Abstract
Self-employment is an alternative to wage employment and an opportunity to increase labor force participation by people with psychiatric disabilities. Self-employment refers to individuals who work for themselves, either as an unincorporated sole proprietor or through ownership of a business. Advantages of self-employment for people with psychiatric disabilities, who may have disrupted educational and employment histories, include opportunities for self-care, additional earning, and career choice. Self-employment fits within a recovery paradigm because of the value placed on individual preferences, and the role of resilience and perseverance in business ownership. Self-employment creates many new US jobs, but remains only a small percentage of employment closures for people with psychiatric disabilities, despite vocational rehabilitation and Social Security disability policies that encourage it. This commentary elucidates the positive aspects of self-employment in the context of employment challenges experienced by individuals with psychiatric disabilities and provides recommendations based on larger trends in entrepreneurship.
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Introduction: the Option of Self-Employment
Individuals with psychiatric disabilities are one of the largest disability-based Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI) beneficiary groups. A psychiatric disability is defined as having received mental health services, disability benefits, and/or workplace accommodations for a psychiatric diagnosis or mental/emotional distress that has substantially limited one or more major life activities. Mental health services remain largely isolated from other support systems for individuals with disabilities, including employment supports.1,2 In spite of over 40 years of investment in and emphasis in public mental health systems on employment, as few as 20% of individuals diagnosed with schizophrenia are working competitively.3 The disparity between the desire of individuals with psychiatric disabilities to work and the rates of employment is well-known, and issues with vocational rehabilitation services for this population have been documented in the literature.4,5,6,–7 Gaps in effective receipt of evidence-based supported employment services persist despite development of federally funded evidence-based “toolkits” and the more recent movement to support education.5
Self-employment is an underutilized employment option for adults with psychiatric disabilities, who face many challenges when seeking paid work. While the literature on self-employment and disabilities does not exclude individuals with psychiatric disabilities, it has not addressed the distinctive experience of this population as compared to individuals with physical, sensory, and intellectual or developmental disabilities.8,9 People with psychiatric disabilities encounter all of the same challenges in self-employment as the general population, but some challenges are unique: financial disincentives in disability policy, including balancing substantial gainful activity (SGA) limits and episodic impairments,10 vocational rehabilitation (VR) service barriers particular to individuals with psychiatric disabilities,7 financing challenges stemming from years in poverty and/or debt,11 and lack of access to suitable training, technical assistance, and mentoring.12 Additionally, internalized stigma may contribute to a “why try” effect 13,14 that can make a person reluctant to try self-employment. Almost no recent public policy or behavioral health literature exists on self-employment for individuals with psychiatric disabilities, even within the literature focused on increasing competitive employment for this group.
In spite of the lack of attention to this issue, there are a number of reasons to highlight self-employment as an employment option for individuals with psychiatric disabilities. Research on the subject is limited; however, one survey showed that 42% of a sample of 75 self-employed individuals with disabilities had a psychiatric disability, suggesting that people with a psychiatric or mental health disability are over-represented among people with disabilities starting small businesses, compared to individuals in other disability groups.15 Similarly, a recent study of Silicon Valley entrepreneurs demonstrated a high frequency of a lifetime prevalence of mental disorders (49%) in entrepreneurs and their close family members, with study authors raising the possibility of an underlying relationship between entrepreneurship and affective, cognitive, and behavioral differences associated with mental health conditions.16 However, entrepreneurs with certain socioeconomic and cultural privileges differ from the population of individuals with psychiatric disabilities, who often face challenges such as persistent poverty, barriers to education, and social exclusion. Nonetheless, anthropological, biographical, and anecdotal writings suggest a relationship between creativity, drive, and mental disorders,17,18,–19 and such individuals may bring particular strengths to self-employment and business enterprising that can benefit society and alleviate some proportion of unemployment.
