By Katharine G. Abraham and Susan N. Houseman
April 17, 2010
The COVID-19 outbreak is causing massive disruption to the U.S. economy, with more than 22 million workers filing unemployment insurance claims since mid-March. 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. The CARES Act, passed March 27, provides full federal funding for states that already have work-sharing programs and half federal funding for states that adopt temporary work-sharing programs.
State and federal officials need to take steps now to ramp up its use. Presumptive Democratic presidential nominee Joe Biden, citing our research, called for expanding work-sharing programs to all 50 states. States with a shared-work option should get the word out to employers about the program and those without one should move quickly to adopt it.
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 and resources on work-sharing
- Abraham and Houseman opinion piece "Since Work is Rare, It's Time to Share," Wall Street Journal, May 11, 2020
- "Let’s Provide Unemployment Benefits Without Layoffs," Bloomberg Opinion, May 7, 2020, by Michael R. Strain
- Abraham and Houseman opinion piece "The Smart Way to Save Jobs in the Time of Coronavirus" in Politico
- Evidence that work-sharing could have saved significant numbers of jobs during the Great Recession
- Research showing that modest expenditures can significantly raise employer awareness and use of work-sharing
- Streamlining Administration of Short-Time Compensation: What’s Right with Kansas?
- An Employment Research newsletter article from October 2016 with background on the program.
- The Upjohn Institute's portfolio of research on work sharing dating to 1981.