nothing (i.e. "looking for a job") and being eligible for free money vs. 2) trying to start something which could have an an impact in not only getting that person back into a paying position but also on the economy as a whole (and thereby being ineligible for money) needed to end
In essence, the president’s plan will create a guaranteed source of startup capital...
Is that necessarily a good thing? I was under the impression the whole "trial-by-fire" of a business plan looking for funding was a valuable testing grounds for the business-to-be.
genius. who needs voluntary transactions live venture capital or angels, what have they ever done? instead lets take money from everyone (if they don't like it we can lock them in a cage) and then give it to others who we decide are worthy.
I don't know why people downvote this. There are two problems when you have a democratic system of government (the US is no longer really a republic IMO):
1. Special interest groups
2. Involuntary taxation
The two combined make for some quite uncomfortable moral hazards. If you pay taxes in the US, you are paying for continued aggression. Or education you'd rather provide yourself. Or any number of things that you don't agree with. For every citizen, there are just a few government services they use over and above the common services everyone else uses as well (not listing them, numerous).
The majority of money that the government collects from the citizen is not spent on the citizen themselves.
"Sure", you say, "It's to help the poor!". As Milton Friedman said: if government could solve the problem of poverty, then why are there still poor people?
In my locality, there are instances of local governments spending $60K per poor family of four annually. Only $20K actually got to the family. The rest becomes overhead.
I think it's quite valid to say that the government should not be involving themselves in commerce in this manner because then they become indispensable. Not because they are useful, but because then they fund a set of uneconomical businesses that no one else would invest in.
Other option for people who don't like it: leave the country.
You wouldn't know it listening to most people complaining but unemployment insurance was not something implemented in 2008, it goes back to the 1930s. That should have been plenty of warning for you to find a place with a tax rate and entitlement system to your liking. Sorry, there aren't a lot of options in the 1st world without taxes and entitlments, but that must just be a coincidence.
Compared to all the thousands of ways in which the government tends to find to waste taxpayer money with near-zero chance of it helping anybody, I just can't seem to be so offended by this one.
If you hate the idea of taxation or stimulus, that's fine, you're certainly not alone, and I'd even agree with a lot of your arguments. But do you really think this is such a poor attempt at it, compared to the other things governments tend to try? As far as I can tell, this is aimed at allowing people that would have been on the dole anyways to spend their time doing something productive in an entrepreneurial capacity rather than sitting on their asses and deliberately not working so that they don't lose unemployment benefits.
Personally, I'd take even a half-baked attempt at spurring entrepreneurialism over monetary fiddling, another round of tax cuts for the rich, or a $50 check in the mail, any day of the week. At least this has a small chance of incentivizing innovation, which is known to help the economy in the long term, as opposed to most of the other options which mostly rely on wishful thinking...
The gyst of it is that if you are receiving unemployment insurance, you no longer forfeit it by starting work on a pre-revenue startup. Previously, you would have been "self employed" and lost access to your unemployment.
I'll further note that this bill, as far as I know, does not make venture capital illegal.
This isn't a grant. It's a modification of the rules for unemployment insurance. It's a good change.
It allows you to use unemployment insurance to pursue your own business for about half a year. Of course, for you to be eligible for unemployment insurance, you had to have been employed at some point and gotten fired. It's also a paltry sum. But, again, any movement in the right direction is a plus.
I'm not sure there are details yet. The stimulus / jobs plan has been proposed, but there is no bill written yet. It will be another ten days before Obama presents his plan on how to pay for the jobs plan, and the bill won't likely be written until after that.
This is a great idea and would have helped me when I faced this situation 9 years ago. Following a layoff, I asked the unemployment office about this, and they said I must actively be looking for work. Still, I think the overall economic impact of this proposal is small potatoes compared to the overall jobs situation, but I guess every little bit helps.
This article does not mention that in order to qualify for unemployment insurance you have to have worked for a certain period of time and then been laid off.
This program will not help a college graduate (or dropout) that wants to start a business right away.
It's a great program, but unemployment should be expanded to include people who are first time entrepreneurs that have never had a job and been laid off.
incidentally this has been done in Australia under the auspices of NEIS apparently over the past 20 years (link to monthly success story here: http://www.nna.asn.au/success-stories )
On top of it, there is a layer of mentoring as well:
To be eligible for the NEIS Small Business Course,
you must be in receipt of a Benefit and must have a Jobseeker ID Number.
