For Immediate Release
Statement In Support of Passage of Work-Share Legislation
WASHINGTON - Dean Baker, a co-director of the Center for Economic and Policy Research, released the following statement today applauding the signing of work-share legislation by President Obama.
“The work-sharing provisions in the Middle Class Relief and Job Creation Act of 2012 go far in keeping American workers employed. The President’s signature on this legislation means that the federal government will now provide support for work-sharing programs nation-wide, giving them more incentive to promote work-sharing.
“Work-sharing programs provide employers with an alternative to layoffs. Prior to passage of the law, unemployment insurance (UI) allowed workers to collect up to 50 percent of their prior wages in UI benefits. Under work-sharing, struggling companies can cut back hours rather than workers and UI benefits would pay 10 percent of their lost wages. This means that instead of a worker losing their job and receiving half their pay, they would now stay on their job after having their hours cut by 20 percent and get 90 percent of their pay.
“This benefits both employee and employer. Workers will be able to remain on their job and not lose valuable skills, getting most of their previous wages but working fewer hours. Employers will be able to keep trained workers on their work force and once demand picks up, they won’t have to hire and train new people, they just increase hours for the existing staff.
“Introduced in Congress in bills by Senator Jack Reed (D-RI) and Representative Rosa DeLauro (D-CT), work-sharing enjoys a range of support on both sides of the aisle and has already been successful in several states in the United States as well as in Germany, where the unemployment rate is currently lower than its pre-recession level.
“At the moment, the take-up rate for work sharing programs is low. However, the new provisions will give states more incentive to promote work sharing as an alternative to layoffs. Two million workers are laid off each month. If work-sharing reduces this number by ten percent, it would generate the equivalent of 2.4 million new jobs a year. The signing of this law could make a difference in the lives of millions of workers and their families.”
The Center for Economic and Policy Research (CEPR) was established in 1999 to promote democratic debate on the most important economic and social issues that affect people's lives. In order for citizens to effectively exercise their voices in a democracy, they should be informed about the problems and choices that they face. CEPR is committed to presenting issues in an accurate and understandable manner, so that the public is better prepared to choose among the various policy options.