Commentary: Coronavirus economic relief proposals are overlooking the 57 million Americans who are self-employed

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COVID-19 has upended life for many of us, creating uncertainty for our families, our businesses, and the broader economy. In the U.S., politicians on both sides of the aisle are racing to align on relief packages that would provide in excess of $1 trillion in aid to various industries, programs, and households. While these packages rightly include support for small businesses, there is a large swath of independent workers—57 million, according to a 2019 study—whose businesses are too small to even qualify as a “small business.”

These are the microbusiness owners, the independent contractors, and the self-employed individuals who make up the emerging gig economy, and are about one-third of the total employable workforce in the U.S. They embody the spirit of entrepreneurism and drive a vital part of the economy. For example, U.S. Etsy sellers alone drove around $6.2 billion in economic output and created 1.7 million jobs in 2019. They join millions of others, from the freelance writers and designers who work behind the scenes, to the independent handymen, photographers, and fitness instructors who are always on call.

They are also among the most vulnerable to the current crisis. If they get sick, they must take time off to care for a family member, or simply experience a decline in sales as customers tighten their budgets—they can’t call on a colleague to cover for them or rely on a steady paycheck. Yet, as microbusiness owners, they don’t qualify for employment-based benefits, like unemployment insurance or paid leave. Nor are current small business supports, like Small Business Association (SBA) loans, helpful for one-person businesses who operate more informal businesses funded by their own personal savings and business revenue. They are truly going it alone, and they are falling through the cracks when it comes to COVID-19 relief efforts.

Both Congress and the Trump administration must ensure that microbusinesses and the self-employed are a key part of any economic recovery package. Earlier this week, on behalf of Etsy sellers, I shared the following reform suggestions directly with Majority Leader Mitch McConnell and Speaker Nancy Pelosi. These reforms would not only provide critical relief to microbusiness owners, but also protect a vital part of our nation’s economy:

Direct assistance

While the $1,200 checks Congress is currently considering would certainly help the self-employed, it will not cover many of the costs they will face as customers cancel orders, shipping becomes less reliable, and their bills come due. In addition to those direct payments currently under discussion for all Americans, Congress should create a supplementary direct assistance program for the self-employed and microbusinesses to help cover the cost of lost business, paid sick leave, individual health care costs, and fixed expenses.

Unemployment protection

The self-employed are typically ineligible for unemployment protection, because they don’t have an employer paying into the system on their behalf. The federal government should immediately establish an unemployment protection fund for all self-employed Americans and gig workers, which would allow them to receive benefits in the event of declining income owing to decreased demand for their goods or services.

Business-critical services

Self-employed Americans, including Etsy sellers, depend on critical e-commerce infrastructure, including financial services, shipping, and Internet connectivity. The federal government should ensure that these essential services remain fully operational, even as the public and private sectors take greater measures to contain the spread of the virus.

Tax and debt deferral

In addition to deferring the April 15 deadline for federal tax returns, that deferral should also include the subsequent two quarterly tax payment deadlines, which place a significant financial burden on the self-employed by putting a short-term strain on cash flow. Congress should also negotiate deferred mortgage and credit card payments for self-employed microbusiness owners, who often operate out of their homes and use personal credit cards to fund their business.

Earned Income Tax Credit

The Earned Income Tax Credit (EITC) is an important source of income protection that already works equally well for gig workers and traditional employees because it is not administered through a payroll, like most other social safety net benefits. Congress should expand EITC by increasing the income threshold (which is dependent on a number of factors), including younger and childless workers, and eliminating the marriage penalty. Lawmakers should also allow it to be calculated and administered on a quarterly basis instead of annually, which would better support individuals struggling to manage short-term income volatility.

Disaster relief

Many of the government’s disaster relief programs, such as FEMA’s Other Needs Assistance program or SBA’s Disaster Relief Loans program, simply do not work for the self-employed. They often fail to cover the specific losses they incur, or require them to jump through too many administrative hoops to access funds. For example, FEMA’s Other Needs Assistance program requires applicants to first apply and then be denied for a SBA Disaster Home Loan to qualify.

Certainly, all government programs come with some level of bureaucracy, but for a sole proprietor, any hour they spend navigating this complexity is an hour they are not making their goods or marketing their services. They simply can’t afford the investment. Congress should appropriate funds for a self-employment assistance fund within the Economic Development Administration’s Economic Adjustment Assistance and the SBA’s Disaster Relief Loan programs, and require these agencies to quickly issue guidelines to help the self-employed understand and access these programs.

Taken together, these reforms would dramatically ease the burdens faced by the millions of independent contractors, self-employed individuals, and microbusiness owners who are driving the broader gig economy. At a time of so much uncertainty, let’s not leave the most vulnerable entrepreneurs behind.

Josh Silverman is CEO of Etsy.