One of the major overlooked problems driving our country’s jobs crisis isn’t unemployment, it’s just not having enough work. The shadow figure that stalks behind the unemployment rate issued every few weeks by the Labor Department is underemployment: people who wish for, and need, full-time work, but are only able to get part-time hours, or have gotten “discouraged” from job seeking. Including those factors, the broad measure of underemployment hovers around 12 percent.
Workers lacking full-time employment are often full-time struggling: juggling multiple part-time gigs, suffering from loss of healthcare and other social protections, and living amidst long-term joblessness across the community.
This paradox of the marginalized worker arguably makes Americans both the most overworked and underemployed people in the industrialized world. But it’s not that the underemployed just want to work more; they actually want to earn more, at a fair rate, for the work that they can get. One way to help fix this imbalance is through work-sharing. Work-sharing allows companies to distribute hours so that people work somewhat less, while ensuring that there’s still enough work to go around to prevent layoffs. There even exists an obscure federal work-sharing program that provides funding for states to put these programs in place, but many states have left the money on the table so far.
Work-sharing is a simple concept: When employers try to cut costs, shrinking the payroll is a quick way to cut back not only on wages but on fringe benefits and related taxes. Employers often make the cruel calculation to replace current workers with cheaper ones, or to reduce their hours. Work-sharing tries to reconfigure the distribution of work and employment by subsidizing employment costs in exchange for reduced work time. So people work less, but get an income supplement to help offset the impact.
With work-sharing, a worker might agree to work one less day per week and “share” the labor with co-workers so that no one is made “redundant.” A federal program launched in 2012 helps employers draw down unemployment insurance (UI) funds to compensate for the lost hours. For example, as explained in a new study by the National Employment Law Project (NELP), if a factory wants to cut its workforce by the equivalent of five employees, “Under work-sharing, the employer could instead reduce the hours of 25 employees by 20 percent, and those workers would receive a pro-rated UI payment for their one day per week of unemployment, while maintaining any existing health and retirement benefits.”
Cutting back hours typically harms workers, but what makes work-share a less painful solution is that the government subsidizes the balance. About half of states have implemented some form of this work-sharing, but now state lawmakers are approaching a year-end federal deadline to apply for funds. A bill to renew the legislation, the Layoff Prevention Act, is pending.
If, instead of losing their jobs, workers share work and simultaneously buffer against lost earnings, they don’t have to start from zero in a hostile job market and risk long-term unemployment (still a massive problem in low-wage, precarious job sectors like retail). And some will see an added benefit in a shorter workweek—a considerable boon in a workforce facing relentless pressure to work longer and harder just to cover basic needs. For the bosses, who are simply reallocating existing unemployment funds, work-sharing saves the trouble of investing in a new hiring process or retraining an inexperienced worker, and the risk of more employee turnover.
(A caveat is that bosses often just try to “downsize” with specific designs to reduce their labor force. The work-sharing formula doesn’t account for insidiously terminating workers out of greed. However, for a small boutique manufacturing firm facing the choice between letting a few veteran machinists go or shutting down, a work-share program can spare everyone the pain of that dilemma.)
The central premise of work-sharing is that forcing someone out of the job should be the last resort, and the state has a responsibility to intervene by supporting the restructuring of labor to protect workers.
Meanwhile, states gain from staving off further job losses. NELP argues that “work-sharing can be a key component of an economic policy that…encourages the retention of employees through the ebb and flow of business cycles,” citing an estimate by the Center for Economic and Policy Research that “from 2008 to 2013, more than half a million jobs were saved by employers using work-sharing as an alternative to layoffs.”
Work-sharing is not a new invention. The practice is more widespread in European countries, particularly Belgium, Germany and Italy. California introduced a statewide worksharing program in the late 1970s. In the wake of the Great Recession, Washington passed legislation to allow states to use federally approved work-share programs to cope with epidemic levels of long-term joblessness.
Now twenty-four states have until year’s end to apply for the federal work-sharing support program. According to NELP, although state legislatures are currently out of session, legislation has been introduced and garnered considerable support in West Virginia, Indiana, South Dakota and Tennessee. Going forward, NELP attorney George Wentworth says, “there are a number of states where advocates were unable to get momentum in short budget-focused sessions this year but have expressed interest in 2015 campaigns, with or without the availability of federal grants.”
To incentivize and help regulate the program, NELP points out that states and companies can take advantage of provisions that allow work-sharing to be paired with targeted training. So a factory that plans to upgrade its assembly-line production process, for instance, can avoid the traditional route of shedding older workers and bringing in automation and instead use UI subsidies to offer existing workers “the requisite training (compensated by work-sharing benefits) to bridge the transition to the more technologically advanced workplace needed to support the new product line.”
Lest you fear this is simply a back-door method of slashing hours at workers’ expense, NELP’s model legislation provides a worksharing framework with built-in labor protections: schedule reductions are limited to 10 to 60 percent; it must comply with basic wage and hour regulations; workers must “receive a pro-rated share of the unemployment benefits they would have received if totally unemployed”; unionized workers must have a collective-bargaining agreement; and to guard against the potential exploitation of the program to squeeze healthcare and retirement costs, “employers must certify that those benefits will not be reduced due to participation.”
Politicians try to spin the economic crisis by talking about the need for “shared sacrifice”—but that’s coded language for coddling capital on the backs of struggling workers. Now that Washington is offering a small way to redistribute workers’ time without sacrificing all their money, states have a chance to really put their money where their mouth is.