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Work-share aids workers and business
By Rich Jones |
July 10, 2010, Saturday
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WOULD you share your hours with coworkers to avoid layoffs?
It's a relevant question since in the US state of Colorado Governor Bill Ritter recently signed a work-share bill into law. Since the law is new, there are a lot of questions about what it means for Colorado workers. We'd like to provide some answers.
Work-share is a voluntary program that companies can use to weather short-term business declines.
Under the program, employers can reduce the hours of a work force to avoid layoffs. Employees, in turn, can claim US unemployment benefits for the reduction in work hours.
Seventeen US states have such programs and employers have reported these benefits: Sharing of reduced hours is less disruptive than layoffs; quality, skilled employees are retained; employee morale and productivity are sustained; and the cost of recruitment and training costs, once the economy improves, are reduced.
Because employees continue to receive their existing health and retirement benefits, there is less need to turn to state services for support. Also, the state sees savings in job assistance programs when more workers remain on the job.
In many states, these programs are considered pro-business initiatives. Businesses will opt in only if it makes business sense, and experience in other states has shown that work-share programs allow companies to lower costs during economic downturns and still keep skilled workers.
The cost to participating businesses, in terms of payments to the unemployment insurance fund, is the same as if they had laid off workers.
In the US, unemployment compensation is paid by the US and state governments to workers who have lost their jobs through no fault of their own -- if he/she worked for an enterprise that pays Social Security tax. It's a type of social welfare benefit and is taxable.
Under Colorado's new law, employers must submit a work-share plan to the US Department of Labor and Employment; and they must certify that the plan and the reduction in hours are in lieu of temporary layoffs.
Plans must apply to at least 10 percent of employees, and work hours must be reduced by at least 10 percent and not more than 40 percent. Finally, employers must state their strategy for restoring work hours for participating employees.
Plans could last a maximum of 18 weeks, as opposed to 26 weeks for regular unemployment benefits. The entire work-share program is, in essence, tied to the current economic downturn; it will sunset in two years.
At the state level, work-share programs are seen as effective because, quite simply, they keep more people working.
In 2009, 2,800 businesses with about 51,000 employees participated in Washington State's "shared work" program.
That's a dramatic increase from 621 employers and 21,272 employees in 2008, and is attributable to the declining economy.
Washington State paid out US$40 million in unemployment benefits under the shared-work program in 2009, a savings of US$54 million over what workers would have received if they had collected the state-average 17 weeks of traditional unemployment benefits, according to Washington's Employment Security Division.
The analysis of Colorado's work-share bill by the nonpartisan Legislative Council estimated that it would save as much as US$2 million per year in unemployment insurance payments and require no additional employees to implement.
"Shared work helps us maintain our competitive advantage," said Terry Schweyen, owner of ASAP Metal Fabricators in Yakima, Washington. "It lets us keep our key people -- a lot of trained people who have skill sets we need -- until things pick up."
(Rich Jones is director of policy and research at the Bell Policy Center, a nonprofit, nonpartisan policy and research organization based in Denver, Colorado. Copyright (C) 2010 by the American Forum.)
It's a relevant question since in the US state of Colorado Governor Bill Ritter recently signed a work-share bill into law. Since the law is new, there are a lot of questions about what it means for Colorado workers. We'd like to provide some answers.
Work-share is a voluntary program that companies can use to weather short-term business declines.
Under the program, employers can reduce the hours of a work force to avoid layoffs. Employees, in turn, can claim US unemployment benefits for the reduction in work hours.
Seventeen US states have such programs and employers have reported these benefits: Sharing of reduced hours is less disruptive than layoffs; quality, skilled employees are retained; employee morale and productivity are sustained; and the cost of recruitment and training costs, once the economy improves, are reduced.
Because employees continue to receive their existing health and retirement benefits, there is less need to turn to state services for support. Also, the state sees savings in job assistance programs when more workers remain on the job.
In many states, these programs are considered pro-business initiatives. Businesses will opt in only if it makes business sense, and experience in other states has shown that work-share programs allow companies to lower costs during economic downturns and still keep skilled workers.
The cost to participating businesses, in terms of payments to the unemployment insurance fund, is the same as if they had laid off workers.
In the US, unemployment compensation is paid by the US and state governments to workers who have lost their jobs through no fault of their own -- if he/she worked for an enterprise that pays Social Security tax. It's a type of social welfare benefit and is taxable.
Under Colorado's new law, employers must submit a work-share plan to the US Department of Labor and Employment; and they must certify that the plan and the reduction in hours are in lieu of temporary layoffs.
Plans must apply to at least 10 percent of employees, and work hours must be reduced by at least 10 percent and not more than 40 percent. Finally, employers must state their strategy for restoring work hours for participating employees.
Plans could last a maximum of 18 weeks, as opposed to 26 weeks for regular unemployment benefits. The entire work-share program is, in essence, tied to the current economic downturn; it will sunset in two years.
At the state level, work-share programs are seen as effective because, quite simply, they keep more people working.
In 2009, 2,800 businesses with about 51,000 employees participated in Washington State's "shared work" program.
That's a dramatic increase from 621 employers and 21,272 employees in 2008, and is attributable to the declining economy.
Washington State paid out US$40 million in unemployment benefits under the shared-work program in 2009, a savings of US$54 million over what workers would have received if they had collected the state-average 17 weeks of traditional unemployment benefits, according to Washington's Employment Security Division.
The analysis of Colorado's work-share bill by the nonpartisan Legislative Council estimated that it would save as much as US$2 million per year in unemployment insurance payments and require no additional employees to implement.
"Shared work helps us maintain our competitive advantage," said Terry Schweyen, owner of ASAP Metal Fabricators in Yakima, Washington. "It lets us keep our key people -- a lot of trained people who have skill sets we need -- until things pick up."
(Rich Jones is director of policy and research at the Bell Policy Center, a nonprofit, nonpartisan policy and research organization based in Denver, Colorado. Copyright (C) 2010 by the American Forum.)
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