Sharing and saving versus work-week shaving

by SixFigureStart | June 17, 2009

  • My Vault
The New York Times this week, in separate articles, spotlighted two corporate tactics for avoiding (or forestalling) layoffs. Furloughs -- think of them as unpaid vacation days -- have been adopted by a variety of companies, while work-sharing is gaining popularity in a limited number of states. But the paper reports that only one of these seems to have the power to put the worker at relative ease.

The latter option is a somewhat unpublicized way for firms to offset the financial burden of worker payrolls. Evidently, seventeen states offer a work share program, wherein state governments contribute a percentage of would-be unemployment benefits to staffers whose work hours -- and, by extension, salaries -- are cut. (Oregon, Connecticut and New York are among those that have a plan on the books.) Specifics vary from state to state -- generally, health benefits aren't touched -- and the Times asserts that, "with savings from reduced income taxes and from commuting fewer days, some workers nearly break even." The only problem is that the plan isn't widely known, even though the number of company and individual participants grew enormously since last year. In one state (Massachusetts), almost 460 firms (and their 10,000 workers) are enjoying these benefits, where only 31 companies did in 2007; in Washington state, almost 40,000 employees are involved in work-sharing. (This sounds similar to how the EU and several nations on the continent have tempered rising unemployment there.) With work-sharing, companies can hold onto highly-trained staff members, and to some degree, maintain worker morale.

On the other hand, furloughs seem to generate a lot of worker anxiety, especially when companies fail to install a formal set of governing rules. Some employees in furlough-stricken firms are under the impression that they're actually supposed to work for free through their enforced vacations, or that they can do so while others stay home in order to impress the boss and/or "save" their spots in case layoffs are deemed necessary at some point. Often, no one in charge wants to dispel these notions. Others work out of guilt, not wanting coworkers to have to shoulder some of their responsibilities, even temporarily. And at the California Department of Motor Vehicles (in a state that has a couple of mandated furlough days each month for many state workers), some staffers have been denied their days off because the department is just too busy. The Times quoted a University of Illinois professor versed in labor relations, who said "A worker’s emotional reaction to a furlough takes control of rational thought” (i.e. the idea that at least he still has a job).

Furloughs are not going away, and implementation may even increase as the employment crisis drags on (and on). More organizations should look into work sharing programs, but it's not clear how to spread the word, or how to get the other 33 states to adopt it. Regardless, either option is preferable to a job reduction…right?

We'd love to hear from both camps. Those of you who have been furloughed, and those who are currently collecting from states' unemployment coffers without actually being on unemployment -- how do you think your company (or local/state/federal bureau) has handled the situation? What could it have done much, much better?

--Posted by Todd Obolsky, Vault Staff Writer

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