Tom Seekins, The University of Montana

Examinations of the use of self-employment in rural vocational rehabilitation leads to several lessons about models of Vocational Rehabilitation (VR).

The first suggests that, within the VR system, an increase in the use of self-employment as an employment outcome could benefit both consumers and the VR system. Still, such lessons are based on a VR model that is based on serving individuals. The second lesson involves questions that point toward a community model in which VR specifically works to improve the community. Historically, VR has focused on finding jobs already created by others. An additional approach involves integration of disability and rehabilitation issues into the mainstream of rural community and economic development. This paper first reviews findings from several studies of self-employment as a rural VR option. Second, conclusions based on this research are offered with an emphasis on the implications for the role that VR plays within rural communities.

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The structure of the U.S. labor market is undergoing significant changes in a more competitive global economy. Among these charges: is a shift toward more contingent employment, including temporary, part-time, subcontracted, and self-employment (Belous, 1989).

Indeed, self-employment is one of the fastest growing employment options. For example, Becker (1984) reported a 23% increase in self-employment between 1976 and 1983. By 1990, Silvestri (1991) reported that self-employment had increased another 10%.

Self-employment includes those who own and operate an incorporated business, the unincorporated self-employed, those in agriculture who own their own farm or ranch, those who are self-employed on a second job (e.g., moonlighting), and may include unpaid family workers (Becker, 1984). The self-employed are represented across the occupations in relative proportion, except in agriculture (i.e., family farmers) and managerial and professional specialties (e.g., dentists) where they are proportionately over-represented (Becker, 1984; Silvestri, 1991).

Rural areas of our nation often have marginal economies and may be more susceptible to shifts in the larger economy. For example, rural areas generally have smaller business establishments, lower rates of people in the labor force, higher rates of unemployment, lower levels of education, and more limited resources, and they face marketing obstacles of scale and distance. Interestingly, rural areas have higher rates of self-employment.

Indeed, some people see self-employment as a last resort when jobs created by others are not available. Others see it as an adaptive response. Still others see it as the ideal of economic citizenship.

While the values and various economic development strategies are debated (Miller, 1985), entrepreneurial approaches, including self-employment, are advocated as an option of particular utility in rural areas. (Malecki, 1988; Miller, 1985; Popovich & Buss, 1989). Further, examining self-employment as a VR strategy raises questions about the role of VR in rural community and economic development.

This paper reviews research into self-employment conducted over the past several years by staff of the RTC:Rural at the University of Montana. Further, it offers some observations about self-employment as a VR outcome. Finally, it begins to identify issues involved in the relationship between VR and economic development.

Review of Research Findings

In 1989, we started exploring self-employment as a rural vocational rehabilitation option. This pursuit can be credited, in part, to suggestions made by Bob Donaldson, a retired Director of the Montana Vocational Rehabilitation and Visual Services Division, who reported that its use was a major distinction between urban and rural counselors he had seen throughout his career.

Our first efforts involved examinations of larger data sets, including 911 data and census data (Seekins, 1992). At about the same time, we began a series of qualitative studies involving interviews with counselors in rural states. These discussions led to the development of a national survey of counselors concerning self-employment as a vocational rehabilitation option (Arnold, Seekins, & Ravesloot, in press; Ravesloot & Seekins, in press). As one of the major issues discussed by counselors during our qualitative study involved state policies, we also initiated a review of state Vocational Rehabilitation policies related to self-employment (Arnold & Seekins, 1994). The following summarizes our findings.

General statistics.

Overall, people who report a work disability are nearly twice as likely to report being self employed (14.7% vs. 8%) as people without a work disability (e.g., U.S. Census Bureau, 1983). This in itself was a startling finding to us. The number of people with a work disability who report being self-employed (520,000) is equivalent to the number of people with work disabilities employed by Federal, state, and local governments (533,000).

Self-employment is more prevalent in rural than in urban areas. Similarly, counselors in rural states and counselors serving rural areas even in urban states are significantly more likely to use self-employment than counselors serving urban areas (Amold et al., in press).

