Ohio lawmakers are poised to make it easier for struggling state businesses to reduce workers' hours instead of firing them.
New legislation will allow the state's unemployment insurance system to compensate some workers for reduced hours under a layoff prevention program called SharedWork Ohio. Wisconsin and New Mexico are also considering "work sharing" bills, and similar legislation is on the books in 25 other states; Michigan and Pennsylvania created programs last year.
Ohio State Sen. Bob Peterson (R-Fayette County) said Ohio wants to jump on the bandwagon in part because Congress recently passed a law providing three years of federal funding for state short-time compensation benefits. Ten other states have signed up for the federal funding, according to the U.S. Labor Department.
But the policy isn't just inexpensive, it's also humane.
"The appeal is that employees don't have to have the conversation with their families that [they are] laid off," Peterson said.
And as a bonus for Ohio businesses, Peterson said, work-sharing would keep more skilled workers in Ohio. Kenworth Truck Company, a major employer in the state, supports the policy, and has suggested it may consider shifting some operations to states that use shared work to help avoid layoffs. "The nature of their business is that it ebbs and flows," Peterson said.
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Work-sharing generally garners bipartisan support. In Ohio, the most recent bill's primary sponsors are Republicans, but the idea originated with Policy Matters Ohio, a liberal think tank based there.
"Under a shared work plan, employees can retain their health insurance and keep accruing retirement benefits while avoiding the emotional and financial hardships associated with layoffs," the policy group's Hannah Halbert testified earlier this month. "Employers can retain skilled employees, avoid expensive retraining and rehiring, boost employee morale and be more easily able to gear up when demand recovers."
Dean Baker, co-director of the Center for Economic and Policy Research, a left-leaning D.C. think tank, has long advocated for work sharing as a means of reducing unemployment. Baker suggested there's no good reason the policy hasn't been more widely adopted.
"Inertia is an incredibly powerful force, but people are beginning to see the benefits of work sharing as an alternative to layoffs," he said in an email. "We have to hope the momentum will keep building."
The U.S. Labor Department estimates that states spent $125 million on work-sharing programs last year, saving 61,299 jobs. That means instead of 61,299 initial unemployment claims, the equivalent of five times as many workers kept their jobs and filed short-time compensation claims, and those claims paid 20 percent of what the workers would have received in normal unemployment compensation had they been laid off.
Peterson said he doesn't necessarily consider work sharing the way of the future, but rather a pilot program lawmakers might expand after they see some initial results. He said the Ohio General Assembly will give work sharing final approval when it returns from its Easter break next month.
"The great thing about us doing this program is that it allows us to get some numbers, get some data," Peterson said.
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