Worksharing—also known as short-time compensation—requires employers to create a plan to avoid laying off workers by reducing the number of hours worked by a group of employees, who would then be eligible for partial unemployment insurance (UI) benefits. This approach allows more workers to maintain connections to their employers—and benefits such as access to health insurance, seniority, or accrued leave—and can help avoid competition among multiple newly laid-off workers as they apply for new jobs. However, only half of state UI systems include an operational worksharing option.
Creating a state worksharing program requires state legislation and dedicated outreach and administration within the state’s UI system. Unfortunately, federal funding incentives—such as the CARES Act shifting the UI benefit cost of worksharing participants from states to the federal government—have been insufficient to get all states to enact programs and then keep them up and running.
During the COVID-19 pandemic, state-level UI systems have been overburdened by a huge and unexpected influx of claimants, technological capacity, and having to recode processes each time federal supplements and expansions get close to expiration. Some states simply had no staff to allocate to employer outreach or new worksharing application processing over the past year; others have allowed their programs to lapse, even though they are still nominally on the books. Table 1 catalogues state worksharing programs in all 50 U.S. states and the District of Columbia as of spring 2021.
Maintaining the federal financial incentives and support that originated in the CARES Act and mandating the creation of programs at the state level would provide millions of workers with more stability during future economic downturns. Furthermore, determining why states have not created worksharing programs or are not using them fully could yield programmatic and policy improvements. Federal technical assistance and high national standards could assist states as well.
Malkie Wall is a research associate for Economic Policy at the Center for American Progress. Lily Roberts is the managing director for Economic Policy at the Center.
The authors would like to thank Hailey Becker, former executive policy associate at the Center for American Progress, for her work on this column.