Is this just PR releases or is the full text of the bill out? After the pre-press on the health care bill versus actually reading the thing, I really want to see the actual text (and the follow-up rule making).
Starting a tech company is so cheap that funding should never be the bottleneck. If your idea is too expensive to start with a laptop and cheap hosting, think of another idea.
This is true for some startup ideas, but not others. By saying "think of another idea" you eliminate many useful types of startups.
I see your point, which is that you don't need a fancy office and an HR staff to get a company off the ground, but that doesn't mean every company can get to profitability on a laptop and cheap hosting.
You're only looking the smallest of expenses. It also depends on how far along you already are with the company. For any non-trivial idea that you're trying to implement from scratch, (especially if you're doing all the work yourself) you're going to want to be able to work on it full time, which means you have living expenses. Depending on where you live, those can be quite high. You might need to pay for training materials as well. There are also software licenses that might be required. I'm sure people with more experience can think of other costs. Hell, if you're just talking about iOS development then you might have to pay for devices, the Apple developer program and a Mac. Not saying these are insurmountable but not as inconsequential as you seem to be implying.
[+] [-] rada|14 years ago|reply
Though this program is geared toward people of all ages, young people are the best suited to maximize its advantages. Older generations tend to have families and other financial obligations, making it more difficult for them to transition into the roles of entrepreneurs.
I am married with a young child, and my salary covers all of my family's expenses, so my husband doesn't have the pressure to get cashflow-positive out of the gate. Contrast that with my younger, single self, when I burned through the start-up capital in a matter of months and had to take consulting gigs just to stay afloat on office expenses.
Young people can more easily adapt to less expensive lifestyles.
Young people care a lot more about what others think, the very foundation of "expensive lifestyles".
Further, young people have access to a wide range of resources, such as Income Based Repayment (IBR), SCORE, Startup America, [...]
IBR is a student loan repayment program, nothing to do with entrepreneurship. SCORE is open to all small businesses (and a waste of time, in my experience). Startup America targets young companies, not young people. And so on...
[+] [-] bentlegen|14 years ago|reply
Speaking of ageist ...
[+] [-] ajross|14 years ago|reply
Nothing is saying entrepreneurship is impossible for the middle-aged, just that it's harder.
[+] [-] webwright|14 years ago|reply
Certainly you can find counter-examples-- older folks who are financially secure and young people with bad attitudes or bad burn rates... But I don't think if you say, "Tall people are better at dunking basketballs" that you're really being unfair to all of the shorter people who are great at dunking, are you?
[+] [-] unknown|14 years ago|reply
[deleted]
[+] [-] philiphodgen|14 years ago|reply
2. If I fire an employee, a portion of the cost of that person's unemployment claims is charged back to me. The employer. It isn't government largesse that funds unemployment claims. It's me.
3. Will this program be yet another potential cost to me? Hard to tell from the PR and press-gab. We'll have to see the law and how it is implemented. Devil in the details, etc.
4. My payroll is suddenly $100K/year lighter than it was. Am I going to replace that guy with another full-timer? Fuck, no. Hello, independent contractors.
5. By the way. I pay 100% of the medical costs for all my employees.
[+] [-] teyc|14 years ago|reply
I also have my doubts about this program. Employers are humans, and humans never associate "quality" with "discount".
Right now, the people who are unemployed face the real risk of exiting the economy altogether, along with their knowhow, and this will cost the economy as a whole in the long term.
Meanwhile, businesses are not going to hire if the consumers aren't there.
The problem with trying to restart the economy with government stimulus is that people are maxed out on their debt. The debt is acting like a sponge, sucking out any additional money that come from the government. The NPR Planet Money talked about how Japan's economy entered its longest growth period post the crash when the PM forced the banks to clean up its bad loans and recapitalize. Subsequently, government stimulus started to take effect. The government has been reluctant to do this, and it will cost the US in terms of its economic dominance as competing countries race ahead on its capital.
I believe any government money is better spent not trying to put people back in employment through incentives, but instead keep these people "engaged" in the economy. Be it through reimbursement of expenses in attending job interviews - fuel is expensive when you are out of work; Making the pool of "consultants" and "contractors" that you allude to more visible.
The mainstay of jobs post crash is going to be a small pool of permanently employed plus casualized, short term contract work. The sooner the government recognizes this, the better.
