This week, Governor Jack Markell in his State of the State address focused on the need for job creation throughout the state. Despite the fact that Delaware’s unemployment rates are slightly below the national average at 7.6%, job creation is still slower than in other areas of the country. In addition, because Delaware beach resorts offer a significant number of seasonal jobs, it is often difficult for the unemployed to find work during the winter months. Governor Markell and the state legislators are focusing on supporting business start-ups in an effort to increase job creation.
Unemployment
Although Delaware’s legislators are encouraging people to open new businesses in the state and are indicating they will offer programs that help people start new businesses, there seems to be a disconnect between what the legislators are saying and what the state unemployment office says about new business start-ups for the unemployed. According to the Unemployment Office website, starting a new business may make current unemployment recipients ineligible for benefits. The site states:
“Unemployment benefits are intended to support individuals who become unemployed through no fault of their own and to promote stable employment, not to support the early stages of a new business or self-employed individuals whose enterprises have not been profitable”
This statement on the unemployment office website seems to contradict what the legislators are claiming. A person who loses their job through no fault of their own could be considered a perfect candidate for launching a new company, using unemployment benefits to pay household bills as they build their business. Although someone who is self-employed whose business fails may not be eligible, penalizing someone who is collecting unemployment seems counter-productive to the state’s claim of supporting business start-ups.
Encourages Dishonesty
One of the biggest problems with this policy in Delaware is that it encourages unemployment recipients to use deceptive practices to keep from losing the benefits that may be keeping a roof over their heads or food on the table. Recipients are forced to put the business in the name of a friend or family member or simply not report that they have started a business in order to continue receiving necessary benefits.
It appears that the state legislators and the Governor should start with the Unemployment Office if they are serious about encouraging business start-ups in the state. Sudden job loss is traumatic enough without having to deal with the arbitrary and sometimes unfair practices of the Unemployment Office.
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