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Work-share program debated by study committee

 The Statehouse File
August 27, 2014
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Business leaders split Wednesday on their support of a proposed work-share program that would let Indiana companies reduce work hours for employees, who could then collect partial unemployment benefits.

The program – which is authorized by the federal government and has been implemented in 29 states – is designed to help both companies and their workers better weather economic downturns.

Mike Ripley, vice president for health care policy at the Indiana Chamber of Commerce, told a legislative study committee that the program gives companies another tool to avoid mass layoffs when times are tight or production is low. And he said workers win by maintaining their benefits and most of their salaries.

“It’s better to have people working than not working,” Ripley said.

But Ed Roberts, vice president of the Indiana Manufacturers Association, said he’s concerned the program could put more stress on the state’s unemployment system, which already is in debt to the federal government. Indiana still owes more than $800 million that it borrowed during the last downturn when the taxes companies paid into the unemployment trust fund couldn’t cover the payments to laid-off workers.

Roberts said the state should be “extremely cautious” about any program that might affect the solvency of the state’s trust fund. He said the work-share program “is fraught with the potential for starting up an engine and letting parts fly off and maim the innocent bystander.”

Officials at the agency that would oversee work share are skeptical as well. Josh Richardson, a deputy commissioner at the Indiana Department of Workforce Development, said there are “real concerns” about the costs of expanding eligibility for unemployment.

“Do we really want to make it cheaper or easier to reduce people’s work hours?” Richardson asked the Employment and Labor Study Committee. “That could result in additional reductions and that harms the trust fund.”

But Chamber of Commerce officials said work share shouldn’t hurt the unemployment fund – particularly because a company’s alternative option is laying off its workers, which would drain more money from its coffers.

The federal government authorized work share programs about three decades ago but interest in the option ramped up in 2012, when Congress made $100 million in grants available to states to encourage participation. Indiana hasn’t been able to take advantage of any of that money, and Democrats – who are the minority party in the Indiana House and Senate – have been clamoring for the General Assembly to take up the issue.

Now, lawmakers in both parties seem at least somewhat interested. Study Committee Chairman David Ober, R-Albion, said a work-share program could actually help the unemployment fund in an economic downturn.

“If we implement the program, there is a chance we can minimize some of the employment job loss in the state,” he said. That’s because people might otherwise lose their jobs and end up on long-term unemployment. Work share is meant to provide temporary relief – and pay only a partial benefit.

Tom Easterday, executive vice president of Subaru of Indiana, told the committee that a work-share program could also help the state retain skilled workers. Too often, he said, workers take jobs out of state after a layoff and might never return to Indiana. Then, when companies are ready to ramp production back up, they spend years training new workers to do the jobs.

Easterday, who is chairman of the Indiana Automotive Council, said work-share would allow those workers to retain most of their salaries and maintain a connection to a company. It would also give companies more consistency in their workforces and allow them to increase production more quickly.

“To retain those skills is very important for the state of Indiana,” he said.

But Richardson said it’s not a problem that skilled workers find other jobs after a layoff. He said overall wages rise when workers are able to gain skills and then take them to another position and the state shouldn’t step in to prevent those moves.

“That’s the economy at work,” Richardson said. “That’s what is supposed to happen.”

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  • Research
    Historically high long-term unemployment, unprecedented labor market slack and the loss of human capital should not be accepted as "the economy at work [and] what is supposed to happen" and is certainly not raising wages in Indiana. See Chicago Fed Reserve: goo.gl/IJ4JhQ Also, here's our research on Work Sharing and our support testimony at yesterday's hearing: goo.gl/NhC9W4
  • Endorsed by all major stakeholders
    It's not often in Indiana that people from both major political parties and from both labor and business groups come together to endorse a proposal. I really think this is going to help create a more flexible labor force, which is what businesses claim to need, while also reducing outright layoffs, and mitigating the impact of salary/wage reductions, both of which have been highlighted as important issues affecting Hoosier workers. Like many other public policies, I'm sure that this one will, over time, be tweaked and changed as needed to meet Indiana's needs. But when you have such broad agreement, why not give this a try?
  • Kudos to Ben
    I could not agree more with Ben's statement. Every time I look at my unemployment insurance rate, "irritated" hardly describes my sentiment. We are talking about a surplus of funds, and possibly refunding that, why, so we can say we did it and get a notch in our political belt? This is real money, to real companies, large and small. The impact is felt across the board; in the spending of the company, the hiring (or lack thereof due to higher insurance costs), as well as in the personal spending of the owners of a smaller company.
  • Federal Debt
    Let's talk about that debt the State owes the Feds. Indiana businesses are being charged the interest for the debt, since Indiana allegedly can't pay the interest. It has quadrupled our Federal Unemployment Tax. Since Pence claims he has 2 billion to spare, can't the State repay the loan or at least pay their own interest?
    • Trapping workers
      Sounds like a ploy to benefit companies not workers. Keep the worker as a subsidized employee part time with unemployment benefits to save the company money and less accountability to manage their business to profitability.

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