elder (senior citizen) current events

Entrepreneur or Unemployed?
By ROBERT B. REICH

June 1, 2010 - LAST year was a fabulous one for entrepreneurs, at least according to the Kauffman Index of Entrepreneurial Activity released last month by the Ewing Marion Kauffman Foundation. “Rather than making history for its deep recession and record unemployment,” the foundation reported, “2009 might instead be remembered as the year business startups reached their highest level in 14 years — even exceeding the number of startups during the peak 1999-2000 technology boom.”

Another surprise is the age of these new entrepreneurs. According to the report, most of the growth in startups was propelled by 35- to 44-year-olds, followed by people 55 to 64. Forget Internet whiz kids in their 20’s. It’s the gray-heads who are taking the reins of the new startup economy. And if you thought minorities had been hit particularly hard by this awful recession, think again. According to the report, entrepreneurship increased more among African-Americans than among whites.

At first glance, all this seems a bit odd. Usually new businesses take off in good times when consumers are flush and banks are eager to lend. So why all this entrepreneurship last year?

In a word, unemployment. Booted off company payrolls, millions of Americans had no choice but to try selling themselves. Another term for “entrepreneur” is “self-employed.”

According to an analysis of Bureau of Labor Statistics by an outplacement firm, Challenger Gray & Christmas, the number of self-employed Americans rose to 8.9 million last December, up from 8.7 million a year earlier. Self-employment among those 55 to 64 rose to nearly two million, 5 percent higher than in 2008. Among people over 65, the ranks of the self-employed swelled 29 percent. Many older people who had expected to retire discovered their 401(k)’s had shrunk and their homes were worthless. So they became “entrepreneurs,” too.

Maybe this is a good thing. A deep recession can be the mother of invention. These Americans are now liberated from the bureaucratic straitjackets they thought they had to wear. They can now fulfill their creative dreams and find their inner entrepreneurs. All they needed was a good kick in the pants.

But this upbeat interpretation doesn’t include lots of people who don’t particularly relish becoming their own employers, like an acquaintance whom I’ll call George. George was an associate partner at one of the world’s largest technology and consulting firms until he lost his job last year in a wave of layoffs. For months, George knocked on doors but got nowhere because of the deep recession.

Finally, his old firm got some new projects that required George’s skills. But it didn’t hire George back. Instead, it brought him back through a “contingent workforce company,” essentially a temp agency, that’s now contracting with George to do the work. In return, the agency is taking a chunk of George’s hourly rate.

Technically, George is his own boss. But he’s doing exactly what he did before for less money, and he gets no benefits — no health care, no 401(k) match, no sick leave, no paid vacation. Worse still, his income and hours are unpredictable even though his monthly bills still arrive with frightening regularity.

The nation’s official rate of unemployment does not include George, nor anyone in this new wave of involuntary entrepreneurship. Yet to think of them as the innovative owners of startup businesses misses one of the most significant changes to have occurred in the American work force in many decades.

Typically each year, large numbers of Americans leave their old jobs to find new ones. Unemployment rises during recessions mainly because companies hire fewer workers, not because they lay more people off. But this Great Recession has been different. Layoffs by mid-sized and large companies have surged while hiring has almost disappeared. These companies have used the sharp downturn as an opportunity to cull their payrolls for good — substituting labor-saving technologies and outsourcing to workers abroad or to contract workers here. This explains why almost half of America’s unemployed have been jobless for more than six months — a greater proportion than at any time since the Great Depression. It also explains why so many people like George have joined the ranks of the self-employed.

Yes, a growing number of Americans went out on their own before the recession, but clearly their numbers have vastly increased. While some are happy about their new status, most are worse off than they were before. It’s one thing to be a contingent worker in good times and when you’re young; quite another in bad times when you’re middle-aged.

Still, many would rather view these people as entrepreneurs and owners of startup businesses, and see their major challenge as getting adequate credit. Congress’s Joint Economic Committee reported last week that small businesses continue to face tight lending standards. “Small business is the job-creation engine that powers this economy,” said Representative Carolyn Maloney, the New York Democrat who heads the committee. Democrats will be pushing bills to make loans more available to them.

Indeed, America’s startup businesses do need better access to credit. But many entities that look like small new businesses are actually self-employed people who need more than bank loans. They need predictable income and benefits.

For starters, they could use what might be called “earnings insurance” that would pay for up to two years part of the difference between what they earned on the old job and what they earn now on their own. Employed workers would contribute to the insurance fund through their payroll taxes, as they do with unemployment insurance, but the total bill for benefits would be unlikely to rise because earnings insurance would get them back to work quicker and thereby reduce the number of weeks they relied on unemployment benefits.

