HR-6431-119
Motion to reconsider laid on the table Agreed to without objection.
Sponsored by Mike Carey (R-OH)
What it does
This bill would amend federal tax law governing state "self-employment assistance" programs, which let unemployed workers use unemployment benefits to start businesses instead of job-searching. It would remove the requirement that participants be likely to exhaust regular unemployment benefits, broaden qualifying activities to include business-plan development, add a weekly certification requirement, and double the cap on program participants from 5% to 10% of unemployment claimants. The changes would take effect two years after enactment, though states could adopt them sooner.
Who benefits
Unemployed individuals seeking to start businesses, who would have easier access to self-employment assistance programs and no longer need to show they were likely to exhaust regular unemployment benefits. State workforce agencies gain more flexibility in program design, and business counseling and entrepreneurial training providers may see increased demand for services.
Who is hurt
State unemployment insurance trust funds could face somewhat higher costs if more claimants (up to double the prior cap) draw benefits while starting businesses rather than actively job-searching. State agencies would bear administrative costs of weekly certification tracking and implementing new guidance. Employers who fund unemployment insurance through payroll taxes could see modestly higher costs if program expansion increases fund draws in some states.
Supporters argue
Supporters argue the current requirement that participants prove they are likely to exhaust regular benefits creates an unnecessary bureaucratic barrier that discourages entrepreneurship among unemployed workers. They contend doubling the participant cap and expanding qualifying activities to include business-plan development would let more unemployed Americans use existing benefits productively, potentially reducing long-term unemployment and creating new small businesses.
Opponents argue
Opponents argue that removing the "likely to exhaust benefits" screen and doubling the participant cap could allow unemployment funds, intended for those actively seeking reemployment, to subsidize business ventures with uncertain success rates. They contend weekly certification requirements add administrative burden for both participants and understaffed state agencies without evidence the expanded program would meaningfully improve outcomes over traditional job-search requirements.