More attention to and better supports for self-employment appear warranted, given that self-employment may offer certain advantages for individuals with psychiatric disabilities. Other writers have described these advantages in case studies of entrepreneurship in this population.12,20, 21 This commentary conceptualizes these advantages—considering individual preferences, interests, and opportunities in the environment for innovation—and makes the case for greater policy, service, and service system efforts to support the option of self-employment.
Advantages of Entry into Self-Employment
Others have listed advantages of and barriers to self-employment by individuals with disabilities.22(Table 2, p. 329) However, self-employment also may offer specific advantages for individuals with psychiatric disabilities, create opportunities suited to people who desire this career path, and provide novel ways to address challenges.
Recovery-oriented job creation
In general, self-employment is consistent with recovery-oriented psychiatric rehabilitation principles such as person-centeredness, self-sufficiency, and community integration. Recovery-oriented service systems are “comprehensive, evidence based, and rehabilitation oriented,” which includes promoting financial, residential, and personal independence and responsiblity.23,24,25,–26 The recovery model involves shifting the focus from chronic illness and dependency to the right to self-determination (autonomy) and to effect change in one’s own life and community (empowerment).11 Self-employment is suited to these goals, as it presents opportunities for autonomy in the workplace and freedom from traditional sources of authority. “Being one’s own boss” is a frequently cited reason in the general population for pursuing self-employment.27,28 Self-employment generates the possibility to use this yearning for self-determination beyond advocating for mental health system changes and channeling it toward the possibility of economic empowerment.29 For those who prefer it, self-employment allows an individual with a psychiatric disability to decrease dependence on employers and disability services by becoming more financially secure and less reliant on entitlements,22 yet these individuals are often told that such ambitions are out of reach.6
Self-employment capitalizes on the interests of many in this population to realize empowerment-related goals.30,31 Many people with psychiatric disabilities have a desire and willingness to challenge the status quo, whether due to experience within a controlling and sometimes dehumanizing service system, the tradition of advocacy within the mental health consumer movement, or simply individual character traits.32,33 These interests, and other personal attitudes and characteristics, are relevant whether an individual fits within the standard employment paradigm in a job, work team, or company. For example, a tendency toward questioning authority may contribute to job loss or being passed over for promotion in an unskilled job as a low-level employee. However, this same tendency can be channeled toward asserting independent authority and, for many, become a powerful motivator toward competitive advantage in business.28 Entrepreneurship research suggests that an individual’s self-efficacy and perseverance in the face of adversity are determinants of new business success.34 In contrast to the unskilled jobs with little opportunity for advancement, where many job seekers with psychiatric disabilities end up,35 self-employment may present a greater opportunity for career development and success for the individuals who structure their businesses to fulfill their desire for empowerment and autonomy.28
Financial security and self-sufficiency
Self-employment introduces a path to asset building and self-sufficiency. However, individuals with psychiatric disabilities likely need benefits and financial counseling to make the most of the existing Social Security incentive programs, described below, which are designed to support exploration of employment through a short trial period. People with a “mental disability” comprise a large proportion (about 35%) of SSDI and SSI beneficiaries.1,2 While providing a basic income, disability benefits also create challenges to employment, especially for people who experience an episodic disability.36 Additionally, those who do obtain jobs often end up in low-level employment, leaving them dependent on SSI/SSDI benefits even when working.3 Self-employment can provide an additional source of part-time/temporary income and opportunity to try out working while receiving benefits or while in a low-wage or volunteer position.22 Social Security Administration’s (SSA’s) substantial gainful activity (SGA) limits the amount of income beneficiaries can earn and still qualify for income support, such as SSI; however, for self-employed beneficiaries, SGA is calculated annually—rather than month to month—allowing for greater fluctuations in income without immediately jeopardizing benefits.15 Conversely, receiving Social Security benefits may provide a cushion during the volatile start-up years of a small business, meaning individuals with disabilities have this advantage over non-disabled entrepreneurs, who often have to rely on family, savings, or debt financing when starting a business.37
