2014: The Year for Action on State Work Sharing Programs

Jan 24, 2014

By Neil Ridley and Lavanya Mohan 

As 2014 begins, states have a unique opportunity to enact work sharing programs that have the potential to save thousands of jobs. Work sharing, also known as short-time compensation, is a modified form of unemployment insurance (UI) that gives employers the option of reducing employees’ hours instead of cutting their workforce during a business slowdown. For example, a business may reduce all employees’ hours by 20 percent instead of cutting some of its workforce. Workers can then receive pro-rated unemployment benefits that help compensate for reduced work hours. 

The recent recession, which triggered huge job losses, spurred interest in work sharing programs as an alternative to layoffs. According to the U.S. Department of Labor, as a result of work sharing, states were able to save nearly 166,000 jobs in 2009—the worst year of the recession. If a program had been in place in 2009 in the remaining 24 states without a work sharing program, up to 70,000 additional workers would have stayed on the job and more employers would have weathered the downturn while retaining qualified workers.[1] 

This is a crucial year for action on work sharing because states face an application deadline for federal funding. The 2012 Middle Class Tax Relief and Job Creation Act, which sets aside $100 million in federal grants for work sharing program improvement and outreach to employers, requires states to apply for a grant by December 31, 2014

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[1] CLASP calculations based on data derived from Katharine G. Abraham and Susan N. Houseman, Short-Time Compensation as a Tool to Mitigate Job Loss? Evidence on the U.S. Experience during the Recent Recession, W.E. Upjohn Institute for Employment Research, 2013 and Sean O’Leary and Paul Miller, Reducing Layoffs: How Work Sharing Can Help Workers and Businesses in West Virginia, West Virginia Center on Budget & Policy, July 2012.

 

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