Overall, however, self-employment is used as a VR outcome in only 2-3% of cases. This is a much lower rate than might be expected, based on the overall rate of self-employment reported on the census by those with a work disability.

Consumer and counselor concerns. The lack of employment options and specifically the lack of self-employment options were identified as the seventh and twelfth highest concerns in a survey of adults with disabilities living in rural areas around the nation (Seekins, Jackson, & Dingman, 1991). Similarly, a survey of consumers of one independent living center found that nearly 80% of their consumers would be interested in pursuing self-employment options. Similarly, three of the top seven concerns of rural VR counselors nationally involve the lack of employment options in rural communities (Amold, 1995).

Counselor attitudes.

The use of self-employment is influenced by the past experience of counselors and office atmosphere, which in turn is influenced by state policy (Ravesloot & Seekins, in press). A survey of 75 counselors from 10 states showed their attitudes accounted for 11% of the variance in self-employment outcomes. Further, counselors' past experience accounted for 38% of the variance in their attitudes and office atmosphere accounted for an additional 11% of the variance in their attitudes. Interestingly, their opinion of the state's policy regarding self-employment accounted for 30% of the variance in their judgments of their office's atmosphere. In essence, the more positive a counselor's past experience, office atmosphere and state policies were toward self-employment, the more likely they were to support its pursuit.

State polices.

In our study of state policies, 11 (25%) states had no specific policies, procedures, or guidelines, for self employment. Ten states (22%) required that the counselor eliminate all other viable rehabilitation options or salaried employment before considering self-employment. Six states required that self-employment be reserved for people with severe disabilities. While three state policies contained positive statements about self-employment, (e.g., it allows the consumer to be productive, etc.) fully 11 (25%) contained negative statements that warned about potential risks of self-employment.

Comparative effectiveness.

Among the attitudes held by counselors that affect their use of self-employment is the belief that high rates of business failures make self-employment too risky. Yet, business researchers now estimate that only about 20% of businesses fail over the first eight years (Aley, 1993; Duncan, 1994; Mangelsdorf, 1993). Even at much higher rates of failure, comparisons to vocational outcomes in job placements reported by the General Accounting Office would be favorable. When looking at all competitive closures, it appeal that a number of people are likely to experience some sort of harmful effects as a result of not staying employed - in a job or in their own business- and that the harmful effects of employment failure are not limited to self-employment.

Cost comparisons.

The average cost of self-employment placements in 1988 averaged $3,122; $1,183 more than the average cost of a placement in which the outcome was that a consumer worked for someone else ($1,939) and $415 more than a sheltered workshop placement ($2,707). The cost benefits over time are not clear, however, because it is not known how long such placements last, the comparative return on investments, the level of income produced, or consumers' comparative satisfaction.

Observations About Self-employment as a VR Outcome

It is important to underscore that self-employment is not for everyone. Nevertheless, our data, and my bias, suggests that self-employment is an area in which VR can expand its emphasis. A general expectation of increasing self-employment closures from approximately 2.5% to 3.5% over the next three years seems achievable and would involve a different employment outcome for over two thousand VR consumers.

It is interesting to note that during our research, we heard of many creative uses of self-employment. One counselor reported a strategy that approximated the development of natural supports for self-employment. She involved a local incubator in assisting consumers to do market research, develop business plans, and secure financing. The financing typically came from a small bank that participated in a micro-loan program but also matched that with their own funds. Since the bank had a financial interest, they typically provided financial oversight and management assistance while the businesses were being launched. Importantly, these were the same procedures that would have been used had the entrepreneur not come from VR or had a disability.

We also heard from many mental health consumers and providers who reported going outside the VR system to develop cooperative businesses. A primary advantage noted was that, as a group, they controlled scheduling in a way that allowed them to plan for cyclical recurrences of debilitating episodes among the owners.

Finally, we have enjoyed extensive conversations about possible models for converting sheltered workshops to community business incubators (Seeking, 1994). Indeed, workshops have many characteristics of incubators already.

Research Questions Concerning Self-employment

Being researchers fascinated by a topic, our work has naturally led to more questions about self-employment that we have yet to answer.

