Career Advice Workplace

What is Work-Sharing?

By: JobGet
Jul 14, 2020 • 4 min read

What is work-sharing and how can it help save jobs 

One of the unpalatable consequences of Covid-19 pandemic is the ongoing economic downturn. The impacts of layoffs on individuals and the economy at large are terrible. People who lose their means of livelihood are bound to suffer from health problems and a wide range of economic issues. Even the companies letting go of their staff at the moment will still bear the brunt in future costs when the economy picks back up. They will have to spend valuable resources on hiring and training new staff. At the end of the day, if companies can manage to hold on to their staff during periods of economic downturns like this, it will do them and their employees a world of good. A work-sharing program can help achieve this. 

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What is Work-Sharing?

Typically, when workers lose their jobs, the United States Unemployment Insurance system helps by replacing some of their earning to keep them afloat during such tough times. But a possibly better alternative is to have the system support workers without the employers actually disengaging their services. This is the main idea behind a work-sharing program. This is a scheme that helps to save jobs during periods of economic downturn.

Reduced Hours 

With a work-sharing system, employers only have to reduce the number of hours that each employee has to work instead of terminating their employment in exchange for reduced pay. The workers affected by this will be eligible for pro-rated unemployment benefits. For instance, if John Doe works for 40 hours a week. Instead of the company laying him off due to a downturn, his work hours can be reduced to just 8 hours, and the company has to pay 20% of this regular income. Under a work-sharing program, John Doe would be eligible for part of the unemployment benefits he would have been gotten if his employment was terminated. 

Benefits for employers 

Generally, the main idea of a work-sharing program is flexibility. For employers who can no longer pay for the services of their workforce, they get to retain their staff while only paying a percentage of what they would typically pay. This effectively lowers payroll cost, which is the primary purpose of a layoff in the first place. The ultimate benefit for the employer is that they will not have to spend money to hire and train new workers when the economy eventually rebounds.

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Benefits of work-sharing for employees 

For employees under a work-sharing program, they will not have to deal with the stress of losing their livelihood entirely. A work-sharing scheme will also help them stay connected to the labor market and maintain the benefits of working, such as health insurance and their retirement benefits. 

So, how widespread are work-sharing programs in the US?

Unfortunately, only 26 US states have a work-sharing program in place. However, these states account for nearly 70% of the workforce. But this program has seen little use even in the current recession. The CARES Act encourages states to make use of work-sharing programs to manage unemployment. The government also promised to reimburse the cost of benefits paid in states that use a work-sharing program.

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