Let’s Help WV Businesses Avoid Costly Layoffs
The State Journal – Every business faces ups and downs, and how a business reacts and adapts to a downturn plays a large part in its success. Read
During tough economic times, businesses often face difficult decisions and can be forced to lay off valuable, trained employees in order to survive. Not only do businesses lose their skilled employees and the time and resources spent training them, but workers lose their jobs, families lose their incomes and communities lose tax revenue.
Under West Virginia’s current unemployment system, businesses do not have the flexibility to arrange alternatives to layoffs. Instead, the state’s unemployment system incentivizes layoffs, because layoffs are the only cost-saving option our unemployment system supports.
But across the country, more and more states are modifying their unemployment systems to provide employers greater flexibility when facing possible layoffs, through a program called work sharing. The way work sharing works is simple: When facing a temporary downturn, a business can reduce its workers’ hours, while the workers collect partial unemployment benefits based on the reduced hours. This allows the business to temporarily cut costs without resorting to layoffs.
The benefits of work sharing are easy to see. Employees get to keep their jobs and benefits, and avoid any risk of long-term unemployment. Businesses get to save money while keeping their work force intact. And when economic times are better, the business is fully staffed and ready to go, with no need for rehires and retraining.
As for costs, work sharing is cost-neutral for both the state and for businesses.
It’s true that work sharing benefits are paid out of state unemployment trust funds, and are charged back to the business when calculating their experience rating. But absent work sharing, those same benefits would be paid out and charged back due to layoffs. The only difference is, under work sharing, nobody loses his or her job.
West Virginia’s current system allows for partial unemployment benefits following a reduction in hours under limited circumstances. But the requirements for partial unemployment are rigid, usually requiring a reduction in hours of more than 50 percent. Work sharing not only allows for more employees to qualify, it puts the decision about how to reduce hours in the hands of the employer.
The best part about work sharing is that it is completely voluntary. Work sharing is only used by businesses that apply for it. Businesses still have the right to enact layoffs, but with work sharing they have an alternative that will preserve their trained and knowledgeable workforce, while at the same time saving jobs, at a cost no greater than conventional layoffs.
Work sharing is a great example of businesses and their employees working together for their mutual benefit.
The policy has enjoyed broad bipartisan support for more than 30 years, and now 24 states give their businesses the option to use work sharing. Most recently, Republicans and Democrats, and labor and business groups have worked together to support work sharing in neighboring Ohio.
Tony Seegers, director of labor and human resources policy for the Ohio Chamber of Commerce, called work sharing, “a useful tool for employers and employees to weather difficult economic situations,” while the Ohio Manufacturer’s Association said work sharing is, “a win/win/win for employers, employees and communities.” And after work sharing legislation passed with strong bipartisan support in the Ohio House of Representatives, Speaker of the House Representative William Batchelder said work sharing is, “something that should be celebrated at a time when differing viewpoints and inability to compromise seem to be at their highest levels.”
Right now, federal incentives have made it the ideal time to adopt work sharing. These incentives include grants for startup, implementation and outreach, as well as the temporary financing of benefits.
Leaders in West Virginia, both in the Legislature and in the business community, should follow suit with their colleagues in other states and come together to support a policy that is “based in the spirit of cooperation” and grant West Virginia businesses the opportunity to use work sharing to keep their workers on the job.