Hoosiers may be sur-prised to learn that in 2012, the 112th Congress agreed on at least one thing: The Middle Class Tax Relief and Job Creation Act of 2012, which included provisions to expand work-sharing policies in the U.S. This provision saved a whopping half-million jobs during the recession — with fewer than half of all states utilizing it during that time period.
Indiana’s delegates supporting the act included: Sen. Richard Lugar and Reps. Stutzman, Donnelly, Carson, Buschon, Young and now-Gov. Mike Pence. Since the act’s passage, work-sharing policies have been adopted and supported by Republican and Democratic governors (including those in Michigan and Ohio), business and labor, and conservative and progressive economists.
Now used in more than half of U.S. states, work-sharing provides employers with the option of temporarily reducing the hours and wages of all employees instead of laying off all workers.
Hoosiers may also be surprised broad bipartisan support exists in Indiana as well. Here’s why:
For workers, the program acts as the front line defense against joblessness. Workers would earn higher wages than they would under traditional unemployment, and they would retain health and retirement benefits. According to the most recent Congressional Budget Office report, “effects of the stigma and erosion of skills [for the long-term unemployed], accounted for half of a percentage point of the [current] unemployment rate, but [those effects] are not expected to begin to dissipate until after 2017.” By the way, the effects of long-term unemployment on structural factors related to the current unemployment rate are five times the effect of unemployment insurance benefit extensions, accounting for just 0.1 percent of the current rate.
For business, work-sharing offers flexibility during economic downturns. Providing a tool for business to retain a skilled workforce is why Gov. Snyder supported recent legislation in Michigan — a smart move for states interested in closing skills gaps. From the CBO report: “difficulties in matching workers and available jobs” accounted for half a percentage point of the current unemployment rate.
Finally, work-sharing has the real potential to chip away at Indiana’s Unemployment Insurance Trust Fund deficit. The program, according to our survey of states with work-sharing programs, is either cost neutral to the state’s unemployment insurance trust fund, or has produced savings. This analysis does not even take into account the federal government’s implementation and outreach grants and its reimbursement period — the latter could save the state millions.
So, why after three years’ worth of legislative efforts does the Indiana General Assembly continue to fail to protect Hoosier jobs? From the Indiana Chamber of Commerce:
“… [T]he bill was scratched from the Employment, Labor and Pensions Committee schedule by its chairman, amid opposition from the Department of Workforce Development and belief the Governor was not yet onboard with the program — despite voting for the federal work-share bill when he was in Congress.”
It’s mathematically reasonable to assume another downturn is right around the corner. With work-sharing, forward-thinking lawmakers can implement this bipartisan, cost-friendly and common sense solution immediately to, as the saying goes, start to fix the roof while the sun is (relatively) shining.
Derek Thomas is senior policy analyst for the Indiana Institute for Working Families. Contact him at email@example.com.