Program to Avert Layoffs Gains Traction

Jul 08, 2011

By Neil Ridley

The jobs data released today reveals that unemployment remains a crisis that requires bold solutions. Unemployment ticked up in June to 9.2 percent, the highest level this year. Layoffs in the private sector are rising again and government continues to trim jobs, according to a recent Wall Street Journal article. Policymakers are currently focused on deficit reduction talks, but high unemployment is an ongoing crisis that needs to be addressed to get the nation back on track.

Recognizing that unemployment remains too high, Sen. Jack Reed (D-RI) and Rep. Rosa DeLauro (D-CT) earlier this week introduced the Layoff Prevention Act of 2011 in Congress. "We need to do everything we can to help businesses save and create jobs and work sharing has been an important and effective, but underutilized tool," Sen. Reed said in a statement.

The Layoff Prevention Act of 2011 would boost work sharing, a federal-state unemployment insurance program that provides some employers with an alternative to layoffs. For example, businesses that face a slump in demand can reduce all employees' hours by a percentage instead of laying off a portion of the workforce. Workers who participate in work sharing are eligible to receive partial UI benefits to help compensate for lost wages. The program is a win-win for businesses, individuals and communities:  businesses retain skilled workers, employees retain their jobs and benefits, and communities minimize the number of unemployed workers.

The bill would provide states that have approved work sharing programs with temporary federal financing for 100 percent of work sharing benefits paid to workers, limited to 26 weeks worth of benefits spread out over the course of a year, according to the summary of the bill. This financing is available for up to three years. The bill would also provide grants to state agencies to modernize and improve program administration.

CLASP has been a long-time proponent of work sharing as an important tool to help businesses and workers.  In the policy brief Work Sharing: An Alternative to Layoffs in Tough Economic Times, CLASP urged more states to adopt the program and asked Congress to address limitations of the federal law that provides a framework for state programs. The brief notes that program participation increases sharply when the economy is down. According to recent data from the U.S. Department of Labor, work sharing programs saved approximately 165,000 jobs in 2009-nearly triple the number of jobs saved in 2008-and another 100,000 jobs in 2010.

The bill is designed to encourage more states to pass work sharing legislation. Today, 23 states have work sharing programs in place. Most recently, Maine and Pennsylvania, with overwhelming bipartisan support, passed work sharing bills. The two are among five states (the others are Colorado, New Hampshire and Oklahoma) and the District of Columbia that have passed work sharing legislation since 2009, when unemployment spiked. In addition, President Obama's FY 2012 budget proposal includes a plan to expand work sharing.

While work sharing alone will not solve the nation's jobs crisis, it is an important tool that states should have available to help avoid layoffs. In addition, it is a valuable economic security program that should, in the long term, become part of the nation's response to high unemployment.


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