is one potential pathway to exit a spell of unemployment. The regular Unemployment
Compensation (UC) program generally requires unemployed workers to be actively
seeking work and to be available for wage and salary jobs as a condition of
eligibility for UC benefits. These requirements constitute a barrier to
self-employment and small business creation for unemployed workers who
need income support. The Self-Employment Assistance (SEA) program,
however, provides an avenue for combining income support during periods of unemployment
with activities related to starting one’s own business.
Thus, within the joint federal-state UC program, the SEA program focuses on the
reemployment of UC beneficiaries. State SEA programs help unemployed
workers generate their own jobs through small business creation. SEA
waives state UC work search requirements for those individuals who are
working full time to establish their own small businesses. SEA provides a weekly
allowance in the same amount and for the same duration as regular UC benefits.
It is available only to individuals who would otherwise be entitled to UC
benefits and have been determined likely to exhaust their UC benefits.
Despite the unique configuration of SEA, which pairs self-employment
activities and income support, participation in the program by states as well
as unemployed workers is limited. Currently, only five states have active SEA
programs for UC claimants, and in one of these states—New York—authorization
for the SEA program is scheduled to expire December 7, 2013. In part, the
small-scale nature of the program is likely due to the authorizing
legislation requirement that SEA be budget neutral; that is, no UC funds may be
used to provide self-employment training.
P.L. 103-182, the North American Free Trade Agreement Implementation Act,
created the SEA program on December 8, 1993. It was permanently authorized
by P.L. 105-306, the Noncitizen Benefit Clarification and Other Technical
Amendments Act, which was signed on October 28, 1998. Like the rest of UC,
the SEA program is financed by federal taxes under the Federal Unemployment
Tax Act (FUTA) and by state payroll taxes under the State Unemployment Tax Acts
Most recently, provisions in P.L. 112-96, the Middle Class Tax Relief and Job
Creation Act of 2012, gave states the authority to expand SEA
participation to certain claimants in the Extended Benefit (EB) and
temporarily authorized Emergency Unemployment Compensation (EUC08) programs.
Date of Report: January 3, 2013
Number of Pages: 10 Order Number: R41253 Price: $29.95
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