A plan backed by the U.S. Department of Labor would allow entrepreneurs to collect unemployment benefits while they build a business, an acknowledgement of startups' growing importance to the American economy.

The plan, called Self-Employment Assistance Programs (SEA), allows people collecting unemployment who "have proven to be good candidates for self-employment" to continue receiving checks while they build new businesses, according to the Department of Labor.

In many states, people who are out of work can collect unemployment benefits only if they're actively searching for a new job at an existing company. SEA waives that requirement, so long as a recipient of benefits can prove he or she is working on what the department calls a "credible" business. Entrepreneurs receiving benefits under SEA would be allowed to continue doing so for up to 26 weeks — the same time frame given to all other unemployment recipients.

Unemployment insurance rules are largely determined at the state level — the federal government only gives certain rules and says that states must provide some form of it. Thus, the Department of Labor can't dicate that every state adopts the proposed rule change. Instead, the department has made $35 million available for states who want to adopt SEA to do so, and it's published guidelines showing state governments how they can institute the new rule.

The plan is based on a model pioneered in Oregon and four other states, including Delaware, Maine, New York and New Jersey. It's being championed by Senator Ron Wyden (D-Ore.), who called the plan a "success that has far outdistanced the cost to [Oregon]." He welcomes other states to model similar changes on his home state's example.

“We already know that unemployment insurance is an economic multiplier, but with self-employment assistance it can be a jobs multiplier too," said Wyden in a statement. "Today’s guidance from the Department of Labor will show states exactly how to give the smart entrepreneurs looking for work in their state the spark they need to become small business job creators."

Labor Secretary Hilda L. Solis credited the Oregon plan with sparking economic revival there, adding that any state which follows suit will also see job growth.

“Self-Employment Assistance has proven to be a valuable tool in helping many unemployed Americans realize the dream of business ownership in Oregon and around the country,” said Solis. “These grants will help improve and expand these state programs while strengthening the economy and creating new jobs as more start-ups launch and grow.”

Scott Gerber, entrepreneur and founder of the Young Entrepreneur Council, called for more states to adopt SEA immediately.

"SEA creates a guaranteed source of capital for startups without any of the traditional credit or collateral requirements as barriers — or the need to give away equity to investors — and empowers the unemployed to one day become the employers," said Gerber. "The program's track record speaks for itself, and now state legislatures must do their part and enact these programs."

What can the government do to better recognize entrepreneurship as a viable career? Tell us your opinion in the comments below.

Thumbnail image courtesy of iStockphoto, lisegagne