1. Who are these people who report work disability and being self-employed? What do they do? How much do they make? How did they become self-employed? How satisfactory is this arrangement?
2. what is the long-range outcome of self-employment outcomes assisted by VR services?
3. Third, recognizing self-employment is not for everyone, still, how can VR counselors help consumers assess their suitability or readiness for self-employment? How might the JAN model or PWI models be adapted to a Business Ownership Accommodation Network?
4. Fourth, what are the policy implications of self-employment at the systems and individual levels? Including issues of Significant Gainful Employment and taxation.
5. Fifth, How many people do people with disabilities who own their own business employ? What is their economic contribution to their community? their contributions to civic leadership?
6. Sixth, What role can business people with disabilities play in the disability movement? If there are indeed so many of them, why haven't they been more visible?
7. Seventh, What is the relationship between VR and the mainstream economic development programs that promote business development and entrepreneurship? Is there a community VR model?

Community and Economic Development Linkages

Viewed from the economic development perspective, Vocational Rehabilitation started over 5,000 businesses in 1988 on an investment of approximately $15,000,000. At an average investment of $3,122, most of these would generally be considered to be micro-enterprises. Such micro-enterprises are an important segment of community and economic development -especially for individuals of low-income and rural communities. As such, VR can be viewed as contributing to economic development of the communities they serve but not in a systematic or planful way.

A proper question might be, what is the role of VR in a community's economy?

One place to begin the consideration of linkages between VR and Rural Community and Economic Development is in an examination of value similarities. Table 1 presents a comparison of some common values held by these two institutional structures.

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Comparison of Some Vocational Rehabilitation and Community Economic Development Models

Community Economic Development:

1. Individual citizens of a community are its most valuable asset and want to work to produce economic value.
2. Want to create longterm, sustainable business and economic activity
3. Want to develop community infrastructure that makes a community a quality place to live, as well as facilitate economic benefit.
4. Open to participation in community assessment and planning
5. Emphasizes personal responsibility and initiative
6. Oriented to building on a community's strengths. Interested in developing social capital, including individual skills and abilities, cooperative networks and trusts.

IL and Rehabilitation:

1. Work is a valued part of life for people with disabilities, too.
2. People with disabilities want to have careers that are financially viable ways of earning a living.
3. People with disabilities and disability advocates want to promote universal accessibility that makes their communities, a better place for everyone.
4. People with disabilities want to be integrated into the activities of their community and want to contribute to the economic viability of their community.
5. People with disabilities can take responsibility for themselves and can live independently.
6. Emphasizes individual strengths and abilities. Emphasizes integration into the community where they can effectively contribute.

Clearly, there is compatibility. Of course, VR consumers and counselors might find resources of value from the economic development programs available. People with disabilities are certainly eligible to participate in RCED programs. Still, there are important distinctions between the two institutions.

The VR model emphasizes individual services, including counseling. The RCED model emphasizes community development activities and tends to work with community groups.

Several models have emerged that suggest ways in which the two sections can cooperate, including some of those being described here. While these models show significant programmatic promise, they do not necessarily represent a comprehensive, integrated model. Such efforts would require integration of people with disabilities and VR counselors into local economic development boards. For example, the role of rural counselors may be partially redefined to include working to develop a community's economy under the notion that a rising tide lifts all the boats.

Similarly, economic development leaders could be involved in VR boards and planning efforts; recognizing that VR can play a role in developing businesses, helping to fill entrepreneurial niches, as well as providing access to a qualified and productive workforce.

Finally, economic development is an extremely large and diverse field, encompassing community infrastructure (e.g., roads, streets, water, electricity, telecommunications, housing, and transportation) as well as business development. As such, it has significant impact on areas of interest to independent living as wed as vocational rehabilitation. Further, even within the area of economic development, there are several types and various strategies. From my rural view, it is Rural Community and Economic Development with which we find greatest compatibility and whose values are summarized above.

While this vast system appears to be open to participation and collaboration, it has huge mass and significant momentum, and multiple points of connection. From this perspective, it would seem easier for the smaller and perhaps nimbler rehabilitation system to initiate further exploration of common goals and practices, and potential collaboration. I am certain they are friendly neighbors.

