Government aid allows work sharing

While job losses keep mounting in today’s brutal economy, a growing number of companies are avoiding layoffs using a program known as work sharing.

Instead of laying off employees, companies are keeping them while reducing workers’ pay, often by 20 or 40 percent. The employees generally get to hold on to benefits as well. Then, state governments step in and make up part of the lost wages, usually about half. Seventeen states have adopted the program, and economists and executives are hailing the program as a way to keep workers employed and retain skilled labor. A similar work sharing program has been credited with saving thousands of jobs in Germany.

With savings from reduced income taxes and from commuting fewer days, some workers nearly break even. Unfortunately, only a small portion of eligible businesses and workers are presently benefiting from the program because most companies still don’t know it exists.

A story in the June 15 New York Times covered a Connecticut metal working plant utilizing the program. At Tri-Star Industries, the 29 nonmanagerial employees now work three- or four- day weeks. “The alternative would have been to lay off three to seven workers,” Andrew Nowakowski, president of Tri-Star Industries said, “but that would mean that when things become busier, I’d run the risk of not having the trained people I need.” The company’s employees have bought in to the program as well, even if it means less pay. “Without this, it would have been four or five guys out the door and one of them could have been me,” said John Drzata, who runs a five-spindle precision lathe.

Right now, business is all about staying in game; fighting to see another day. A shrewd combination of sacrifice and creativity such as work sharing is the way to survive.

Source: New York Times

Question: Would you be willing to try a work sharing program in your business?

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7 thoughts on “Government aid allows work sharing

  1. John Belzer

    We’ve been participating in California Workshare off and on for the past 10 years. We utilized it heavily during the 2001-2002 recession and have leaned on it even harder during this one. It works roughly as you’ve suggested and is a “win’win” for both employee and employer. I’ve recommended it to a number friends in the industry.

  2. Bill Prion

    Where does the money come from that the government pays for people to not work? It either steals it from tax payers or forces the taxpayers further into debt.

    I am amazed that seemingly intelligent people consider this a good idea. Money falling from the government sky is an unsustainable way to manage an economy.

    When you only consider the individual receiving the stolen money or that person’s employer, this may seem like a good idea. But when you consider the overall damage from crippling interest payments on the national debt, it is clear that ideas like this are not in anyone’s best interest – including those that are initially helped.

    To put this another way, consider if the government simply sent everyone $100,000 each year and told them that working was optional. The imbalance between those working in productive jobs (non-government) and those being supported would be enormous and just about everyone (I hope) would agree that this cannot work. Then ask the question, where is that point of balance that is sustainable and what would the signs be if we crossed it? Skyrocketing deficits and a struggling economy may be some clues.

  3. Noah Graff

    Bill, you make some good points. I wonder where this money comes from too. Seems like every state is complaining about being in debt.

    Keeps people working on the one hand. And they would be collecting unemployment anyway. It is in the interest of the employees and employers for the reasons mentioned in the article but for the rest of the people on the whole and the macro economy I’m not sure if the rewards of the program trickle down enough to make it worth it for the rest of us.

    What about the schools that are losing teachers and the roads falling apart and the hospitals? Not to mention the debt.

  4. Clint Cam

    Bill says “Where does the money come from that the government pays for people to not work? It either steals it from tax payers or forces the taxpayers further into debt.”

    I don’t know what state you live in, but it doesn’t work that way in CA. Benefits are paid out of the employer’s unemployment account. That’s money the employer has already paid in, that is used to cover unemployment claims. The same account the money would be coming from if the company had laid off the employees, except the amount would be much greater. It’s clearly a winning solution for everyone involved. We have used it several times in the last 10 years.

  5. JB

    Here in Texas the WorkShare program works just as it does in California, and when I ran a manufacturing firm with sites in both states a few years ago we utilized this program with pretty good results. As Clint says, the money comes from the payments from the employer, not the pocket of the general taxpayer, therefore the only people losing out are those employees on the program – but hopefully they are bright enough to see the greater good.

    The owners of company I work with now refuse to utilize this option, to the detriment of the company and the staff, no matter how long and hard I try to explain the benefits. Instead they have remained frozen with inability and inexperience to take action, cut hours across the board anyway, with their only explanation being that they don’t think they can afford the increased unemployment insurance rates that would result from enrolling in the WorkShare program. The truth they will not hear is that the staff know of the option at hand, and now only see the owner’s refusal to sign on the company as a greedy money hungry move.

    I wish those narrow minded people out there could see that when a group of people band together and agree to share the pain, selecting a plan they have paid for with their dollars (again, unemployment insurance payments come out of an employers and employees pocket), that a good can only come if it.

    The aspect of this that Clint also touched on is that a large group can spread the penny pinching to save jobs for a handful that might be completely out of work, and those that think they might be at risk to have been layed off often understand the sacrifice being made to keep them there.

    Bill – your $100,000 analogy is way off base and not a correct comparison. The WorkShare program is not giving anybody money while telling them working is optional, quite the contrary. The benefit (atleast in Texas) only applies to workers who have been cut between 10-40%, and they only recieve a proportional benefit to the amount their hours have been curtailed. The employer is allowed to vary this by department and can change the levels each week – which helps the employer stay alive (this is important for that tax base you mention).

    Before anyone should begin harping about “stealing” from taxpayers to give to others, get educated on the true facts and function of the program. No one, except Democrats in my opinion, wants more debt – but if the cascade of business failures continues, or the huge bailout debacle continues, we’re going to be up a real creek without so much as a canoe let alone paddles. The WorkShare program is one low impact to all program, atleast in Cali and Texas, that helps bridge the gap between failure and making it through the tough times.

  6. Howd

    Why do the ‘smart’ people who support this tripe think the manufacturing jobs are goin over-seas? that money comes from the employer?? did these ‘brains’ consider they have to raise their prices to cover these ‘donations’. it’s an end-run way to raise taxes, have the employer pay them. pure idiocy.


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