
Obama's job aid plan - $10,000 to $13,000 in assistance for entrepreneurship - GBond
http://moneyland.time.com/2011/09/12/the-most-overlooked-and-important-proposal-in-obamas-jobs-plan/
======
rada
Whoa, the article is ageist, and proud of it.

 _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
> Young people care a lot more about what others think, the very foundation of
> "expensive lifestyles".

Speaking of ageist ...

~~~
natnat
Young people tend to be single, which means they have a lot more at stake in
terms of public image than married people do.

------
philiphodgen
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.

~~~
ctdonath
"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?

~~~
SoftwareMaven
You have to pay for unemployment insurance. The more people who make claims
against you, the higher your insurance gets. You probably aren't going to get
charged 100% of the employee's unemployment, but you get charged a goodly
chunk.

~~~
dualogy
Seriously? I'm surprised anyone is still hiring _at all_ in the US! Sheesh,
what a policy. "Hello independent contractors" -- I hear you.

~~~
larrywright
The IRS is very picky about what constitutes an independent contractor. This
has long been abused by companies trying to skirt employment law and avoid
payroll taxes. They have a litmus test of sorts to determine whether someone
is an employee or an independent contractor (tl;dr: if you treat them like an
employee, they're an employee). And of course, there are significant penalties
for getting this classification wrong.

For more details, go to the source:
[http://www.irs.gov/businesses/small/article/0,,id=99921,00.h...](http://www.irs.gov/businesses/small/article/0,,id=99921,00.html)

~~~
ww
My lawyer (a tax attorney) said this is rarely prosecuted on independent
contractors who are themselves incorporated (along with things like actually
have a contract etc). From my own experience this is true as well. Think about
it, the IRS would have to give back all of the matching that the contractor
(agent) did when they collect from the employer (principal).

Edit: talk to your own attorney though.

------
DanielBMarkham
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.

~~~
hugh3
_There is a great big giant humongous gap between something that sounds good
in an editorial and something that actually does something useful_

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.

------
jeremymcanally
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.

~~~
TomOfTTB
First, who said "an illegal" or "lazy"? Searching the page I only find your
comment using those terms.

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)

~~~
mbesto
1\. Read the comments on the actual article, not HN.

2\. Unless you have another ingenious way to make unemployment money more
efficient, I see it as a fairly decent argument.

------
GBond
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!

~~~
dualogy
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.)

------
jwb119
About time.

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

~~~
anamax
> 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

There was no such policy - there was no such "decision".

The standards for "looking for a job" are/were low enough that one could be
trying to start something at the same time. (I know - that's what I did.)

While we like to talk about starting companies, ie we like startup porn, the
vast majority of the long term unemployed won't start anything. More to the
point, the folks who would are unaffected by this proposal, so there won't be
any benefits received for the costs incurred.

How do I know this? The folks who would start do start and are doing so
already. (Yes, I read the SEA stats.)

~~~
JayWilmont
There is such a policy, at least in New York State. Any time spent on "self-
employment" activities reduces the amount of unemployment insurance money you
receive.

~~~
lurker14
all activities, or activities with associated revenue streams?

~~~
nknight
There are precedents for it being _all activities_. Particularly anything
you're doing that would be in line with your usual profession, whether you're
getting paid for it or not.

The rules vary by state, though.

~~~
orangecat
So a laid off programmer could be penalized for working on an open source
project to keep their skills current? Incredibly idiotic if true, but it
wouldn't be the first time we've created screwed up incentives for the lower
end of the income scale. I'm becoming more and more convinced that we should
replace most of the welfare bureaucracy with a negative income tax.

~~~
nknight
Potentially, yes. In the case law I remember, exceptions were explicitly
carved out for "hobbies", so if you can show that it's something you usually
do as a hobby and that it's not interfering with your job search, you can
probably avoid penalties, but I could see it being a major pain in the ass.

