Legislature and State Government and Legislation and Government & Economic Development and Government

Lawmakers might consider revamp of jobless benefits

October 5, 2011

State lawmakers could take up a proposal next year that would make unemployment benefits more flexible and give companies additional options for cutting back on employee hours.

So-called "work-share" programs have been implemented in 21 states, and state Rep. Mary Ann Sullivan, D-Indianapolis, plans to introduce a bill for such a program in Indiana. Another Indiana House member, Ed DeLaney, D-Indianapolis, presented the concept Tuesday to the state’s Unemployment Insurance Oversight Committee.

The program would allow employers to avoid laying off workers by reducing their hours. Those employees would then receive a share of unemployment benefits proportionate to the reduction in hours.

For example, instead of laying off one worker and eliminating his 40 hours per week, a firm could cut 10 hours a week from four employees’ workloads. The state, in turn, would pay a smaller share of unemployment benefits to the four workers instead of paying full benefits to one worker who was laid off.

That helps companies, DeLaney said, because if demand for work resurges, firms can increase existing employees’ hours and avoid the costly process of hiring new workers. The concept has the initial backing of the Indiana Chamber of Commerce, an endorsement that could boost its chances in the Republican-controlled General Assembly next session.

It also would help workers, who could receive additional skills training while maintaining a job, DeLaney said.

“Is that going to get someone back to work faster? I don’t know,” DeLaney said. “But the employer doesn’t have to face hiring costs.”

Some legislators and industry lobbyists raised concerns about the policy.

Sen. Brent Waltz, R-Greenwood, said companies typically lay off the least experienced or productive members of the work force. A work-share plan would unfairly spread economic pain of reduced hours across more workers, including those who might be better qualified.

“The strongest, best employee and the weakest employee and all the people in between end up suffering equally,” said Waltz, who redistributed water among four glasses during the committee meeting to illustrate his point.

Waltz also said companies such as construction firms, where work flow typically varies by season, would benefit the most.

DeLaney, a lawyer whose firm handles some employment-law cases, said it’s not always the case that weakest workers are laid off. Instead, employers often eliminate workers that are older and more experienced because they are paid more.

Several important questions would have to be considered in crafting a work-share policy. Among them is how employers would reduce their benefit costs for employees working fewer hours, and how to build safeguards into the system so employers couldn’t abuse it.
 
Ed Roberts, a vice president with the Indiana Manufacturers Association, said creating an effective work-share program could take “hundreds of hours.”

He cautioned against moving too quickly, particularly since the Department of Workforce Development, which administers unemployment benefits, plans to overhaul its computer system at the end of the year.

Adding a new benefits-compensation system in the middle of that change could be overwhelming for the department, he said.

“This isn’t to say 'no,'” Roberts said. “This is to say 'slow.'”

Lawmakers will decide whether the proposal Sullivan intends to introduce will get a hearing in next year’s legislative session, which begins in January.

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