Work sharing gains support in Indiana Legislature as alternative to layoffs

During a hearing Tuesday, lobbyists for the Indiana Chamber of Commerce and AFL-CIO urged the concept as a way to keep skilled workers on the job and mitigate the damage of an economic downturn.

At least 27 states have implemented similar programs, known as “work sharing,” which are credited for reducing the number of workers unemployed during the 2008 recession.

Republican Gov. Mike Pence opposes the idea. But the legislative study committee’s conservative chairman, Rep. Dave Ober, R- Albion, said he’ll push for a bill next session.

“Obviously this would be valuable if there were to be another economic downtown,” said Ober, whose northeast Indiana district was hit hard by the last recession. “So if we’re going to pursue a program like this, the earlier the better, as far as passing it and getting it into law.”

Democrats and Republicans on the committee echoed the sentiment, saying they are convinced the Legislature can pass a bill that doesn’t burden the state’s unemployment fund.

Work-share programs allow companies that face a temporary decline in business to reduce employee hours rather than implement layoffs. Such programs allow workers to keep health and retirement benefits. State unemployment benefits make up a portion of lost wages.

During Tuesday’s hearing, Josh Richardson, who oversees unemployment insurance for the Indiana Department of Workforce Development, said the Pence administration’s objections are “philosophical.”

“Do we really want to make it cheaper and easier to reduce people’s work hours?” Richardson said.

His comments came after business and labor leaders expressed support for work sharing. Among them was Tom Easterday, senior vice president of Subaru of Indiana Automotive, which employs more than 3,600 workers.

Easterday said auto industry layoffs after car sales plunged in 2008 meant the loss of highly skilled workers who were difficult and costly to replace. He cited national statistics that only 36 percent of advanced manufacturing workers who lost jobs to the recession returned when the economy recovered.

Retaining jobs in a downturn is not only critical for workers, Easterday said, “but to retain those skills is critical to the state of Indiana.”

As a member of Congress, Pence voted two years ago for legislation that gave financial incentives to states that created or improved work-sharing programs. But, as governor, Pence threatened to veto a work-share bill filed this year. In doing so, he passed up about $2 million in federal funds that could have been used to launch the program.

During the hearing, Ed Roberts, lobbyist for the influential Indiana Manufacturers Association, spoke against work sharing. He described it as “uber-complex” in its impact on the state unemployment insurance system and spoke at length about the difficulty of implementing it.

Republican Sen. Greg Walker of Columbus, and later Democrat Rep. Chuck Mosely of Portage, cut short his argument.

“How do we not have enough brains to make this work?” Mosely said tersely.

Mike Ripley, a vice president at the Chamber of Commerce who’s been lobbying for a work-share program, countered concerns that it would negatively affect the unemployment trust fund, which is subsidized by a tax on employers and pays benefits when workers lose their jobs.

Others noted findings of a 2011 report by the Congressional Research Service that the effect of work-sharing programs on states’ unemployment insurance funds will be minimal.

Ripley also addressed concerns that work-sharing programs are only used by a small number of employers. About 1 percent of employers used the programs in states that had them during the last recession.

“Even if we save 500 to 1,000 jobs,” he said, “isn’t that better than having those people laid off?”

The committee is scheduled to meet again in early October, with the intent of developing recommended legislation, Ober said.