“As the nation’s economic recovery remains weak, a growing number of businesses are searching for ways to weather the economic downturn and retain their workforce. Work sharing (also known as short-time compensation), available in 22 states, is an unemployment insurance (UI) benefit that explicitly targets job preservation and allows businesses to retain their skilled workforce during times of temporary decreased demand.
Currently, a business that sees a decrease in demand needs to reduce production and lay off workers. A work sharing program allows an employer to have the option of reducing the hours and wages of all employees or a particular group of employees (such as a department) instead of laying off a portion of its workforce to cut costs. Workers with reduced hours and wages are eligible for partial UI benefits to supplement their paychecks…
Work sharing is a win-win-win strategy. A work sharing program benefits the state by mitigating further job losses. The employer benefits by reducing the high costs associated with turnover and maintaining continuity within the firm. And the employee benefits by maintaining wages and reducing the effects associated with long-term unemployment” (p. 3). (Abstractor: Author)
Major Findings & Recommendations
“Work sharing needs to be an option in more states and part of the nation’s response to unemployment. The need to address long-term unemployment and minimize new job losses must go hand in hand. Of the participating states, it is clear that many employers are still participating and effectively mitigating job losses. As of October 2011, Indiana has had six straight months of increasing unemployment rates and should consider the program to mitigate losses by providing employers with options tailored for their individual needs. As mentioned earlier, work sharing is a win-win-win strategy Indiana cannot afford to not take advantage of in this time of economic distress, as the benefits far outweigh the costs” (p. 26). “Work sharing programs particularly benefit the manufacturing industry. Yet Ohio, Michigan, and Indiana, who have manufacturing as a large sector of their states’ economies, do not have work sharing programs. Indiana has lost 194,000 jobs from December 2007 to October 2011, of which 89,800 were manufacturing job losses. In addition, Indiana’s unemployment rate for October 2011 was 9.0 percent—up from 8.2 percent in May 2011. Work sharing could assist Indiana in coping with continued job losses, growing numbers of unemployed workers, and provide a proactive tool for future economic downturns” (p.4).“Despite the overwhelming support of work sharing programs, there are also concerns that should be noted. Most importantly, work sharing is only a temporary solution and should be designed as such. Work sharing is not appropriate for every employer or situation—especially those who are not likely to see an increase in demand once the economy rebounds. Work sharing is most useful for companies and industries in which it is possible to reduce hours and modify work schedules” (p.7). “Research shows employees were as productive as, or more productive than, non-work share employees. This may be due to the fact that the toll of layoffs and unemployment on employees are extreme and the impacts are long lasting” (p. 13).(Abstractor: Author)