Self-employment provides an opportunity to grow wealth, even for people on benefits, given the allowances for work-related expenses. Social Security programs related to self-employment provide flexibility, in the form of qualifying business expenses, when calculating income limits under Social Security rules. For example, the resource limit for SSI beneficiaries is $2000; however, under the Property Essential for Self-Sufficiency (PESS) program, a business owner who is on SSI can reserve funds in a separate business account, if those resources are required for business expenses.38 The Plan for Achieving Self-Support (PASS) Program allows a person with a disability to set aside employment-related income or resources that would otherwise be counted toward the limit for SGA. While not specifically designed for individuals with psychiatric disabilities, the 1998 Assets for Independence Act (AFIA; Public Law 105-285) authorized the establishment of Individual Development Account (IDA) programs that can enable low-income persons to combine their own savings with matching public or private funds for investments in their capacity to engage in competitive employment, such as business start-up or expansion and post-secondary education.11 However, the low uptake of these programs likely contributes to self-employment remaining an infrequent outcome.39
Although generally not seen through a self-employment lens, trends in mental health show an increase in independently incorporated non-profit peer-run organizations, where a majority of staff are individuals with lived experience of the mental health system.40 Therefore, people with psychiatric histories actually have quite an extensive history of starting corporations and creating jobs,29 which has contributed to a trend in mainstream treatment systems hiring peer support specialists.30,41,42 Self-employment may be an innovation where individuals with disabilities take the lead, individually or collectively, in pushing an agenda that works in their favor.
Moderating the impact of inadequate work history and low educational attainment
Individuals with psychiatric disabilities are less likely to finish school, including high school and post-secondary programs, and may have been segregated in subpar special education programs.43 Getting and keeping a job can be difficult for people with limited and/or disrupted education and work experience, especially when experiencing emotional or psychological distress. Supported employment and education services, where they exist, were designed to address these challenges, yet these services have not been substantially alleviated by existing employment services, and many workers face ongoing barriers once employed.36
Self-employment may create additional opportunities for people with limited education, as evidenced by a recent report indicating that, among people in unincorporated self-employment, the percentages of people with less than a high school diploma (10%) or a professional degree (9%) are higher than those for individuals with a bachelor’s degree (6%) or a master’s degree (5%).44 Although there are many industries where lower education attainment among workers is common, self-employment presents an additional choice for such individuals.
Creating an accepting, supportive work environment
Even when employed, people with disabilities, and people with psychiatric disabilities, in particular, face barriers to successful and satisfying careers, including stigma and discrimination. The particular stigma against individuals with psychiatric labels creates challenges in accessing resources and support for self-employment as well as wage employment.45 A nationally representative poll in 2013 showed that only 28% of Americans are willing to have a person with a psychiatric disability as a coworker.46 The Kessler Foundation found that 16% of workers with any disability reported supervisors’ and coworkers’ negative attitudes toward them as a barrier at work; people with psychiatric disabilities likely find such attitudes even more common.47,48 Such discrimination can cause added distress, making it difficult to fully engage on the job.49 If it is too difficult to acquire on-the-job support and accommodations in traditional wage employment settings, self-employment can present a better alternative for some workers.8 While such encounters may not be able to be completely eliminated, self-employment provides some control over the work environment, colleagues, and customers, which may provide some insulation against such distressing encounters.
A healthy, trauma-informed work environment
Individuals with psychiatric disabilities experience higher levels of trauma than many other groups.50 Individuals with trauma histories may react to “normal” workplace stressors in unique ways because these stressors trigger intrusive memories of previous harm. A noisy environment, teamwork, or certain supervision styles may cause difficulties completing job tasks, particularly for those with negative prior experiences at work (e.g., discrimination, harassment, social exclusion, multiple unsuccessful attempts at employment). Many self-employment opportunities can be trauma-informed because self-employment can offer time and resources for self-care during the work day, including designing a workplace tailored to the owner’s individual needs. For example, a study of occupationally high-achieving individuals diagnosed with schizophrenia found that “controlling the environment” was one of the common strategies contributing to success.51 Although that study did not specifically focus on self-employment or trauma, participants were in professional, technical, or management positions, which require a degree of autonomy and self-determination, making these results relevant.
