Layoffs Could Be Eased by Work Share

December 28, 2011 | Daily Tribune |  Link to article

LANSING - To reduce layoffs during tough times, Gov. Rick Snyder, legislators and business groups favor a program that allows both businesses and the state unemployment insurance program to contribute to workers' paychecks.

The program, known as work sharing, allows businesses to keep employees during down periods in the economy by reducing their hours and wages. A part of the employees' lost income is then made up through partial payments of unemployment insurance. The program is an alternative to full unemployment benefits paid to laid-off workers. Unemployment insurance is funded through payroll taxes on Michigan businesses.

Twenty-three states have similar programs. President Barack Obama supported it as part of his jobs package, said Neil Ridley, a senior policy analyst with the Center for Law and Social Policy in Washington, D.C.

Supporters say work sharing helps employers retain talent, keeps people working and allows workers to keep their benefits such as health insurance.

"We think it's a very creative idea to keep people in the workplace," said Chuck Hadden, president of the Michigan Manufacturers Association. "We're very concerned about losing talent at times, and if there's a way we can keep people working, then we want to do that, obviously."

A bill setting up work sharing was introduced by Rep. Jim Ananich, D-Flint, last spring. It gained bipartisan momentum after Snyder recently supported work sharing in his talent retention speech, said Tom Lenard, a legislative assistant for Ananich.

"When it's been approved in other states, it's been a very bipartisan proposal," he said. "The business community, people with conservative philosophies, (people) with more progressive philosophies can all agree to keep people on the job and giving more tools to businesses and to workers is the right thing to do." He said Ananich has seen some interest from legislators in the House and Senate.

How the program affects the state's unemployment trust fund woes could play a role in its passage, said Dave Jessup, the legislative director for the Small Business Association of Michigan. The fund is $3.2 billion in debt and the state is looking for ways to resolve it.

Research collected from other states show that work sharing doesn't hinder or help the bottom lines of unemployment trust funds. The Congressional Research Service in September reported that work sharing in other states has little effect on those trust funds' solvency. An Employment Security Department study in 2003 found that employers using work share do not have a negative effect on the fund. The payment of partial benefits to retained workers instead of full benefits to laid off workers reduces the size of the unemployment insurance program, Ridley said.

The Legislature is working to solve the trust fund debt issue first, Jessup said, because its debt to the federal government makes Michigan subject to penalties, which are passed on as costs to state businesses.

"In my mind, I think we must address the solvency reform issue in the immediate present and would like to take a closer look at what the governor is proposing shortly after the New Year," Jessup said. However, Hadden said work sharing could be part of that legislative unemployment insurance reform package.

The Small Business Association of Michigan hasn't taken an official stance on work sharing, but Jessup said he believes the program has merit. But he's concerned about changing the original intention of unemployment insurance by making it supplemental income to people already working, rather than for people who have lost their jobs.

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