[+] [-] temphn|14 years ago|reply
What could possibly go wrong?
[+] [-] ctdonath|14 years ago|reply
Can you elaborate on this? It's something I've long heard and failed to grok. How can an employer, as normal business practice, have to still pay a fired employee any amount?
[+] [-] chopsueyar|14 years ago|reply
Also, if you are paying for their unemployment, why is unemployment being deducted from their paycheck too?
[+] [-] muhfuhkuh|14 years ago|reply
From this country? That matters much more than whether they'd be contract or full-time.
[+] [-] DanielBMarkham|14 years ago|reply
I must note, however, some phrases that set off my bullshit detector.
>SEA participants were 19 times more likely than eligible non-participants to be self-employed
Either I'm missing something or this says that people who are in a self-employed assistance plan are likely to be self-employed. Perhaps this is an editing error?
>In Oregon, nearly half of the successful SEA entrepreneurs have each created an average of 2.63 new jobs
Ok, but what kind of filter does "successful SEA entrepreneurs" imply? 1 in 100? 20%? Once again, the language is loose and circular.
Money is not an answer to everything. In fact, funding at high levels can be the worst thing ever to happen to a good team in a startup. At small levels, like this, it perhaps can make a big difference. Perhaps.
There is a great big giant humongous gap between something that sounds good in an editorial and something that actually does something useful. I'd want a lot more data on this before passing judgment one way or another.
[+] [-] hugh3|14 years ago|reply
I am reminded of "politician's logic" from Yes Minister.
1. Something must be done.
2. This is something.
3. Therefore, we must do this.
[+] [-] chc|14 years ago|reply
[+] [-] jeremymcanally|14 years ago|reply
Of course people will abuse this, too, just like they abuse the unemployment insurance we have now. But to me, the net positives that come out of this will outweigh the (probably minor) fraud that will happen. Adding benchmarks (e.g., you have to legally register a business, you have to prove some sort of business activity to a case worker, and so on) will keep a lot of the fraud out, even if they're token requirements.
[+] [-] temphn|14 years ago|reply
After they just wasted another $535M of taxpayer money in crony capitalist payments, why do you think it's "ignorance" to evince strong opposition to these kind of attempts at meddling in the economy?
VCs and angels fund selectively and with their own money. The govt funds politically and with other people's money. That selects for Chris Gronet and George Kaiser, not Mark Zuckerberg and Peter Thiel.
[+] [-] oldstrangers|14 years ago|reply
This one, probably most of all:
"Hilarious, what kind of "jobs" are all of these inexperienced young people going to create for themselves? Another Obama giveaway."
Obviously this guy doesn't have an account with Google or Facebook.
[+] [-] nkassis|14 years ago|reply
But sites like this (http://literallyunbelievable.org/) also make me loose faith in humanity sometimes
[+] [-] TomOfTTB|14 years ago|reply
Second, "the system is already being abused so lets allow further abuse" isn't really a great argument.
(For the record I'm actually in favor of this I just don't think your tone is necessary and I think it discourages anyone who might disagree)
[+] [-] GBond|14 years ago|reply
Hopefully this leads to further help for folks starting a company (that will in-turn create more jobs when successful) like healthcare coverage.
EDIT: This will also help with mainstream cultural and social acceptance. Less weird looks when explaining to Joe Shmoe your employment situation!
[+] [-] dualogy|14 years ago|reply
[+] [-] jwb119|14 years ago|reply
The policy of forcing a decision for laid off people between 1) sitting around doing nothing (i.e. "looking for a job") and being eligible for free money vs. 2) trying to start something which could have an an impact in not only getting that person back into a paying position but also on the economy as a whole (and thereby being ineligible for money) needed to end
[+] [-] sliverstorm|14 years ago|reply
Is that necessarily a good thing? I was under the impression the whole "trial-by-fire" of a business plan looking for funding was a valuable testing grounds for the business-to-be.
[+] [-] talmand|14 years ago|reply
Excellent.
[+] [-] danssig|14 years ago|reply
[+] [-] fredBuddemeyer|14 years ago|reply
[+] [-] cheez|14 years ago|reply
1. Special interest groups 2. Involuntary taxation
The two combined make for some quite uncomfortable moral hazards. If you pay taxes in the US, you are paying for continued aggression. Or education you'd rather provide yourself. Or any number of things that you don't agree with. For every citizen, there are just a few government services they use over and above the common services everyone else uses as well (not listing them, numerous).