Schedule flexibility
Individual needs are not easy to address in many employment settings, yet small adjustments can make a big difference for workers with disabilities. People with psychiatric disabilities benefit from flexible work accommodations.52 Effective accommodations may be simple and low-cost, but may not be provided in a wage employment setting.53 Individuals with psychiatric disabilities may not seek accommodation at work, due to concerns about disclosure. Self-employment can allow for accommodations without the need for disclosure, as the self-employed individual has control over the environment, work schedule, coworkers, and collaborators, which will contribute to productivity, success, and, ultimately, recovery. While self-employed individuals may or may not decide to structure their work environment and client relationships in ways that accommodate their own needs, such tailoring is often available when working for oneself.54
In a large-scale multisite employment project, the accommodations most commonly requested by people with psychiatric disabilities were related to scheduling, such as changes to standard work schedule, length and frequency of breaks, or time off for appointments.36 Of course, when people work for themselves, flexibility in scheduling is a consistent benefit. Additionally, self-employment may provide a way to increase work hours over time, whereas wage employment jobs often require a set number of hours per week, with no way to increase over time without taking a new job and making a new commitment.
Increasing Access to Self-Employment
Focusing on the economic and societal value of self-employment may be useful in promoting supports, services, and programs to funders and policy-makers. Small businesses generated over 40% of all new jobs in the USA in the past 10 years.55 Self-employed individuals each create at least one job (the job for themselves) and, even if they have no employees, these businesses contribute to overall economic growth.55
Whether or not self-employment will offer success for any individual depends on that person’s preferences, circumstances, and capabilities. Self-employment is not necessarily desirable for everyone. The group of people with psychiatric disabilities who desire to be self-employed is a smaller population than people with psychiatric disabilities who use supported employment, supported education, or vocational rehabilitation services.
Improvements in vocational rehabilitation
Existing federal-state VR policies are mandated to support self-employment, including the Workforce Innovation and Opportunity Act of 2014. Nearly one-third of the people served by the program have a psychiatric diagnosis, but this group has a lower employment success rate than individuals with other disabilities, suggesting the VR system is less effective for people with psychiatric disabilities.56,57 VR case closure statistics also show that self-employment remains only a small percentage of overall closures in employment for people with any type of disability (an average of 1.7% in 2007), and the percentage of people with a primary psychiatric disability is even lower than average (1.1%).58
Similarly to other employment, access to resources and support available through VR could help compensate for barriers associated with a history of a disability or current impairments. For instance, individuals who are blind receive additional assistance from rehabilitation services in business enterprising, per federal law,59 but no such tailored rehabilitation is available for individuals with psychiatric disabilities, despite being over-represented and underserved in VR. VR case closures for individuals with psychotic disorders are frequently attributed to lack of cooperation and service refusal.7 One possible explanation for the poor employment closure rates from the client perspective is that VR services do not meet their needs, leading to frustration with vocational services and low labor force participation.4 An increased focus on self-employment could add to employment closures by VR, while accommodating the preferences of those who might be suited to pursue small business.
Having “lived experience” of business administration is often a pre-requisite in mainstream business coaching and support services, yet VR counselors who work as wage employees (and do not necessarily have any entrepreneurial interest or experience) seem to be expected to be able to help their clients become self-employed. Prior efforts to provide opportunities for business-to-business peer support and mentoring for self-employment, such as New York’s INCube, Inc. of the late 1990s, have largely fallen by the wayside or are not widely available.12,20,21 There are new opportunities for behavioral health systems to capitalize on the successes and lessons learned in peer support, to enable people with lived experience of business development to mentor their peers.