Acknowledgements

I wish to acknowledge the contributions of several colleagues to the ideas presented in this paper. First, of course, are Nancy Arnold and Craig Ravesloot who collaborated on much of the research. I also want to acknowledge Rick Offner, former Director of RTC:Rural, who supported the early steps of this research despite what might be considered conventional wisdom. Similarly, Bob Donaldson provided important encouragement very early in the process, as has Joe Mathews, current Director of Montana's Division of Vocational Rehabilitation and Visual Services more recently. Support for the development of this paper was provided by a grant from the National Institute on Disability and Rehabilitation Research (NIDRR) (H133820002-95). The ideas presented do not necessarily reflect the position of NIDRR and are strictly those of the author.

References

Aley, J. (1993). Debunking the failure fallacy. Fortune, 128 (5),21.

Arnold, N. (1995). Problems and strengths reported by non-metropolitan and metropolitan vocational rehabilitation counselors and supervisors. Missoula, MT: Research and Training Center on Rural Rehabilitation, University of Montana.

Arnold, N. & Seekins, T. (1994). Self-employment as a vocational rehabilitation closure: an examination of state policies. Journal of Disability Policy Studies 5(2), 65-80.

Arnold, N., Seekins, T., & Ravesloot, C. (1995). Self-employment as a vocational rehabilitation outcome in rural and urban areas. Rehabilitation Counseling Bulletin. 39(2), 94-106.

Becker, E.H. (1984). Self-employed workers: An update to 1983. Monthly Labor Review, July, 14-18.

Belous, R.S. (1989). The contingent economy: the growth of the temporary, part-time, and subcontracted work-force. Washington, DC: National Planning Association.

Duncan, J.W. (1994). The true failure rate of start-ups. D & B Reports, 43 (1), 6.

Malecki, E.J. (1988). New firm startups: Key to rural growth. Rural Development Perspectives, 4(2), 18-23.

Mangelsdorf, M.13. (1993). The incredible shrinking failure rate: Start-up news. Inc., 15 (10), 58.

Miller, J.P. (1985). Rethinking small business as the best way to create rural jobs. Rural Development Perspectives, 1(2), 9-12.

Ravesloot, C. & Seekins, T. (under review). Vocational rehabilitation counselors' attitudes toward self-employment outcomes.

Seekins, T. (1992). Rural and urban employment patterns: Self-employment as a metaphor for rural vocational rehabilitation. Missoula, MT: Research and Training Center on Rural Rehabilitation, University of Montana

Seekins, T. (1994). Converting community rehabilitation facilities to local business incubators. Goodwill Forum, 8(2),10-12.

Seekins, T., Jackson, K, Dingman, S. (1991). Rural rehabilitation issues from the consumer's perspective. Missoula, MT Research and Training Center on Rural Rehabilitation, University of Montana.

Silvestri, G.T. (1991). Who are the self-employed? Employment profiles and recent trends. Occupational Outlook Quarterly, Spring, 26-36.

U.S. Bureau of the Census (1983). Labor force status and other characteristics of persons with a work disability: 1982. Washington, DC: U.S. Government Printing Office.

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Tom Seekins, Ph.D., Director, RTC: Rural, The University of Montana, 52 Corbin Hall, Missoula, MT 59812-7056, (406) 243-2654;
email the Rural Institute.

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Excerpts of Reviews and Comments

Chapter Four

Mr. Seekins builds a good case in support of rural vocational rehabilitation being beneficial to both people with disabilities and to community economic development. Of particular interest is his comparison of vocational rehabilitation and economic development models. At first glance the comparisons are intriguing but with further review the reader realizes that these are the same principles upon which vocational rehabilitation was originally established and has withstood the test of time for seventy-five years. Vocational rehabilitation has always made sense and cents.

The author effectively uses current literature to make assumptions about rural vocational rehabilitation and self-employment. He also identifies realistic need for further research concerning self employment particularly in rural areas.