In reality, enforcement of UI regulations is somewhat spotty, and at least in
California, a tech worker who's only on it for 2-3 months is unlikely to have
any trouble. The risk isn't nonexistent, though.

------
sliverstorm
_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.

~~~
stc
Well you still get to do that when your $10,000 runs out.

~~~
hugh3
At which point you've already wasted $10,000 of someone else's money.

There's also the good ol' sunk cost fallacy. The longer you've spent working
on your dumb business plan, the less likely you are to change it to a smart
business plan.

------
talmand
Then, if you become successful, you can be labeled as one of the hated rich
and they'll put you out of business with crushing regulation and taxes.

Excellent.

~~~
danssig
"Crushing regulation and taxes" generally hits small businesses hardest.

~~~
talmand
According to descriptions of what "rich" seems to mean to most, small
businesses are the largest part of that heavily disliked group.

In the recent English riots the prevailing thought seemed to be that simply
owning a business meant you were rich.

~~~
danssig
It's hard to imagine this being the case. When I think of "has way too much
money" I think of big corporate fat cats. Never small business owners. I don't
know anyone personally who sees small business as hated rich either.

Perhaps this is some kind of cultural thing in the UK?

------
fredBuddemeyer
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.

~~~
krschultz
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.

~~~
srdev
I'm conflicted on the idea of leaving the country as a solution. Its not
enough to simply live and work in another country -- you're still liable for
taxes. You have to fully expatriate and renounce your citizenship. This is
often very difficult and time-consuming to do, and near-impossible if you're
not in a skilled line of work.

~~~
gyardley
I'm still a Canadian citizen, but because I don't live in Canada, don't have
assets in Canada, and don't earn income in Canada, I don't pay taxes in
Canada.

As far as I know, being taxed on worldwide income is just an American thing.

~~~
burgerbrain
It is just an American thing. And it's a great example of why "if you don't
like it, leave it" is bullshit _particularly_ when spoken in the context of
American politics.

~~~
philwelch
If you don't like it, leave it and then renounce your citizenship.

~~~
burgerbrain
Clearly you have not been paying attention.

------
becomevocal
This seems really cool and all, but what are we talking about in terms of wait
time and hurdles to jump through? Anyone know details?

I've looked into and seen others go through grant processes and they are often
terrible. Hope it isn't similar.

~~~
maratd
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.

~~~
tibbon
Strange question, but couldn't you always do this?

From my understanding, unemployment insurance only required that you take
no/low salary from a company. You were still able to receive money from
capital-gains/investments.

Start a consulting firm/startup, pay yourself a $1 salary with stock options.
Don't exercise these options for a long time (when you stop UE). I read the UE
stuff time and time again in Massachusetts and kept looking for something to
say that I couldn't do this but couldn't find anything that said so
explicitly. I didn't end up doing consulting (just more learning/studying),
but it would have worked and been legal right?

~~~
maratd
> Strange question, but couldn't you always do this?

No. For you to receive unemployment insurance you must prove that you are
actively seeking a job.

I suppose you could have invested the time into looking for a job while
spending the rest of it starting a business, but this will provide you with an
_explicit_ option to start your own business. That will encourage more people
to do so.

~~~
tibbon
Right. Let's say I was searching for a job, but doing Rails work on the side
(not a startup per-se, but you know... doing startupy like work). I could
spent 1 day per week looking for a job, and 4 to 6 days a week coding for
people. All the proceeds go into a consulting firm which I hold ownership of.

But yes, it is good for this to be official now.

~~~
ansy
If you do this you are probably violating the unemployment rules in your
state[1]. If you reported this income with the unemployment office you will
most likely have your benefits reduced or eliminated. But most people don't
report this income and get away with "double dipping" which was heretofore not
allowed. Technically if the government found out you did this they could
penalize you retroactively. But this is a hassle and most people just get away
with it unnoticed.

