By Katharine G. Abraham and Susan N. Houseman
The COVID-19 outbreak is causing massive disruption to the U.S. economy, with one-fifth of workers already reporting losing hours or work because of the pandemic. In such situations, layoffs are often seen as inevitable. But, unless a business has been forced to close, there’s a way to keep workers on the payroll and ease the pain of a downturn. It’s called “work-sharing,” and 26 states covering about 70 percent of the U.S. workforce offer a work-sharing option in their unemployment insurance system.
Under a work-sharing plan, employers cut employees’ hours instead of laying off workers, while employees on reduced hours receive pro-rated unemployment benefits. Businesses benefit by retaining valued employees and avoiding recruitment and training costs when economic conditions return to normal. Workers benefit by retaining most of their income and access to health insurance.
Work-sharing is a crisis-mitigation tool we already have in our arsenal to fight this pandemic’s economic fallout. State and federal officials need to take steps now to ramp up its use: States with a shared-work option should get the word out to employers about the program, those without one should move quickly to adopt it, and the federal government should subsidize states’ shared-work programs during the COVID-19 crisis.
We detail what states and the federal government should do now to ensure that employers can and will implement work-sharing in a Politico opinion piece "The Smart Way to Save Jobs in the Time of Coronavirus."
Abraham is an economist at the University of Maryland and served as a Member of President Obama’s Council of Economic Advisers. Houseman is Vice-President and Director of Research at the Upjohn Institute for Employment Research.
Other research on work-sharing
- Evidence that work-sharing could have saved significant numbers of jobs during the Great Recession
- Research showing that even modest expenditures can significantly raise employer awareness and use of work-sharing
More Upjohn Institute COVID-19 responses
- "An Unemployment Insurance COVID-19 Crisis Response" by Stephen A. Wandner and Christopher J. O'Leary
- "Preserving Jobs Despite the Coronavirus: Encouraging 'Labor Hoarding'" by Timothy J. Bartik
- "Coronavirus and the Economy: Repurposing Production, Helping the Needy, Saving Businesses, and Encouraging Job Preservation" by Timothy J. Bartik and Brad Hershbein
- "Housing policy is crucial to stem the coronavirus fallout" by Lee Adams, Brian Asquith and Evan Mast.
- "Disaster Unemployment Assistance would help gig, contract, self-employed workers affected by COVID-19" by Stephen A. Woodbury
- "What is the likely impact of proposed COVID-19 stimulus payments?" by Marta Lachowska
- Stimulus steps the US should take to reduce regional economic damages from the COVID-19 recession, by Timothy J. Bartik, Brad Hershbein, Mark Muro and Bryan A. Stuart (Brookings)