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Work-Sharing: A Powerful Tool to Save Jobs in Virginia

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From the Commonwealth Institute for Fiscal Analysis: Work-Sharing: A Powerful Tool to Save Jobs in Virginia Confronting an economic downturn in the wake of COVID-19, Gov....

Work Sharing: An Idea Whose Time Has Come

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We've all watched the unemployment rate stay far too high for far too long in the past couple of years. Since there seems to be no ability in Washington to "think outside the box" seeking solutions in this Great Recession we're in, perhaps we could learn some things from other nations, and, indeed, from 17 of our own states.

Economists Dean Baker (co-founder of the Center for Economic and Policy Research) and Kevin Hassett(American Enterprise Institute) have explained one idea that is working in Europe a darn sight better than the unemployment payments we use in this country to alleviate the pain of being laid off. It's called "work sharing."

In an opinion piece in the Los Angeles Times, Baker and Hassett, coming from both the left and the right, endorsed the system in place in Germany, where work sharing has kept the unemployment rate far below ours. Let's say a business needs to to cut back on employment because of reduced demand. Rather than laying off 10 workers, it might instead reduce the hours of 50 employees by 20%. The German government would then provide a tax credit that made up for most of the potential lost pay, with the company absorbing a bit more of the lost pay. So, those 50 workers might have a pay reduction of 4%, but the bonus would be a four-day work week.

That's a win-win for everyone. The government shells out less money than in our unemployment insurance system, the corporation takes a small hit, as does the worker, but the worker gets a sweet reward - 8 hours of  free time, plus the ability to keep benefits, no small thing in our economy where health insurance is  so closely tied to employment.

Already in the U.S., 17 states have some form of a work sharing program, but only a tiny fraction of those eligible to use it are even aware that such a program exists. Connecticut, Washington State, Massachusetts, and Oregon are among states with work-share program, even though few businesses in them have taken advantage of it.