Ohio businesses would able to prevent layoffs and instead temporarily reduce their employees’ hours while letting them keep benefits and collect unemployment, under a bill proposed in the House.
The program — SharedWork Ohio — is similar to initiatives in 25 other states, including two nearby: Michigan passed its version of the program last June, and Pennsylvania created a SharedWork program last March.
SharedWork would allow Ohio employers looking to cut costs through layoffs to instead temporarily reduce all employees’ hours by 10 to 50 percent. Meanwhile, employees could collect up to half of their missing wages through unemployment compensation until the company decides to ramp up production again.
Proponents say SharedWork would allow workers who would otherwise be laid off to keep their jobs and health benefits, while saving companies the time and money they would use re-training new workers. Companies would also save money on the higher unemployment taxes that accompany layoffs.
“The bittersweet side of this will be it will be most successful when our economy is doing the poorest,” said State Rep. Mike Duffey, R-Worthington, one of the bill’s sponsors. “But that’s the point, right? It’s supposed to soften the blow so that husbands and wives don’t have to go home and say ‘Honey, I lost my job today.’”
During good times and bad alike, SharedWork would help smooth out cyclical layoffs in industries — particularly manufacturing — that traditionally ramp up and scale back production to match market demand, Duffey said.
How would it work?
One example of how SharedWork Ohio would work is that an employer considering laying off 20 percent of the workforce could instead opt to cut an eight-hour Friday shift out of the 40-hour work week.
Impacted employees would keep their full benefits such as health care, while collecting the equivalent of four hours of pay on Friday through the unemployment system.
“It’s kind of a no-brainer,” Duffey said.
A largely identical bill, also sponsored by Duffey, cleared the Ohio House last year by a 81-15 vote with bipartisan support. But the measure stalled while legislators awaited guidance from the federal government over how to implement the program.
“It’s a rare labor issue that’s good for both employers and for employees, as well as the state of Ohio,” said Ohio Sen. Bob Peterson, R-Fayette County, one of the two sponsors of the senate version of SharedWork.
Initial start-up costs of the program — about $2 million in computer programming costs to allow the state to administrater SharedWork and payments to workers whose hours are reduced — would be funded by the federal government until 2015. After that, the program would be funded by the existing state unemployment compensation system.
The SharedWork bill is unusual in that although it has Republican sponsors, it originated with Policy Matters Ohio, a liberal-leaning public policy group that advocates for workers issues.
“This is a proven layoff aversion tool,” said Hannah Halbert, legislative liaison for the Policy Matters. “We know that it works in other states to help employers manage these downturns… It really helps stabilize the workforce for a lot of employers and for a lot of employees.”
The initiative also has the support of several major business groups in Ohio. Officials with Kenworth Truck Company, the largest employer in Ross County (Chillicothe), have lent their support to SharedWork Ohio.
“I think it’s a great way to allow that flexibility, and not just force an employer to lay employees off,” said Chris Ferruso, Ohio legislative director for the National Federation of Independent Businesses.
“It’s another tool to help businesses weather an economic downturn and help their workers remain employed,” said Anthony Seegers, director of labor and human resources policty for the Ohio Chamber of Commerce.
An unanswered question is how many employees could be affected by SharedWork. In 2009, 11,000 employees in New York participated in SharedWork, while in Texas in 2010, about 24,600 employees did.
Duffey said factors that will dictate how widely-used SharedWork will be in Ohio include how willing employers are to adopt a new idea, and how effectively state officials and business groups market the program’s benefits.
The highwater mark for SharedWork’s popularity is in Rhode Island, where 16 percent of businesses participated in the program. That included companies from a wide range of sectors including banks, car dealerships and manufacturers.
Duffey credits the program’s success in Rhode Island to aggressive promotion and publicity in state newspapers.
“Not everyone’s going to choose to do it, and it’s not going to be any more difficult to do layoffs than normal … but we want to give another option to folks,” Duffey said.