Mr. Seekins makes one point very clear in his article. Self-employment is not as highly valued as a vocational rehabilitation outcome as other employment that perhaps is perceived as more real work with personal benefits such as health insurance, retirement, vacation pay, etc. Only 2%-3% of employed consumers who exit the VR system are self-employed even though the U.S. Census, according to Mr. Seekins, reports 14.7% of the U.S. population who report a work disability also report being self- employed. Why the disparity? Mr. Seekins suggests counselor attitude or state policy. This reviewer thinks the reason perhaps goes beyond the counselor and VR state agency. Rehabilitation counselors and state VR agencies will respect what is expected of them.

What does the Congress, the Rehabilitation Services Administration and society expect of the public VR system? The 1992 Amendments to the Rehabilitation Act of 1973 mandate the establishment of evaluation standards and performance indicators for state VR agencies. To the reviewer's knowledge these have never been established. There was debate early on of whether competitive employment with full benefits is a more valued outcome of the VR system than other employment such as self-employment which may or may not have benefits. State VR agencies and counselors will emphasize those outcomes or standards that are most valued by the "System." Self employment as a VR outcome will not receive the emphasis that it perhaps deserves unless it is perceived as an equally valued outcome.

Larry Johnson

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Dr. Seekins paper synthesizes the results of considerable research on the use of self-employment in rural vocational rehabilitation programs. He specifically examines two dimensions: The use of self-employment for persons with disabilities served by the VR system; and, the impact of the state VR system within rural communities on the overall economic development of such communities. Seekins research is comprehensive, extensive and compelling. His statistics regarding self-employment are startling: "people who report a work disability are nearly twice as likely to report being self employed (14.7% vs. 8%)." Yet, overall VR outcome for self-employment is less than 3%. His conclusions that counselor past experience, office atmosphere and state policies toward self-employment (not consumer choice, aptitude or opportunity) were the primary factors influencing self-employment as a VR outcome are not surprising, but are terribly discomforting.

In this paper, Dr. Seekins articulates the critical questions that future research protocols must address. Just who are the self-employed people who report a work disability? What disabilities do they have? What occupations do they have? How did they get started? Did they receive VR services? What is the long range outcome of self-employment?

Diane L. Neville

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Dr. Seekins paper provides some enlightening findings and clear suggestions for program development and continued research about self-employment as a vocational outcome for people with disabilities, especially those who live in rural areas. One of the significant findings is the fact that self- employment is an option chosen by a higher percentage of people with disabilities than the general population. The reasons behind this statistic probably relate to the barriers faced by people with disabilities in the labor market as well as a lively entrepreneurial spirit among persons with disabilities. It would be interesting to know more about these entrepreneurs. What are their demographics? How successful are their businesses? To what factors do they attribute their success? What types of businesses have they selected? What resources have they found helpful in starting and succeeding in business?

Another finding cited, supports the contention that the vocational rehabilitation system should embrace and promote small business development as an option for its consumers. In 1988, the VR system played a role in the start up over 5,000 businesses at a relatively nominal fee per business start-up. Future research and analysis needs to tell us more about these businesses, specific services that were provided, demographics, outcomes, etc. Dr. Seekins clearly points out the VR system can foster community economic development in its efforts to assist persons with disabilities find gainful employment and that these ties should be strengthened, with VR taking the initiative.

While Dr. Seekins focuses on the rural community and the conditions which support, or may even require the development of self-operated businesses, the linkage between micro-enterprise development sponsored by VR and community economic development has implications for urban, and especially underdeveloped and impoverished inner city communities such as enterprise and empowerment zones.

The data on state agency policies and counselor attitudes indicates that awareness development, training and additional research is needed. For many states a complete systems change may be necessary. Such change requires an analysis of current policies toward self-employment, a concerted effort to encourage this option and the requisite training of staff at all levels to make such a reorientation within the system a reality. This assumes however that state agencies wish to pursue or encourage the self-employment and clearly many currently do not. Self-employment should not be the option of last resort, but one for individuals who have the desire and the potential to develop the skills and secure the supports needed to launch a business.

