Program helps employers trim workers' hours
State picks up some of reduced paychecks for part-timers
In the continued recession, more Maryland businesses are turning to a program to avoid layoffs by reducing full-time employees' hours.
The program, called work sharing, has operated in Maryland since 1984 and is available in at least 17 other states. Employees see their hours reduced by at least 10 percent but receive some compensation for the time off through state unemployment insurance funds.
Advantages for employers include the ability to maintain high productivity, quality and morale, as the trained workforce remains in place and employees avoid the insecurity of layoffs, state labor officials say.
"Workers appreciate that employers are trying to do what they can to keep them employed," said Thomas Wendel, assistant secretary for unemployment insurance with the Department of Labor Licensing and Regulation.
He estimated that the number of businesses signing up for work sharing so far this year has at least doubled from a year ago, while inquiries have risen more than five times. Employees in the program retain their benefits in most cases, although certain benefits, such as leave, may be reduced, Wendel said.
Companies using the program run the gamut from manufacturing to architectural and graphic design firms, he said. "One segment we don't see a lot of is service industries," Wendel said. "They tend to use more temporary-help firms."
A General Motors plant in White Marsh that makes transmissions for pickup trucks had planned to close for the last week in February due to declining demand. But demand picked up in recent weeks, and the facility stayed opened this week.
Such a complete plant shutdown on a temporary basis would not qualify for the work-sharing program, Wendel said. Employee hours can be reduced by only up to 50 percent, although that level may be waived in some cases.
Wendel said he spends a good amount of time visiting employers and telling them about work sharing. Ellen Valentino, state director of the Maryland chapter of the National Federation of Independent Business, said she had not heard about the program but planned to look into it.
"It sounds like it could be of interest to our members," she said.
Layoffs have escalated in recent months in the current recession. Companies in Maryland filed notice with the state for 803 layoffs in January, up 32.5 percent from a year ago.
Even so, initial unemployment claims in Maryland have dropped in recent weeks, although they are still significantly higher than a year ago, according to U.S. Department of Labor figures. In the week ending Feb. 14, the number of unadjusted initial unemployment claims in Maryland was about 7,600, down 13 percent from the previous week and 36.5 percent from the past year's weekly high of some 12,000 in mid-January.
However, the Feb. 14 state figure was still up 61 percent from the same week a year ago. Nationally, initial adjusted unemployment claims continued to increase in recent weeks, including a rise of more than 70 percent from a year ago in the most recent week.
While work sharing began in California in 1978, the concept has not caught on as readily in this country as in some European nations, according to a study published last year in Oxford University Press' Publius journal. Work-sharing benefits in the U.S. have never constituted as much as 2 percent of the yearly total unemployment benefits paid, lower than in Europe.
Other states besides Maryland have reported recent increased workloads in the program. In January, work-sharing unemployment claims in Oregon were up 433 percent compared with a year earlier, according to a published report. Oregon started its program in 1982.
Part-time jobless benefits splits business groups
Some business groups are on opposite sides of a proposal by Gov. Martin O'Malley (D) to extend unemployment benefits to people who work part-time at least 15 hours a week. A similar bill failed last year.
The proposal can "actually serve the economy by putting money back into the economy," Maryland Chamber of Commerce officials say. But the Maryland chapter of the National Federation of Independent Business opposes the measure.
Valentino said the timing, with the recession, was not right. She also was concerned about the bill's emergency status and its definition of part-timers as working only 15 hours. "Normally, the standard for part-time work is 20 hours," she said.
If the bill is passed, expenditures from the state unemployment insurance trust fund would increase by $5.7 million in fiscal 2009, according to a report by the state Department of Legislative Services. The unemployment insurance program is financed through employer taxes.
The bill received a favorable report from the Senate Finance Committee after a recent hearing. A House committee held a hearing on similar legislation this week.
As an emergency bill, it would take effect the day it is signed into law.
Maryland work share
Requirements include the following:
At least two employees who would have been affected by a layoff must come from an affected department or unit.
Employees must have been on the payroll continuously for at least three months before a plan is submitted and must not already be part-time employees.
Employers must reduce hours by at least 10 percent and by no more than 50 percent. The reduction may be waived in some cases.
Employees may receive work-sharing benefits for up to 26 weeks in a benefit year.
Information: 410-767-2671 or www.dllr.state.md.us/employment/worksharing.