State and Federal Policymakers Explore Work Sharing, an Alternative to Layoffs
By Neil Ridley
Colorado in early June became the 19th state to adopt work sharing - an unemployment insurance program that provides an alternative to layoffs by allowing employers to cut employees' hours instead of slashing the number of employees on their payrolls.
Gov. Bill Ritter Jr. signed the Colorado Work Share program into law on June 9. Citing the need to grow the state's economy, support businesses, and create quality jobs, Ritter at a state-wide conference said, "As tough as the economy is, we must maintain our commitment to collaborate and bring people together around economic development, workforce development and education."
Work sharing, also called short-time compensation, is a win for all: Businesses retain skilled workers, employees retain their jobs, and communities minimize the number of layoffs during tough times. For example, businesses can reduce all employees' hours by 20 percent instead of laying off a portion of the workforce. Workers then receive partial UI benefits to help compensate for lost work hours. Although they work fewer hours, employees retain benefits such as health insurance. Communities, in turn, can avoid the harsh economic impact of widespread layoffs.
This and other strategies are important to consider as the nation grapples with the highest unemployment rates in a generation. Although the national unemployment rate has leveled off in recent months, it remains close to 10 percent. Mass layoffs, which involve 50 or more employees with a single employer, have declined since 2009 but are still high compared to pre-recession levels.
More and more states have recognized the need to implement innovative solutions to address the unemployment crisis. Currently, four other states are considering work sharing programs.
Policymakers in Washington, DC also are examining the promise of work sharing. In 2009 Sen. Jack Reed, Reps. Rosa DeLauro and Jim McDermott introduced bills to encourage more states to adopt work sharing . And, most recently, the Obama Administration proposed changes to federal UI law through the UI Integrity Act to ensure that more states participate in the program.
CLASP has recommended greater use of work sharing as an alternative to layoffs. In a policy brief (Work Sharing: An Alternative to Layoffs in Tough Economic Times) released during the worst phase of the recession in March 2009, CLASP urged more states to adopt the program and asked Congress to address limitations of the federal law that authorizes state programs. The brief also suggested measures to encourage additional states to adopt the program.
Since then, experts across the ideological spectrum have endorsed work sharing. On June 10, Heather Boushey, senior economist at the Center for American Progress, appeared before the U.S. House of Representatives Ways and Means Subcommittee on Income Security and urged Congress to expand work sharing programs. Other experts, including Professor Michael Reich and Professor Till Marco von Wachter, agreed that building on existing programs would be the best way to promote alternatives to layoffs.