Work-Share Programs Help Blunt Job Cuts

As News of Joblessness Disappoints Analysts, Some States Have Programs that Help Retain Workers

(CBS)  With another brutal month of job cuts, nearly 15 million Americans were out of work in June, disappointing analysts looking for green shoots.

"But right now we need more than shoots. We need branches, leaves and flowers to get the economy to look better," said Stuart Hoffman, the chief economist with the PNC financial services group.

Already a dozen states and the District of Columbia have unemployment rates about 10 percent. With Michigan, the highest at more than 14 percent, only two states - Nebraska and North Dakota - have unemployment rates lower than when the recession began, reports CBS News correspondent Anthony Mason.

Many businesses are trying desperately to hang on to workers. At Tri-Star Industries, a metal working factory in Berlin, Conn., owner Andrew Nowakowski laid off six of his 36 employees, and was going to cut more, until the state came to the rescue.

"This program allows us to maintain our full time work force intact," Nowakowski said.

Under Connecticut's "work-share" program, Nowakowski has cut back his workers to three and four-day weeks, but the state makes up half of their lost wages with unemployment funds. Seventeen other states offer similar programs.

"If I didn't have this I'd be probably trying to get on the welfare line," said James Cassidy, an employee.

But rising unemployment has retailers hurting. A Stride Rite and Payless Shoes, CEO Matthew Rubel says he doesn't expect to see a rebound for at least another year.

"There is still one of 10 people looking for a job. So you can do whatever you want with the Wall Street numbers - Main Street, they're still looking for work," Rubel said. "And until we get them back working, they are not going to go out and spend."

The picture gets worse when you add up all those people who've settled for part-time work or given up looking. The so-called underemployment rate is now a record 16.5 percent.

[KathieEM22]

I am an employer in Oregon who used this program last winter to save my two employees' jobs. I learned about it through a friend whose husband's employer uses it regularly during their slow season. But it took a lot of sleuthing to find and participate in the actual program.

These programs are life-saving for small business. I can't understand why they are not better publicized, and why all state do not offer them. Perhaps if they were more widely known and offered, more employers would be taking advantage of them to retain their valued employees.

Thanks, CBS, for this story!

[John_Merritt]

Thank You Kathie:

So many times we hear of all the banter about plans, re-creations and stimulus'; but rarely do we hear from people like yourself that has used these valuable services and can share those stories. Well done for being diligent and persevering.

[sjc_1]

There are all kinds of ways businesses and individuals can work together during these times. With computers, networks and databases, we can connect consumption with production and utilized excess capacity for the good of everyone and the country. But when it has become the social norm to just fire people and call it a layoff, we will continue to spiral downwards.

[sjc_1]

I have seen companies layoff 1000s of people, when they could have put a lot of those people on 3 or 4 day work weeks. Some people could handle the salary reduction and welcome the extra time off...but noooooo, they have to blast them ALL out the door.

[1notrub11]

Agreed.

Must be another reason, huh? I am betting the personnel "overhead" counts for something here too. Most companies estimate a minimum of 35-45% (my recollection; facts quoted would be welcomed) of a person's salary to cover those costs (insurance, 401Ks, etc.). It is also a short term view by management that does not account for close out costs, rehire costs (in the longer term), and most especially corporate memory loss. All that could be retained by your suggestion of a reduced work week.
Heck, I would take that - having been out of work for 18 months, being just 60 and seeing no good solution in sight.

[sjc_1]

They could say that you have to pay more of your insurance premium and no matching on 401s, but I think it is the HR lawyers. It is a lot easier to just fire people and claim you had to do it than to do the right thing.

[1notrub11]

Yep, agreed again. I would be happy to pay a bigger fraction of my benefits, in order to remain employed, continue to contribute and actually benefit the company I was working for.
But you are right, the right thing isn't the first thing they do, is it?

[whitemale08]

It's what happens when Bush/Paulson/Obama/Geitner bails out Goldman Sucks and JP Morgan.

How any American would believe that 'investing' trillions in bailouts of absolutely worthless derivatives and credit-default swaps would revive the economy is beyond me.

THE AMERICAN SUCKER....YOU GOTTA LOVE 'EM!

[tiktin]

Exactly. Well said.