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How work-sharing works
Work-sharing is a voluntary unemployment insurance program designed to save jobs by giving employers an alternative to layoffs during periods of decreased demand.
If a company sees a 20 percent decrease in demand, it would typically furlough 20 percent of its workers. Under work-sharing, the employer could decrease pay for a particular line or department by 20 percent for a short period of time. The 20 percent loss in income incurred by the employee would be partially made up by the state in unemployment benefits.
A worker earning $600 a week, for example, would receive $390 in jobless benefits if furloughed. Under work-sharing, if the worker’s hours drop 20 percent, wages would fall to $480 (80 percent of full pay) and work-sharing benefits would make up at least half of the lost wages ($60) for a total of $540 a week (90 percent of full income). The worker also maintains health benefits and avoids joining the ranks of the unemployed.
Work-sharing may have stemmed 2012 job losses at Cummins Engines.

Work-sharing program would ease Indiana’s unemployment woes

An unemployment insurance shortfall continues to stand as the dark underside to Indiana’s improving economic outlook. By late September, the state owed the federal government more than $1.3 billion for loans it had accepted to meet its unemployment obligations during the Great Recession. At the current rate of repayment, it will be 2017 before Indiana’s debt is repaid.

One approach to keeping unemployment insurance payments in check going forward has won the support of an unusual collection of business, labor and anti-poverty groups. But the Indiana Department of Workforce Development continues to reject calls for a voluntary work-share program. Last year, the agency announced it would not participate, even though the U.S. Department of Labor is offering more than $2 million to help market such a program with employers and to update the state’s technology systems.

Indiana employers would benefit from a work-sharing program, which is why the Indiana Chamber of Commerce has made it a legislative priority for 2014. Indiana employees also stand to benefit, which is why the Indiana State AFL-CIO supports it, along with the Indiana Institute for Working Families. As more states get on board and the data continue to demonstrate the value, lawmakers would be wise to direct Indiana to participate.

A bipartisan group of Indiana congressmen, including Sen. Richard Lugar and Reps. Joe Donnelly, Marlin Stutzman, Mike Pence, Andre Carson, Larry Bucshon and Todd Young, supported the Middle Class Tax Relief and Job Creation Act of 2012 that incorporated a provision on work-sharing. Federal grants under the law will provide 100 percent reimbursement rates to the unemployment insurance trust fund for up to three years once a work-sharing law is passed. Estimates are that Indiana could save nearly $50 million over that period.

Close to 30 states have now passed the legislation, which represents a common sense approach to fluctuations in business.

Derek Thomas of the Indiana Institute for Working Families notes Gov. Rick Snyder signed a bill in Michigan citing the advantages it offered in helping companies retain skilled workers. Gov. Chris Christie of New Jersey also supported work-sharing.

The Republican governors recognize the proposal as another tool employers need to respond to fluctuations in a global economy. Indiana, with an economy still heavily dependent on manufacturing, is vulnerable to those fluctuations. Among others, they contributed to substantial job losses at Columbus-based Cummins Engine last year.

Thomas points to Kenworth Trucking, which helped promote work-sharing legislation in Ohio and announced it would consider shifting some operations to work-sharing states so it could more easily avoid layoffs, given the ebb and flow of the trucking industry. He offers evidence from other states to discount the Department of Workforce Development’s claims of administrative challenges and abuse.

A work-sharing program seems to be a perfect fit for Hoosiers. Indiana should join the states already making it available to employers.