New Program Cuts Hours Instead of People, Helps Older Workers

April 07, 2011 | AARP Bulletin |  Link to article

At the height of the recession, Jeanne Manhard of New England Copy Specialists (NECS) found life at work very demanding. Everyone in the office had to take one day a week off - and everyone was sharing the challenge of getting more done with less.

See also: Part-time jobs for retirees.

"I had 55 emails this morning when I came back after my day off," lamented Manhard, 60. But she wasn't complaining ­ - especially because she knew that the possible alternative was no job at all.

Instead, the Woburn, Mass.-based NECS was taking part in a state program called WorkSharing, in which companies reduce the work hours of employees and then help them collect prorated jobless benefits for lost hours.

In a typical work-sharing arrangement, a company of 100 people needing to trim labor costs by 20 percent cuts work hours by that percentage, rather than laying off 20 people. The setup is often confused with job sharing - two part-time employees who share one job. With work sharing, everyone feels some financial pain, but everyone keeps working.

According to a report by AARP's Public Policy Institute, "Saving Jobs Through Work Sharing,"employer interest in work sharing grew during the recession, with a record number of companies setting up programs in 2009. Nationwide, about 111,000 workers took part in 2001, according to the Congressional Research Service, growing to 289,000 in 2009. In 2010, the numbers slipped to 128,000 as the nascent recovery made some companies strong enough to resume regular workweeks.

Twenty states have programs, variously known as work sharing, shared work and short-time compensation: Arizona, Arkansas, California, Colorado, Connecticut, Florida, Iowa, Kansas, Maryland, Massachusetts, Minnesota, Missouri, New Hampshire, New York, Oklahoma, Oregon, Rhode Island, Texas, Vermont and Washington.

President Obama praised work sharing in his 2009 inaugural address, citing "the selflessness of workers who would rather cut their hours than see a friend lose their job."

Workers happy - and unhappy

But the programs are by no means universally popular. Employees who feel secure in their jobs as a layoff looms may resist giving up income to help other employees whom they may not even know.

"Some employees like it a lot because they can spend more time with their kids," said Tracy Gianakos, practice administrator at Crossroads Orthopaedics in Waterford., Conn., a 37-employee medical practice that has a work-sharing program in place. "Others are unhappy because they don't get full pay for their days off."

The programs' ground rules are set by Washington, which helps with funding, but states are left to decide the details: the percentage of hours that can be reduced, duration of the program, rules for renewing it once it has run its course, and the requirement - or not - of maintaining health benefits.

Work sharing is particularly good for companies that spend years training their employees and don't want to lose that investment - if laid off, they may not be available when times improve. Because of that skill factor, the PPI study reports, work-sharing employees tend to be older (ages 35 to 64) than unemployed workers as a whole.

Good for older workers

Work sharing can be good for workers of all ages, but "it may be particularly good for older workers" because they have a difficult time finding a new job, says Sara Rix, PPI's senior strategic policy adviser. "At one time, older workers were less likely than their younger counterparts to be displaced, but that age advantage seems to have evaporated."

Skill-reliant manufacturers were the first to embrace the concept, and they remain strong participants. With the economic downturn, scores of other kinds of businesses have been trying it out: finance and health care, service industries, travel agents, and other companies across the blue- and white-collar spectrums.

At NECS, Jean Manhard's company, the program provided for most employees to work a four-day week, with benefits for the fifth day paid by Massachusetts WorkSharing. "We announced it at a company meeting in September 2009," said Ann Manning, NECS's vice president of human resources. "I could tell that the employees thought they were about to be laid off. Instead, they were thrilled that the company was able to keep them."

NECS specializes in helping customer firms with document imaging, distribution, security and storage. "This business is over 40 years old," Manning noted. "Some of our technicians have been with us for 15 or 20 years. We don't want to lose them."

Papé Group, a distributor of heavy equipment for the trucking and construction industries, had similar concerns. "We don't want to lose our workforce," said Melissa Zemp, a human resources supervisor at the company, which has 1,500 employees in 65 locations in seven states and work-sharing plans in three. Papé continues to maintain health benefits, whether the states require it or not.

Company handles the claims

Without work sharing, employers may still cut back employee hours, and employees may collect partial unemployment benefits on their own. But under work sharing, employers deal with unemployment officials, and people collecting the partial benefits aren't required to show that they're looking for work, as they would be for regular unemployment.

"The company does all the paperwork," said Dianne Proulx, president of the union that represents employees at the Republican, a 400-employee Springfield, Mass., media company. "The employees didn't have to file the claims. And the unemployment office can be hard to reach."

At the Republican, employees have been taking off 10 days spread over the 20-week duration of the plan.

If employees can get past the loss of income, many treasure the freedom that comes with a string of three-day weekends. Proulx's days off allow her and her husband to take camping trips. "People visit their families, go to amusement parks and get things done around the house," said Rhonda Stubblefield, HR benefits coordinator at Scroll Compressors, a Lebanon, Mo., manufacturer of compressors for air conditioners, with a workforce of 1,000.

Unions' reactions

Under federal law, employers must get labor's blessing before initiating a program. At the Republican, the Springfield Newspapers Employees Association gave no resistance - it was the union's idea, enshrined in its contract. "We'd had layoffs a couple of time in the past, so we wanted work sharing in lieu of more layoffs, or unpaid furlough days," says Proulx, president of the union.

Still, unions sometimes resist. The president of a small textile company recounted union opposition. "We have a group of 18 employees on a work-sharing plan right now," said the president, who asked not to be named, citing concern over offending the union. "In 1996, when we did it the first time, the union business agent told us he didn't support it. ... We're going low-key this time."

Because work sharing is generally administered uniformly across work units, it can clash with a value long-championed by the labor movement - seniority. But seniority does get its due at the Republican, says Proulx: "In any department, if two employees wanted to take off the same day, we used seniority to break the tie."

Overall, "work sharing is a way to reduce the human costs of a recession," said Neil Ridley of the Center for Law and Social Policy, a research and advocacy group for low-income people. "Just as unemployment insurance keeps people from falling into poverty, work sharing also helps keep people out of poverty due to job loss."

At NECS, meanwhile, the program is winding down. Most employees, including Jeanne Manhard, are back to 40-hour workweeks. Times are looking up, and most everyone who was with the company when the crisis began is onboard to help build the business back up.

Diane Cadrain is a Connecticut-based attorney and freelance journalist who writes frequently on employment issues.

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