Supporting risk-taking
Employment service providers may not know how to identify true suitability for self-employment. Individuals considering self-employment may have an overall goal to increase their income or accommodate preferences for the workplace, yet lack a broader vision of business growth or understand the risks inherent in self-employment. Self-employment in an unincorporated or small business often has a predominant focus on self-sustainability rather than economic prosperity. On average, wage employment has more financial rewards than starting a new business (with the exception of the highest bracket of entrepreneurial incomes).27 However, reducing expectations of individuals with psychiatric disabilities in business may mimic many of the problems of the traditional psychiatric system and barriers to employment. People with mental health conditions experience significant stigma and discrimination, not only from employers, but from care providers who communicate to them that they will never be economically self-sufficient, leading to internalized stigma.60,61 Importantly, internalized stigma resulting from predictions of lifelong inability to support oneself or questions of “competence” contribute to a “why try” effect that can be a significant barrier to self-employment.62 Conversely, recovery orientation in mental health services means also tolerating the “dignity of risk.”26,63,64
Service providers who do not understand this dynamic may unintentionally collude with low expectations of success often attributed to individuals with psychiatric disabilities. Inexperience with business start-up and management and a lack of accessible technical assistance limit a person’s readiness for self-employment and also limit employment service provider confidence and competence in supporting this employment option.65 Supporting self-employment requires both an understanding of the opportunities presented by self-employment and a willingness to support individuals with psychiatric disabilities in taking risks.
Identifying motivations for self-employment
Some self-employed individuals start a business by choice or to pursue an opportunity; others do so out of necessity. This difference between self-sustainability and prosperity is frequently conceptualized in the business literature in terms of the difference between “choosing” self-employment and “needing” to be self-employed.66 For instance, in developing economies and rural areas, self-employment is a major source of employment and income because of the scarcity of wage employment jobs.67,68
Those who are self-employed by choice are driven by profit and innovation.66 In contrast, people who are self-employed out of necessity are driven by other motives, such as having few other choices, and tend to be unhappier than employed people.68 Necessity-based business activity is defined by having no better choice for work; opportunity-based business activity includes those who have a job but are motivated to pursue a better opportunity.69 Self-employment for some individuals with disabilities may be seen by employment service providers as necessity, encouraged only because of a perceived scarcity of potentially successful jobs for these individuals. Leaders in the field of disability and self-employment have cautioned that self-employment by individuals with a disability should not be seen as a “cop-out”—a way of avoiding the need for developing wage employment opportunities and aggressively pursuing support and accommodations on the job.8 Providers may need to shift their attitudes to a more hopeful and open approach to considering self-employment as an option. One successful project promoting entrepreneurship for people with disabilities70 used a four-phase support process, beginning with business concept development and self-assessment—a useful step in ensuring that the plan for the business matches the motivations of the person.
Society’s conventional ideas about success in business may create conflict for individuals with disabilities and their supporters.65 Many people with psychiatric disabilities have lived in poverty for many years and, like many who live in poverty, struggle to think beyond day-to-day subsistence.11 Emphasizing the conventional meaning of “success” in business as wealth, job creation, and other forms of fame and fortune may create an unnecessarily high bar for entry into self-employment. This definition of success may not be desirable for many individuals with psychiatric disabilities, as it is not for many members of the small business community.71
A self-supporting microenterprise might be exactly the kind of business that many self-employed individuals desire, but societal expectations of growth-oriented entrepreneurship could act as a deterrent. Alternate definitions of “success” for such individuals may be more relevant and meaningful, such as increases in self-sufficiency, reduction of dependence on systems, services, or even natural supports, as well as autonomy, freedom, and satisfaction, which are cited as reasons for self-employment in the general population even when weighing these advantages against lost wages.27 Open non-judgmental discussions of self-employment alternatives, goals, and definitions of success place this option on the table, alongside wage employment, for consideration and exploration of motivations.