Adapting the Projects With Industry (PWI) model was mentioned as one approach to encouraging and guiding self-employment programs and I concur that this model offers promise in the area of self-employment and entrepreneurship. The model suggests the formation of a Business Advisory Council (BAC). In the case of developing entrepreneurship models, the BAC should be composed of business people that would include entrepreneurs, bankers, business development experts, training experts, economic development representatives, marketing experts, people with disabilities and others, as well as some of the larger business concerns or groups in the community who are knowledgeable about the marketplace and business and contracting opportunities. Like other BACs this advisory group could not only assist in the development of an entrepreneurship training and/or lending programs but provide advice about local opportunities, resources and even engage in mentoring or other activities to assist individuals in the program.

Debra A. Perry

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Self-employment as a rural vocational rehabilitation option is viable, and a positive outcome from the individual's, vocational rehabilitation program's, and community's perspectives. The author focuses on findings which explore self-employment as a rural vocational rehabilitation option, future research questions, and community and economic development linkages. The paper presents many valid points of view, and provides an excellent framework to further develop training programs for counselors, training on self-employment for consumers, marketing, public policy for incentives, and methods to develop cooperative relationships with community and economic re-development sectors. The following areas need additional development:

Training for counselors- The paper states that the "more positive a counselor's past experience, office atmosphere, and state policies were toward self-employment, the more likely they were to support its pursuit..." Therefore, there is a window of opportunity to expand self-employment as a vocational rehabilitation outcome by developing and implementing a hands-on training curriculum for counselors on self-employment as a viable option to include in a consumer's IWRP. Counselors could be taught specific information on how to start a business (e.g., how to write a business plan; where to procure funding; etc.) and information on (small) business resources (e.g., SBA, small business technical assistance centers, etc.).

Public Policy- Although the author touches on the development of state policy to encourage the increased use of self-employment as a viable vocational rehabilitation outcome, it is also necessary to expand this section. The state VR agency could provide incentives for counselors to expand the use of self-employment as an option. In additional national policy needs to be created/revised, including the development of work incentives, earned income tax credits, job tax credits, SBA programs which focus on people with disabilities who own/want to own a business, targeted community economic and development programs for business-persons with disabilities, etc. Targeted technical assistance and micro-loan programs for business persons with disabilities who own/want to own their own businesses is critical.

Training for Consumers- Developing and implementing hands-on, how-to training for people with disabilities who own/want to own their own businesses is critical, if self-employment is to be expanded as a viable vocational rehabilitation outcome. Mentoring by other small business owners (preferably with a disability) is an important component of developing the expertise to start and continue to run a successful business.

Linkages with the Economic Development Sector- Although the comparison of some vocational rehabilitation and community economic development models is a useful approach, there are some difficulties with this model. Historically, it has been difficult to get individuals with disabilities to focus on broader, community development issues (e.g., sanitation, water, electricity). There are valid reasons for this--when you are using your energy to fight for survival issues (housing, healthcare, civil rights, education, transportation, employment), you frequently do not have the time or resources to fight the broader societal/communitarian issues, also. In addition, individuals with disabilities and counselors need to be involved with existing/mainstream professional service organizations (e.g., Lions, Rotary, Kiwanis Clubs, etc.) and trade associations (e.g., U.S. Chambers of Commerce, etc.) on the local and national levels.

Randee Chafkin

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The University of Montana Rural Institute thanks the National Rehabilitation Association for giving permission to make this excerpt available. It comes from pages 43-48 of:

The Entrepreneur with a Disability: Self-Employment as a Vocational Goal
A Report on the 19^th Mary E. Switzer Memorial Seminar
Edited by Leonard G. Perlman and Carl E. Hansen
March, 1996

National Rehabilitation Association
633 South Washington Street
Alexandria, Virginia 22314
(703) 836-0850 Voice; (703) 836-0848 FAX; (703) 836-0849 TT

Note: The 19^th Annual Mary Switzer Memorial Seminar was held September 6-8, 1995, in Washington, D.C. To order copies of the monograph, call (703) 836-0850. The National Rehabilitation Association is a non-profit organization dedicated to improving the quality of life for people with disabilities.

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