Finally! A good unemployment proposal
Most of what we’ve been writing about Unemployment Insurance in the past 18 months has centered around misguided proposals or legislative inaction that have made it more difficult for laid-off workers to receive benefits as they look for work.
Today, however, there is some good news. The Senate Reforms, Restructuring and Reinventing Committee passed out a bill introduced by Sen. Bruce Caswell (R-Hillsdale) that would institute a work-sharing program for Unemployment Insurance. Similar bills were introduced several months ago by Sen. Vincent Gregory and Rep. Jim Ananich, who are both Democrats and support the Caswell bill. Work sharing was part of Gov. Rick Snyder’s agenda for workforce development in Michigan, and the League published an op-ed in several Michigan newspapers urging Michigan to adopt the program.
It’s not hard to see why the idea enjoys support across the political spectrum.
Work sharing, also called short-time compensation, provides an alternative to layoffs for businesses that need to reduce their payroll hours due to reduced demand for their products or services. It allows qualifying employers to reduce the payroll hours of a large pool of employees by 20-40% rather than eliminating some workers altogether. Each employee would be eligible for a proportional percentage of the UI benefits he or she would receive if laid off entirely.
Workers benefit from work sharing because they will have less disruption in their household income than if they were laid off. While UI benefits never replace 100% of lost wages, the wage loss is lower for workers with reduced payroll hours than for those with no payroll hours at all. For some workers, it will mean not getting laid off. For others, it will mean “sharing the sacrifice” through a reduced income so that their coworkers will not be laid off. Workers also benefit because it means they can keep health insurance and other benefits, an important part of minimizing the disruptions to their household economic security.
Employers benefit from work sharing because it enables them to keep their skilled workers rather than having to search for, hire and train new workers when business improves. This reduces unpredictability, administrative costs and training costs. It can also help maintain positive morale in the workplace, as workers are likely to prefer spreading the sacrifice around rather than fearing the loss of their jobs entirely.
We’ll keep you posted on how this proposal fares in the legislative process.
– Peter Ruark




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