Developing training and resources
A review of empirical research on self-employment for individuals with disabilities found two factors influence success besides individual characteristics: supports such as information and mentorship, and accountability systems.72 Since many individuals with psychiatric disabilities have experienced disruptions in their formal education, and some have cognitive barriers to academic education and/or computer literacy, widely available training programs and supports for prospective business owners and entrepreneurs may not provide an instructional approach or needed accommodations for this population. However, mainstream entrepreneurship programs (e.g., Small Business Development Centers, Small Business Administration) may not reach out to or provide the support necessary to people with disabilities in their minority, women-owned, and other “disadvantaged” business programs.15,22 Other research suggests that small business development resources often look unfavorably upon small businesses operated by individuals with disabilities because they are not high-grossing.72 Additionally, limited financial resources may prevent enrolling in a training program for business start-up, even if one exists nearby.
People with psychiatric disabilities often experience fluctuations in their functioning, yet existing self-employment training and technical assistance programs may not be able to accommodate these fluctuations, as such programs require completion over a short time frame. Such programs do not address mental health issues and expect self-esteem and self-confidence as a pre-requisite to enrollment.73 There may be little in the way of individual attention or adequate emotional or logistical support offered by mainstream training programs, which may also have substantial gaps in their ability to advise on particular issues for individuals with disabilities such as balancing Social Security benefits.15 This limits about the ability of these programs to promote accountability for this population. Specially designed business start-up training and support may be valuable for people with psychiatric disabilities.
Implications for Behavioral Health
If behavioral health systems, service agencies, and providers are committed to promoting recovery and maximizing employment for people with psychiatric disabilities, all avenues need to be pursued to support them in creating lives where they find meaning and purpose. Embracing recovery requires supporting reasonable risk-taking that can lead to growth and success, which, for some job seekers, will include self-employment. Employment services need to include self-employment as one potential option, even if that means that employment specialists need to develop knowledge in this area or facilitate tailored peer support. Behavioral health clinicians and other direct service providers need to be willing to explore the possibility of self-employment, whether it seems a vague dream or a specific goal. Service systems and funders at local and national levels can support research in this area and fund pilot programs that help support interested and motivated individuals in starting, managing, and maintaining a small business.
Summary and Conclusions
This article considered opportunities for greater support for the option of self-employment, to make it more available and accessible for individuals with psychiatric disabilities. In general, people with disabilities encounter many of the same barriers and motivators to self-employment faced by the general population and other disadvantaged populations, but considering some specific advantages, benefits, and nuances in who is suited to self-employment (and why) may form the foundation of the best practices in promoting self-employment.
Self-employment has the potential to contribute a viable and valuable career path for adults with psychiatric disabilities. For this potential to be realized, many issues need to be addressed, including individualizing business goals and definitions of success, as well as accommodating experiences such as trauma, discrimination, self-stigma, and limited work and educational attainment. Greater efforts are needed through policies, services, and service system integration to promote and support the option of self-employment, considering individual preferences and interests, and opportunities in the environment for innovation. Behavioral health and vocational rehabilitation systems need to place self-employment among the viable options for work, learn how existing resources can be used to better support this option, design effective peer supports and alternative learning opportunities, and encourage self-employment for job seekers who are interested in exploring or pursuing this path.
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The work for this publication was completed at Live & Learn, Inc., 785 Quintana Road, Suite 219, Morro Bay CA 93442, under a grant from the National Institute on Disability, Independent Living, and Rehabilitation Research (NIDILRR).
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Ostrow, L., Nemec, P.B. & Smith, C. Self-Employment for People with Psychiatric Disabilities: Advantages and Strategies. J Behav Health Serv Res 46, 686–696 (2019). https://doi.org/10.1007/s11414-018-9625-8
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DOI: https://doi.org/10.1007/s11414-018-9625-8