The Indiana Chamber has been striving for the past few years to have the state of Indiana implement a work share program. Those efforts have inexplicably fallen on deaf ears.
Now, Washington is throwing a lifeline to states that failed to act previously. But Indiana is saying no to the program – and no to the federal funds and economic stimulus that comes with it.
What is work share? In short, a voluntary and cost-effective alternative to traditional unemployment. Instead of laying off a number of employees entirely during an economic downturn, an employer can retain those workers and instead reduce the hours of all employees or those of a particular group or department. Those employees then draw a partial unemployment compensation benefit based upon the hours reduced.
If Indiana had already adopted a work share law, the federal government – through the CARES Act – would be paying 100% of all work share benefits from now until the end of 2020. The current “lifeline” provision allows non-work-share states like Indiana to participate and receive federal funding for 50% of work share benefits for the remainder of the year.
In addition, the CARES Act appropriates $100 million for non-work-share states to pay for the costs of developing computer systems and other administrative costs of establishing a work share program. The Indiana Department of Workforce Development’s past rationale of saying it would cost too much money to implement the program (though minuscule in comparison to the economic impacts today) is rendered moot by the federal grants now available. The opposition, both previously and still today, of the Indiana Manufacturers Association is equally baffling and disappointing.
Twenty-eight states today have successful work share programs. Workers in those states are able to receive the partial unemployment benefits AND the $600 per week in extra federal support that is available through July 31. In other words, additional dollars will be circulating in the economies of those states – but not in Indiana.
This one-page document outlines the work share benefits for employees, employers and the state. It’s a win-win-win scenario. And that is before the enhanced federal benefits and implementation funding.
Instead, Indiana faces a lose-lose-lose outcome. Less money for employees in need, reduced flexibility for employers in retaining a skilled workforce and additional depletion of the state’s unemployment insurance trust fund in a time of most severe need.
Our state government leaders are showing exemplary leadership in guiding the state’s health and economic recovery from COVID-19. Choosing not to implement work share, however, is a missed opportunity to assist Hoosier employers and their employees.
Many Hoosier companies are using work share effectively for their operations in other states. It’s most unfortunate that they do not currently have that opportunity in Indiana. We hope the state reconsiders its position in the coming months, before the General Assembly reconvenes, in order to be better prepared for future economic downturns.
Pandemic Impact on the State’s Unemployment Insurance System
Indiana didn’t see near this number of unemployment insurance (UI) claims during the Great Recession.
For the week of March 28, 2020, initial UI claims peaked at 139,174. At the end of May 9, that number was 30,961for new initial claims. Total continued claims for the week ending May 9 is nearly 300,000 (294,767). In terms of actual dollars, for that same cumulative period, it equaled approximately $88,500,000 in claims the state has paid out to Hoosiers.
When the crisis began, the fund balance was about $895 million and revenue near $455 million per year. Depending on how long this crisis lasts and if the number of benefits paid continues at this rate, it will be difficult to avoid borrowing from the federal government.
Ongoing claims are the highest in five industries: manufacturing at 35%, accommodations/food service at 15%, health care/social assistance at 10%, retail trade at 9% and administration/support at 5%.
The Chamber team will continue to be very engaged on this important issue for employers and is advising the administration on the best course of action.