The self-employed also need more help saving. Since they can no longer depend on tax-free corporate matches to their 401(k)’s or I.R.A.’s, they should be entitled to tax credits that match them. Fortunately, thanks to the reform package passed by Congress, they will have more help getting affordable health care, as they will be able to use their aggregate bargaining power in medical exchanges to push down insurance costs.

New businesses are vital to job growth, and entrepreneurship does fuel the economy. And surely some of America’s new independent workers will build their own companies. But when the economy is still so hard on so many, it’s important to distinguish between entrepreneurial zeal and self-employed desperation.

Robert B. Reich, a former secretary of labor, is a professor of public policy at the University of California, Berkeley, and the author of “Supercapitalism.”

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As boomers age, their focus shifts from finding rides for parents to getting around in their own later years

Going home for the holidays may bring cheer and joy to many but a harsh reality for others: Their parents are too old to drive.

As the oldest of the nation's 79 million baby boomers turn 61 this year, the specter of aging and its consequences loom large. Boomers may be worrying about their parents now but know they may experience similar challenges someday.

"They're getting to see it face to face," says Sandy Markwood, chief executive of the National Association of Area Agencies on Aging, who says the holidays reunite families who have communicated strictly by telephone or e-mail throughout the year. "They realize Mom and Dad are slipping and shouldn't be driving."

Concern over how the bulging population of seniors will get around in a sprawling nation heavily dependent on the automobile is paramount among advocates for the elderly -- so much so that Markwood's group is making transportation the centerpiece of its annual "Home for the Holidays" campaign.

"Half of American households don't have access to adequate transportation options other than cars," Markwood says. "Rural America and suburbs don't have public transportation available."

Options are fewer for the elderly because 21% of Americans older than 65 don't drive, she says. More than 600,000 people age 70 and older stop driving each year, according to a report by the Government Accountability Office.

Through the Eldercare Locator program the association administers nationwide, the group is encouraging adult children visiting their aging parents to take appropriate steps to connect Mom and Dad with a way to get to the doctor, the pharmacy, the beauty shop or the grocery store. The group is getting the word out -- through brochures that will be distributed by local agencies for the aging -- that many areas provide free transportation to the elderly.

*In Olathe, Kan., Johnson County's Area Agency on Aging has 100 volunteers -- many of them retirees -- who provide 880 rides a month.

"They drive their own cars, drive to people's houses, pick them up and take them to appointments, wait for them and bring them home," says Barbara Gerhard, coordinator of Catch-a-Ride.

"A lot of elderly are very isolated, but they get to know their drivers and they ask for a driver," she says. "It gets to be a friendship and a network."

*The Lower Savannah Council of Governments, a regional transportation agency that represents six counties in the southern half of South Carolina, has one person assigned to handle calls from people who need rides. The agency has worked to create a shared-ride program.

"As they call in or relatives call, we can hook them up with transportation providers," says Rhonda Mitchell, who's in the newly created position of mobility management specialist.

*In and around Harrisburg, Pa., the Dauphin County Public-Private Senior Transportation Groups has nine volunteer organizations providing rides in their townships.

"They take phone call requests and they do dispatching and scheduling," says Eileen Carson, deputy administrator. "They're responsible for maintaining the vehicles and for fundraising."

Fourteen vans provide 40,000 one-way trips a year with the help of 45,000 volunteer hours.

Transportation services vary from place to place. Eldercare Locator brochures that will be distributed by local aging agencies give a primer on various free programs and include questions to ask. (It's available at 800-677-1116 or www.eldercare.gov.)

"Family gatherings during the holidays often offer great opportunities for conversations about an older loved one's well-being," Markwood says. "Raise questions and raise issues between adult children and elder parents before there is a crisis."

"I'm from Brooklyn, N.Y.," she says. "I came home from my senior prom on the subway."

When she and her husband retired in Kansas, he did the driving. Then, "he had the nerve to die," Mayberry says. "All of a sudden, I thought, 'Oh my God, you can't get to a doctor, you can't do anything.' I am really up a creek here without my daughter to drive me weekends."

She discovered Catch-a-Ride, which she calls "the greatest invention ever made."

Mayberry now volunteers to help recruit drivers for the program through fliers sent to churches. She also volunteers at a hospital once a week. A driver picks her up to take her home.

"That means I don't have to beg," she says. "It's embarrassing to have to ask for a ride."