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Sharing Work Is a Smart Alternative to Layoffs—And the Feds Pay

Nevertheless, only 26 U.S. states have operational shared-work programs.

Michigan gets it. Rhode Island gets it. So do Washington, Kansas, and Oregon. These, according to the Federal Reserve Bank of Cleveland, are the five states that have made most use recently of short-time compensation, a smart but underused federal program that saves jobs by letting employers reduce hours instead of laying people off. The workers whose hours are cut get partial unemployment insurance benefits.

Short-term compensation, also known as shared work, maintains the connection between workers and employers until business picks up and hours can be restored. Bloomberg’s Reade Pickert and Catarina Saraiva have featured its benefits.

Lately the federal government has made the program hard to resist. In ordinary times its costs are shared between the states and the feds. But President Biden’s $1.9 trillion American Rescue Plan, which was signed into law March 12, includes full federal funding of shared-work payments through Sept. 6.

Yet only 26 states have operational short-time compensation programs: Arizona, Arkansas, California, Colorado, Connecticut, Florida, Iowa, Kansas, Maine, Maryland, Massachusetts, Michigan, Minnesota, Missouri, Nebraska, New Hampshire, New Jersey, New York, Ohio, Oregon, Pennsylvania, Rhode Island, Texas, Virginia, Washington, and Wisconsin.

That’s unfortunate. “Failing to deploy Shared Work aggressively is a huge and costly mistake,” Kitty Richards and Emily DiVito wrote in an issue brief for the Roosevelt Institute in March.

Nationally, short-time compensation’s share of total unemployment compensation has remained below 1% for most of the past 30 years. It briefly spiked to 1.6% in July 2020 before receding to trend, according to Bureau of Labor Statistics data.

On April 13, the Hamilton Project released a report on unemployment insurance that recommended beefing up short-term compensation. Author Arindrajit Dube, a professor at the University of Massachusetts at Amherst, says the application form for employers should be streamlined and the program should be publicized better. He also endorses proposals made by President Joe Biden when he was running last year to expand eligibility to employers doing more extreme reductions of hours, and to compensate employers for the cost of maintaining full health benefits for workers.

Numerous organizations have spotted the potential benefits of short-time compensation. Now’s the time to realize that potential.

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