Proposal aims to help businesses keep workers employed
Madison — A plan to decrease the number and impact of layoffs by allowing businesses to reduce employees’ hours instead of laying them off has been introduced by State Senator Julie Lassa (D-Stevens Point). Under the plan, workers with reduced hours would receive partial unemployment checks to supplement lost income.
Lassa presented the voluntary plan today to the Unemployment Insurance Advisory Council, the body that advises state government on unemployment compensation issues. Currently, workers are ineligible for unemployment benefits unless they are available for full-time work.
“Work-share programs are a win for businesses, employees and local economies,” Lassa said. “Businesses retain skilled workers, employees retain their jobs, and communities minimize the number of layoffs during tough times. The program also allows companies to ramp up quickly when business improves, helping our economy recover more rapidly. ”
“For example, if a company was forced to reduce labor costs by 20 percent, instead of laying off a fifth of its work force it could just reduce employee hours by 20 percent,” Lassa explained. “The employees would be able to claim unemployment benefits for the lost hours to help offset the income loss, and they’d be able to keep their jobs along with benefits such as health insurance and retirement.”
Currently, if a company issues lay-offs, it risks losing its skilled workers while it waits for demand to improve, Lassa said. Once it does, production is often delayed as the company rebuilds its workforce. Meanwhile, laid-off employees and their families face no income other than the maximum weekly unemployment benefit of $363, which significantly reduces their buying power.
Council members representing both labor and management expressed interest in the idea, especially since the federal government offers states implementation funds to operate the program and conduct outreach to employers. The Council will forward the proposal to the U.S. Department of Labor for review.
Currently, 25 other states offer work-share programs, and the concept has been endorsed by groups ranging from the conservative American Enterprise Institute to the progressive Center for American Progress. In Rhode Island, work-share has helped prevent more than 16,000 layoffs between 2007 and 2011. Germany’s work-share program is credited for reducing its unemployment rate from over 8 percent in 2008 to under 6 percent in 2011.