This week, the Department of Labor (DOL) posted an invitation to states to apply for federal funds to promote work-sharing (officially called "short-time compensation") programs.  The total amount available is almost $100 million, with the largest amount -- over $11.5 million -- available for California (see this chart for how much each state could get).

Only states that have work-sharing programs that fit the new federal definition  in the Middle Class Relief and Job Creation Act of 2012 (Act) can apply for these grants. The Act places states into 3 categories:

  1. states with existing work-sharing programs that fit the new definition
  2. states with existing programs that don't conform to the new definition
  3. states that don't have work-sharing programs

The federal grants to promote work sharing are divvied up for 2 purposes:

  1. 1/3 for implementation or improved administration of their programs -- such as upgrading processing systems
  2. 2/3 for promotion and enrollment activities -- such as outreach to and education of employers about work-sharing

Since work sharing is voluntary on the part of employers, publicity and outreach by states is key to improving participation rates. These grants should help jumpstart such efforts. DOL provides a handy application checklist and sample quarterly progress report, along with other useful information about applying. If states fail to take advantage of these grants and the federal reimbursements, they'll be leaving significant funding on the table, at a time of tight state budgets.

These grants are the 2nd type of federal funding made available to states for work-sharing by the Act. The first, and potentially much larger, amount of funding is for federal reimbursement of states' work-sharing unemployment insurance (UI) costs.  Dean Baker and I estimated that states could save $1.7 billion per year for up to three years, as well as reduce their unemployment rates, if they were to take full advantage of the provision. Currently about half of the states have work-sharing, with Michigan and New Jersey adding programs this year. 

In June, DOL posted detailed information on how states can transition into having programs that conform to the new federal definition.  There are monetary advantages for states to make this change. 

If a state currently has a work-sharing program that doesn't fit the federal definition, bringing the program to conform would enable it to:

  • receive federal reimbursement of its work-sharing UI costs past August 2014 (for up to 3 years until August 2015)
  • apply for the federal grants to improve and promote its program

If a state doesn't have a program, it can enter into an agreement with the federal government to create a temporary work-sharing program, which would allow it to receive reimbursement of  50% of its work-sharing UI costs for up to 2 years.  And if it were to enact its own program that fit the federal definition, it would be able to:

  • double its federal reimbursement of UI costs (to100%)
  • extend the reimbursement for a total of up to 3 years (until August 2015)
  • apply for the federal grants to improve and promote its program

States that have existing programs, regardless of whether they fit the federal definition, need to sign agreements in order to receive reimbursement of their work-sharing UI costs and contact the appropriate Regional Office before getting signatures from appropriate state officials. 

For more information about the new federal work-sharing provisions, DOL has posted a brief fact sheet and many resources about the federal reimbursements and grants.  Model legislative language and details about how states without work-sharing can enter agreements with the federal government to create temporary work-sharing programs are still forthcoming from DOL.

In addition, NELP and CLASP have published a detailed summary of the work-sharing provisions in the Act, and CEPR has an issue page devoted to work-sharing as well.