An unprecedented 10 million people applied for unemployment insurance across the country over the last two weeks with more likely to come. Many employers are responding to shutdown orders, lack of cash flow, and the crisis by laying people off. Leaders have enacted measures to encourage employers to avoid more layoffs, such as conditioning business loans on maintaining payroll and providing tax credits for payroll expenses.
There is a little known program within our existing unemployment system, however, that would enable us to avert more layoffs. Most companies and workers have not heard of it, but work sharing, also known as “short time compensation” is a way to avoid layoffs and keep people employed while reducing payroll. It was widely used during the Great Recession.
In the book “Policies to Address Poverty in America,” Melissa Kearney and Ben Harris noted that work sharing programs “played a substantial role in ameliorating the rise in unemployment in many countries” when the Great Recession hit hard. Rhode Island has made good use of work sharing, with claims accounting for a sixth of state unemployment claims in 2009. This proven approach should be getting far more attention right now.