Nearly 60 million Americans are self-employed in some way, whether full time or as a side hustle. Self entrepreneurship is common in this country, but the economic collapse of 2008-2009 massively damaged the careers of millions of self-starters. Now, the economic struggles around the coronavirus are threatening to do the same thing.
Self-employed American workers have gotten some aid through government relief programs, but millions are still fighting against the current. Here’s where aid has come from, where self-employed people can access it, and where stimulus packages have fallen short.
Relief for the Self Employed
Under normal circumstances, self-employed people don’t qualify for unemployment benefits. Thanks to the CARES Act, the $2.2 trillion coronavirus stimulus bill, self-employed workers can get unemployment during the pandemic. Congress created Pandemic Unemployment Assistance (PUA) specifically for states to disburse to independent, freelance, and contract workers who wouldn’t typically qualify for unemployment.
The PUA offers 39 weeks of benefits, starting as early as January 27 if your work was impacted by coronavirus. The government introduced relief in other ways too, such as tax credits for sick and family leave, and expanded health insurance options. For the most part, however, unemployment insurance is the key feature of government relief, as it partially makes workers whole again.
However, things haven’t been seamless. Offering unemployment benefits to tens of millions of people for the first time partially overwhelmed some state’s programs. In addition, some self-employed people are finding the benefits are far less than expected.
Where Things Have Fallen Short
It’s fantastic that for the first time ever, self-employed people have access to social benefits. However, the relief effort hasn’t been as robust as intended. For starters, although it varies by state, unemployment programs are overrun and struggling to keep up. One report found that nearly half of workers who applied for unemployment still haven’t gotten any aid.
When self-employed workers do receive benefits, they often receive less than they should. The problem is that many self-employed people have multiple sources of income, and may have filed a W-2 form. The income listed on the W-2 would only be a small piece of what the person makes, but since W-2s are traditionally used for unemployment filing, some workers are filed into basic unemployment as opposed to the PUA.
The result is significantly reduced benefits. One self-employed dance teacher said that she only got $87 per week through typical unemployment, but should have received $386 through the PUA. Basically, a small loophole is costing struggling self-employed workers hundreds of dollars each week.
Despite the issues with PUA, any self-employed person who needs financial help should apply for unemployment benefits. Each state has a different application process and portal, but generally speaking you’ll need to provide information and documentation about your past work history and income.
As of now, there’s no answer for self-employed workers who are receiving the wrong amount of benefits. Any future stimulus packages could address the issue, much like how Congress passed a follow up to the Payroll Protection Program to tweak glitches.