The majority of money that the government collects from the citizen is not spent on the citizen themselves.
"Sure", you say, "It's to help the poor!". As Milton Friedman said: if government could solve the problem of poverty, then why are there still poor people?
In my locality, there are instances of local governments spending $60K per poor family of four annually. Only $20K actually got to the family. The rest becomes overhead.
I think it's quite valid to say that the government should not be involving themselves in commerce in this manner because then they become indispensable. Not because they are useful, but because then they fund a set of uneconomical businesses that no one else would invest in.
TL;DR: don't downvote because you don't agree.
[+] [-] krschultz|14 years ago|reply
You wouldn't know it listening to most people complaining but unemployment insurance was not something implemented in 2008, it goes back to the 1930s. That should have been plenty of warning for you to find a place with a tax rate and entitlement system to your liking. Sorry, there aren't a lot of options in the 1st world without taxes and entitlments, but that must just be a coincidence.
[+] [-] bermanoid|14 years ago|reply
If you hate the idea of taxation or stimulus, that's fine, you're certainly not alone, and I'd even agree with a lot of your arguments. But do you really think this is such a poor attempt at it, compared to the other things governments tend to try? As far as I can tell, this is aimed at allowing people that would have been on the dole anyways to spend their time doing something productive in an entrepreneurial capacity rather than sitting on their asses and deliberately not working so that they don't lose unemployment benefits.
Personally, I'd take even a half-baked attempt at spurring entrepreneurialism over monetary fiddling, another round of tax cuts for the rich, or a $50 check in the mail, any day of the week. At least this has a small chance of incentivizing innovation, which is known to help the economy in the long term, as opposed to most of the other options which mostly rely on wishful thinking...
[+] [-] jbooth|14 years ago|reply
The gyst of it is that if you are receiving unemployment insurance, you no longer forfeit it by starting work on a pre-revenue startup. Previously, you would have been "self employed" and lost access to your unemployment.
I'll further note that this bill, as far as I know, does not make venture capital illegal.
[+] [-] yellowbkpk|14 years ago|reply
[+] [-] becomevocal|14 years ago|reply
I've looked into and seen others go through grant processes and they are often terrible. Hope it isn't similar.
[+] [-] maratd|14 years ago|reply
It allows you to use unemployment insurance to pursue your own business for about half a year. Of course, for you to be eligible for unemployment insurance, you had to have been employed at some point and gotten fired. It's also a paltry sum. But, again, any movement in the right direction is a plus.
[+] [-] nhebb|14 years ago|reply
This is a great idea and would have helped me when I faced this situation 9 years ago. Following a layoff, I asked the unemployment office about this, and they said I must actively be looking for work. Still, I think the overall economic impact of this proposal is small potatoes compared to the overall jobs situation, but I guess every little bit helps.
[+] [-] pythoning|14 years ago|reply
This program will not help a college graduate (or dropout) that wants to start a business right away.
It's a great program, but unemployment should be expanded to include people who are first time entrepreneurs that have never had a job and been laid off.
[+] [-] americandesi333|14 years ago|reply
http://workforcesecurity.doleta.gov/unemploy/self.asp
Unfortunately, not California
[+] [-] teyc|14 years ago|reply
On top of it, there is a layer of mentoring as well:
http://www.becnorthside.com.au/index.php?option=com_content&...[+] [-] protomyth|14 years ago|reply
[+] [-] jbooth|14 years ago|reply
[+] [-] guelo|14 years ago|reply
[+] [-] bsiemon|14 years ago|reply
[+] [-] hexis|14 years ago|reply
[+] [-] sliverstorm|14 years ago|reply
[+] [-] lawnchair_larry|14 years ago|reply
[+] [-] mnutt|14 years ago|reply
I see your point, which is that you don't need a fancy office and an HR staff to get a company off the ground, but that doesn't mean every company can get to profitability on a laptop and cheap hosting.
[+] [-] hexagonc|14 years ago|reply
[+] [-] delinquentme|14 years ago|reply
i just want a place to submit an idea and prototypes and get cash ....
[+] [-] donnaware|14 years ago|reply
[deleted]
[+] [-] known|14 years ago|reply