Washington States’s SharedWork program was praised in a recent New York Times article about the “often overlooked” benefits of job sharing programs.
Officially titled short-time compensation (STC), the SharedWork unemployment insurance program preserves employees’ jobs and employers’ trained workforces during times of lowered economic activity. Ultimately, STC serves as an alternative to layoffs for employers experiencing a reduction in available work hours.
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STC works by allowing employees experiencing a reduction in hours collect a percentage of their unemployment compensation (UC) benefits to replace a portion of their lost wages.
While economists on both sides of the aisle sing the praises of work share programs, they remain underutilized.
“I’m sick of this being the ‘best kept secret,’” Suzan LeVine, Washington’s Employment Security Department, told the New York Times. “It is the diamond in the rough of the unemployment benefits system.”
Currently, 26 states have permanent programs. While these programs have yet to get signifiant traction nationwide, the same cannot be said for Washington’s SharedWork.
The Times reported that between March and August last year, 688 businesses took part; now 3,560 are using the program. One in nine Washington workers receiving state jobless benefits receive them through work sharing.
The programs are reportedly underutilized, despite positive outcomes, in the United States due to weak labor laws and state requirements.
Work sharing is widely credited with saving jobs and easing the pain and severity of economic downturns. But while popular in Germany and other advanced industrial countries, such programs have had trouble gaining traction in the United States, where job protection laws are comparatively weak and layoffs are a ready solution when revenues drop. States aren’t required to offer short-time compensation, and many choose not to devote the resources — like funds for updated computer technology — to create and run such a program,” wrote Patricia Cohen, national economics reporter for the Times.
On the employer side of the equation, the program is said to equip work places with the ability to preserve their relationships with workers and avoid the costs associated with retraining.
The unemployment and uninsurance chain reaction set off by COVID-19 underscored another downstream benefit of the program.
During the first ten weeks of pandemic induced closures, starting on March 15, more than one million workers in Washington filed unemployment insurance claims. A large number of workers and their family members lost their employment-based health insurance.
With health insurance tied to employment for a great many, the program critically allows workers to stay employed in their current position and retain their coverage.
As a part of the emergency relief package passed in March, Congress increased incentives for shared work programs.
Policymakers expanded work sharing after the Great Recession and encourage states to use it in 2012 when the payroll tax cut was extended.
According to the Times, getting the word out to policymakers and businesses has been a hurdle to wider utilization of work share programs around the county, though outreach campaigns remain ongoing.
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