Work Share Program That Cuts Jobs v. Hours Could Grow
February 25, 2010 | USA Today | Link to article
A program that encourages companies to avoid layoffs by reducing workers' hours could be expanded to nearly half the states this year.
Legislation this year in at least seven states would create work-share programs in Colorado, Hawaii, Ohio, Oklahoma, New Hampshire, New Jersey and Pennsylvania, growing the initiative for the first time in decades.
Seventeen states already have programs in which employers can cut the hours of all or most employees in lieu of layoffs. The workers get jobless benefits to recover part of their lost wages.
Work-sharing lets employers avoid the costs of severance and of training new hires when the economy rebounds. For workers, it eliminates the trauma of layoffs and helps preserve morale.
The number of employers in the programs soared last year as the recession deepened and the jobless rate climbed to 10%. A record 166,000 jobs were saved in the 17 states that offer the option vs. 58,000 in 2008, according to the National Association of State Workforce Agencies.
"The program has played an important role during this recession, and it should be available to workers in more states," says Neil Ridley of the liberal Center for Law and Social Policy.
How the program works: If a firm slashed 20% of its workforce, employees earning an average $800 a week would receive $400 in unemployment insurance. With work-sharing, if all employees' hours were cut 20%, each would earn $640 in wages, plus $80 in unemployment.
Jobless benefits pay about half of lost wages. Many states make employers keep health care and other benefits for affected workers. In New York, 46,000 employees participated last year vs. 15,000 in 2008.
A bill by Sen. Jack Reed, D-R.I., would fund work-sharing for two years, keeping states from further straining unemployment trust funds. It was not included in a job-creation bill passed by the Senate Wednesday.
The program likely would not make sense for firms that don't expect sales to rebound for years and don't depend on skilled workers, says Doug Holmes of the National Foundation for Unemployment Compensation & Workers' Compensation.
The Gear Works of Seattle, which makes gears for wind turbines, sliced workers' hours 20%, skirting layoffs for about 15 of 93 employees, says executive Mike Robison. Machinist Robert Foster, 38, who worked four-day weeks for 10 months, says, "I like it vs. the alternative."