Related story: Across Maryland, technology transforming how offices work
Maryland could save almost $36 million per year in unemployment insurance costs by federally financing its work-sharing program, according to a recent study.
The study by researchers at the Center for Economic and Policy Research in Washington, D.C., states that all 50 states and Washington, D.C., combined could save as much as $1.7 billion annually.
Work sharing, which has operated in Maryland since 1984 and is available in about 23 other states and the District, allows employers to avoid layoffs by instead reducing employees’ hours. Employees remain employed and receive some compensation for the time off through state unemployment insurance funds, while employers avoid having to train new workers when they need to hire them back.
The Middle Class Relief and Job Creation Act, signed into law by President Barack Obama in February, includes provisions that would allow the federal government to pay for states’ unemployment benefits for those in work-share programs.
The law allows the federal government to cover 100 percent of work-sharing benefits for up to three years in states that already have work-sharing programs, including Maryland and Pennsylvania, and Washington, D.C. In states that don’t have such programs, such as Virginia and West Virginia, the federal government would cover 50 percent of benefits for up to two years if those states agree to provide work sharing.
Researchers Nicole Woo and Dean Baker based their savings projections in the study on the percentage of work-sharing participation in Rhode Island, which has embraced the program more than other states.
“If states were to take advantage of the federal financing for work sharing in the new law, it would be reasonable to expect that they could reach approximately the same level of participation as Rhode Island did in 2009,” Woo and Baker said in the report.
The state labor department currently is undertaking a comprehensive review of the federal application process to determine the appropriate next steps, said spokeswoman Summar Goodman.
The average number of work-share claims nationally has dropped to 24,452 in the week ending May 26 from 37,249 a year ago, according to federal labor figures.
This week, the U.S. Department of Labor released details on how states can begin receiving federal reimbursement of payments made by short-term compensation programs such as work-sharing. Besides providing reimbursement funds, the federal government has about $100 million in grants to administer a work-sharing program.
Awareness of work sharing among employers is lacking even in states with longtime programs, Woo and Baker said.
“With millions of workers still being laid off every month, the work-sharing provisions could make an important and positive difference in the lives of millions of workers, employers, their families and communities,” they said. “These provisions mean states can also improve their finances by promoting work sharing.”