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Work-share programs help some businesses avoid layoffs

More than 38 million Americans have filed for unemployment since March, though the passage of the CARES Act has for now helped alleviate some of the financial fallout. But buried in the landmark legislation, there is also financial support for work-share programs in some states that allow businesses to avoid laying off any employees at all. NewsHour Weekend’s Christopher Booker reports.

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  • Hari Sreenivasan:

    The coronavirus pandemic has put every country to the test. Whether measuring infection rates, mortality or unemployment, the results vary dramatically.

    Here in the U.S., the government is weighing whether or not to provide another stimulus package as more than 38 million people have filed for unemployment since mid-March.

    In Germany, the number of people out of work during stay at home orders surged, but a state funded short-term program there helped many avoid layoffs.

    It's a work-sharing agreement that some here in the U.S. are hoping may catch on. NewsHour Weekend's Christopher Booker has more.

  • Christopher Booker:

    With the passage of the landmark CARES Act in March – The headline was financial relief was on its way for millions of Americans.

    As companies slashed jobs, the nearly $2 trillion relief bill meant that on top of a one time stimulus check, an additional $600 a week in federal unemployment insurance would be made available for those suddenly out of work.

    But, buried deep in the document – was something else – additional support for little known state programs that can help businesses avoid having to lay people off in the first place.

  • Matt Pearce:

    I learned about work share because I actually stared reporting a story about the unemployment system in my capacity as a journalist at the L.A. Times. Right at the same time, I was working on that. Our management came to us and said that they wanted $2 million in cuts from our newsroom.

  • Christopher Booker:

    Matt Pearce is a reporter for the Los Angeles Times and an elected guild member of the newspapers union.

  • Matt Pearce:

    You know there are other programs out there like TPP that small businesses have applied for to keep workers on their payroll. We were too big to be eligible for that. We also didn't have access to the Treasury program for mid-sized business loans, so we reached for the next closest tool, which was the worksharing program.

  • Christopher Booker:

    California is one of 25 states along with the District of Columbia that have what is known as a Work Share or short-term compensation program.

    Such programs allow companies to avoid layoffs in exchange for a reduction in employee hours – a percentage of the employee's lost wages are offset with unemployment insurance, which comes out of state funds. But under the CARES Act those payouts are being reimbursed by the federal government.

  • Matt Pearce:

    We had trouble actually finding other employers who had had experience with this program. I mean, this was the craziest thing when I was making phone calls even among labor people in California, they didn't have much experience with it.

  • Christopher Booker:

    But Pearce and the guild did figure it out and convinced management to agree to a 12-week work share program. Cutting hours of everyone by 20%, the agreement saved 84 jobs.

  • Matt Pearce:

    That's really attractive thing about this program. You don't have to lay people off just to save the business. Everyone can take a collective hit, protect some people so that they don't get thrown out into the unemployment line. It really seems like a win-win for all of us.

  • Susan Houesman:

    It is a program that I think in many respects is ideally suited for this recession.

  • Christopher Booker:

    Susan Houseman is the Vice President and director of research with the W.E. Upjohn Institute for Employment Research.

    The Michigan research organization was founded 75 years ago to study policy-related issues of employment and unemployment.

  • Susan Houesman:

    The causes of the recession. We're not economic in nature. There's a health pandemic. And what ideally we'd like to do is to hold things in place as we get better control of the virus ramp up as quickly as possible. There is not a fundamental restructuring that needs to be done in the economy.

  • Christopher Booker:

    Much of the immediate job losses were in the service sector of our economy. Is a work share program more beneficial to folks that are able to work in an office or right now work from home? Is it possible to have a workshare program for someone that works at a restaurant or the bartender? For someone that works in retail?

  • Susan Housemen:

    Right. So in principle. Absolutely.

  • Christopher Booker:

    But again, that is, if it's available in your state and employers know about.

    In 2017, Houseman was a co-author of a study that looked at how to expand workshare programs already in existence in Iowa and Oregon.

  • Susan Housemen:

    And he baseline in Iowa for employers knowing about this program. Their minds have been running for years and it was 10% and in Oregon it was about about 25%.

  • Christopher Booker:

    25% of employers knew about this in Oregon and only 10% knew about in Iowa?

  • Susan Housemen:

    Correct. Many employers don't know about it. And if you think about it, just it was just within the last several years that nine of these states, including mine, Michigan, introduced this program. We were in an expansion. So I would imagine that very few employers, when this hit and it hit quickly, this this recession, knew about it.

  • Christopher Booker:

    There are those who argue, the lack of workshare is not just about policy, but something much more complicated.And this can be seen nowhere more than in the difference in unemployment between the United States and Germany.

    At the end of April, the German unemployment rate was 5.8%. Meanwhile, in the US it was 14.7%.

  • Professor Kohler:

    Well, whats the difference? Well of course, culture is the difference.

  • Christopher Booker:

    Thomas Kohler is a labor scholar and professor of law and philosophy at Boston College.

  • Thomas Kohler:

    So what has made the difference? Their so-called Kurzarbeit – short work system. What Kurzarbeit does is to take those funds and to give an incentive to employers and employees to continue to work or continue to train. And the government will subsidize that. The idea being this is a lot cheaper than having a large body of unemployed people who end up if they're out of the labor market too long. They have difficulty getting back into it.

  • Christopher Booker:

    According to the German Ifo Institute for Economic Research half of all German firms — covering as many as 10 million German workers — are currently utilizing Kurzabeit.

  • Thomas Kohler:

    To do something as structurally comprehensive as the Germans would require a lot of change in our attitudes. You can never look at a model and buy it and take it home. It won't work that way. You need a certain culture to do it, but there's a lot we could learn from it.

  • Christopher Booker:

    Do you anticipate employment policy will change in the US in response to this crisis?

  • Thomas Kohler:

    I think at some point it absolutely has to. We have too many people who have literally no protections at all. It's clear to me that we need a new way to think about work and how we order it.

  • Matt Pearce:

    I can see from firsthand experience now, you know, not as a journalist, but as someone, you know, representing my coworkers, why it's so difficult to promote these programs in the US. They're just it's easier to lay people off.

    There's not a culture of spreading around the pain to protect people in these times of temporary economic crunches. We're just going to try to survive this round the fight and then get on to the next battle, which could be 12 weeks from now, six months from now, a year from now.

  • Christopher Booker:

    The CARES Act funds workshare programs through the end of 2020. The current LA Times deal lasts until the end of July. While Pearce its unclear what happens after, his phone has been ringing – the calls coming from other newsrooms across the country looking for advice.

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