Even more technically, some states will even deny unemployment benefits if you
are working without pay such as in a startup situation (and you are honest
enough to admit this). It's not about income or full utilization, it's are you
working at all.

The change in the law makes getting paid for self employment legal. Although
if your self employment included revenue I assume it would still count against
the amount you received from unemployment, again depending on your state.

[1] [http://career-advice.monster.com/salary-benefits/benefits-
in...](http://career-advice.monster.com/salary-benefits/benefits-
information/unemployment-benefits-part-time-work/article.aspx)

------
pythoning
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.

------
americandesi333
Seems like there are some states that have this program in place- Delaware,
Maine, Maryland, New Jersey, New York, Oregon and Pennsylvania.

<http://workforcesecurity.doleta.gov/unemploy/self.asp>

Unfortunately, not California

------
teyc
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.
    

[http://www.becnorthside.com.au/index.php?option=com_content&...](http://www.becnorthside.com.au/index.php?option=com_content&view=article&id=60&Itemid=68)

------
protomyth
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).

~~~
jbooth
The bill's been sent to congress this morning, if you can't find it on their
website yet, you'll be able to soon. (Haven't gone looking myself).

~~~
protomyth
isn't there yet - hope they put it up sometime tonight

~~~
protomyth
here is a link: [http://www.whitehouse.gov/the-press-
office/2011/09/12/messag...](http://www.whitehouse.gov/the-press-
office/2011/09/12/message-president-congress-sectional-analysis-and-text-
american-jobs-act)

------
guelo
Who cares about these proposals? They might be good ideas but the Republican
House is never going to pass this.

------
bsiemon
I found the link for a list of unrelated things 2 paragraphs in quite jarring.

------
hexis
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.

~~~
sliverstorm
I rue the day when "tech company" came to equal "software company"... there
are so many other kinds of tech, too.

~~~
anigbrowl
Web software at that. HNot to pile on (I saw the comment below about sloppy
wording), but there are a lot of other business models besides 'online service
that does one thing really well'. If you want to create the next Photoshop or
Excel, for example, you need to deliver a lot of functionality right from the
get-go, which will take longer to build.

------
delinquentme
where the hell is the TLDR?

i just want a place to submit an idea and prototypes and get cash ....

------
known
US need a win-win proposition with Chindia

~~~
DiabloD3
I know this is getting downmodded, but hes somewhat right.

"Chindia" is draining our economy, by "draining our economy", I mean its
destroying the people who actually do the work.

For every job that is sent overseas, not only does it result in someone, an
actual real person, losing their job, but a form of slave labor in a foreign
country "hires" the replacement.

If I was President, honestly, I would push for a 0.5% tariff on all goods and
services from countries that are not considered first world countries.

I may be unable to improve the conditions of slave laborers in foreign
countries (especially China and India due to massively corrupt governments
that are doing everything possible to widen the gap between the poor and the
rich instead of closing it), but I don't have to support doing business with
those who make this possible.

0.5% would result in hundreds of millions of dollars in recaptured revenue,
which could be instead spent on trying to preserve jobs in the US instead of
exporting them, but it would also be low enough that the consumer would not
bear the brunt of this.

~~~
gte910h
>If I was President, honestly, I would push for a 0.5% tariff on all goods and
services from countries that are not considered first world countries.

An alternate statement of that idea (which I'm not sure I agree with either),
is a tariff on goods and service in the amounts required to bring the hourly
foreign labor costs up to the US federal minimum wage with no exemptions.

~~~
DiabloD3
I was actually considering something similar. Instead, define "first world
country" as a county who's median yearly pay is at least half of hours,
recognizes basic human rights, recognizes democratic voting, and doesn't
punish their population for speaking out against the government or any
government sponsored religion (such as the Muslim religion in various middle
eastern countries), and also recognizes the rights of women.

As in, fellow countries that believe in life, liberty, and the pursuit of
happiness.

Attempting to tariff any harder can have extremely adverse effects. The rich
wish to remain rich at all costs.

