It’s been almost four years since President Obama signed the Middle Class Tax Relief and Job Creation Act of 2012. Among many other benefits, this law advanced the first substantial set of reforms to the Unemployment Insurance system in nearly 40 years, with an emphasis on re-employment. One of the key reforms was federal support for expanding short-time compensation programs, also known as “work sharing” or “shared work.” STC allows employers to reduce employee work hours to reflect decreases in business demand without laying them off, while providing partial unemployment benefits to workers whose hours are cut. This keeps workers on the job with a sustainable income and prevents job loss during economic downturns. It also lets employers retain skilled workers and avoid the costs of recruiting, hiring and training new employees when business demand increases. So are these programs truly effective? The Labor Department has released a research report from IMPAQ International on employers’ experiences and awareness that finds most view STC as a win-win solution for their companies and employees. The study collected survey data from over 2,000 employers across four states with active STC programs: Kansas, Minnesota, Rhode Island and Washington. Employers who participated in the study said that they applied for STC because they faced economic hardships, wanted to retain valued employees, and wanted to maintain the morale and health benefits of their employees. A few highlights:
- The employers indicated that retaining employees saves on hiring and training costs.
- In all four study states, more than 80 percent said that they would be either “somewhat likely” or “very likely” to apply for the program again in the future.
- Between 86 and 99 percent of employers in the four states indicated that their employees’ reaction to STC was favorable or very favorable.
One employer participated in an STC summit hosted by the department in November 2015 said her Rhode Island textile mill company would not have survived the recession without the STC program and the ability to retain a skilled workforce. As for her workers, they were able to avoid the hardships of full unemployment and continue to earn a portion of their regular wages, while at the same time collecting some unemployment benefits to replace a portion of their lost wages. We estimate that STC programs have saved more than 570,000 jobs since the Great Recession. The results are in: STC works for both employers and employees. Learn more about short-time compensation programs at https://stc.workforcegps.org/. Gay M. Gilbert is the administrator of the Office of Unemployment Insurance for the Labor Department's Employment and Training Administration.