November 24, 2014
The recent passage of a work-sharing program by the Illinois state Senate signals an increasing willingness across the country to provide employers with alternatives to layoffs. The state is now in the company of the District of Columbia and 27 other state legislatures, all of whom have also passeed work-sharing programs, and will be the 13th state to have done so since 2009. Back in 2011, CEPR Co-Director Dean Baker penned a report on work-sharing, both in the OECD and the U.S. states that had already implemented such programs, and detailed its potential impacts on productivity and employment.
Under these programs, employers have the option of cutting hours rather than workers, with much of the subsequent loss in the latter’s wages compensated by unemployment insurance benefits. In the case of Illinois, those benefits would be available in cases where employers cut hours by 20% to 60% among two or more workers. When demand picks up again, employers would not have to recruit and train new workers and can simply increase current workers’ hours. Additionally, workers can remain in the labor force and avoid the risk of long-term unemployment currently faced by many. As someone whose family has been affected by layoffs and the subsequent stress related to unemployment, I can personally attest to the attractiveness of such a program.
If the Illinois bill is signed by the governor by December 31st, $4.3 million in federal funding will become available for costs associated with start-up, promotion, and enrollment, the result of the passage of the Middle Class Relief and Job Creation Act of 2012. Dean Baker had praised the passage of that legislation, which provided states with such financial incentives for the implementation of work-sharing programs, stating that it “could make a difference in the lives of millions of workers and their families.” The bill’s co-sponsors, Senator Jack Reed (D-RI) and Representative Rosa DeLauro (D-CT), have since introduced another bill extending a grant application deadline and federal financing by one year, which, if passed, could save Illinois close to $54 million.
