Relief for Self-Employed Workers: Why the Hold Up and How to Fix It

Millions of self-employed Americans currently struggle financially as stay-at-home orders have made it impossible for them to earn their livelihoods. This group of workers includes small businesses owners, shopkeepers, realtors, freelancers, gig economy workers such as rideshare drivers, and other independent contractors. One thing these workers share: their ineligibility for traditional unemployment insurance. Because they have no “employer,” these workers would have been left without a safety net during wide-spread lockdowns but for legislative intervention. The recent CARES Act created two new programs that could provide relief to these workers: the Pandemic Unemployment Assistance (PUA) program, which extends unemployment insurance (UI) benefits to the self-employed who are not typically eligible for these benefits, and the Paycheck Protection Program (PPP), which is administered by banks and provides forgivable loans to small businesses based on last year’s payroll. While many self-employed workers are eligible for PPP support, funds allocated for the program were exhausted this week. Thus, at the moment, PUA is the only form of short-term relief still available for self-employed workers hit hard by the crisis. While the CARES Act provides federal funding for the PUA program, administration of these benefits has been left up to states—a Herculean task given the 22 million new claims rolling into the UI system so far. Three weeks have passed since the passage of the CARES Act, but most states are not yet accepting claims.