Friday, May 29, 2009

Save money and people with Shared Work

From the 01 June 2009 Greater Niagara Newspapers

By Bob Confer

Throughout this recession employers have been looking for any way possible to cut costs and stay afloat as their sales tank and their profits go with them. Typically, the first thing to go is the workforce. We’ve seen this in plenty with the unemployment rate climbing near 9 percent nationally and 11 percent locally.

Cutting a company’s employment is a double-edged sword. The business can save plenty of money by doing so, but it ends up creating a great deal of problems in that company, our economy, and our homes.

Any time that a company lets people go during a slow period – be it a recession or a slowdown specific to that business or industry – the short term savings can easily evaporate over the long term. When things pick back up the company will have to replenish its troops. If their one-time employees, unable to hold out on the unemployment rolls any longer, went on to find new jobs, which is the case more often than not, the company would be forced to replace them with new workers. That is a costly endeavor because the managers will have to weed through resumes, conduct interviews, train new hires, and, in many cases, hire and fire until they’ve found the right people. Those efforts can quickly add up to the thousands of dollars in direct and indirect costs.

Singularly, a lay-off can hurt a company in the long run. Collectively, it hurts all of us immediately. Only a few months into an economic downturn it seems that a vast majority of companies start to lay-off their workers. When you have hundreds of thousands of businesses doing this, from small mom-and-pops to gigantic corporations, the ranks of the unemployed rise dramatically. Since the start of the recession over 5.7 million people have become jobless and no longer have the income available to spend on discretionary goods, leisure, and, most unfortunately, the basic needs of food, clothing, and housing. In essence, the lay-offs may, at the micro level, help save the day, but at the macro level they remove active participants from the marketplace which in turn sets off a domino effect that only prolongs the downturn.

But, lay-offs are more than dollars and cents. There’s a human side to them as well. Every individual who is let go was a breadwinner for his or her family. He helped put a roof over their heads. She helped put food on the table. He put away for their retirement. She saved for their kids’ college educations. You take away their income, even if it’s just one out of a two-income household, and that family is hurt. Their quality of life is lessened and their plans for the future become questionable. It’s stressful and painful, something you wouldn’t want to put your worst enemy through. Many employers understand this and letting someone go remains at the top of the list of the things that affect them the most in the workings of their job.

So, how does a businessperson go about beating the recession and saving labor expenses without assuming the countless negatives that come with casting-away a valued employee?

I strongly suggest that before they pull the termination trigger they first give New York’s Shared Work Program a try. My company participated in the program for 5 months that began in the Fall. I’m glad I did so. And, so are my coworkers. We all won.

This inventive program allows a business to cut back on its employees’ hours and wages by 20 to 60 percent (typically 1 to 3 workdays). The affected worker then collects his paycheck and receives an unemployment check from the State for the days he did not work (but normally would have) during that week. The company can be in the Shared Work program for a period of 53 weeks. Normally, during the 53 week period an employee can collect up to 20 weeks (5 months) of Shared Work benefits. Thanks to the Federal Extended Benefits Plan workers are now eligible for an extra 20 weeks in that period, meaning that a cost-conscious company could stay leaner and meaner for ten months out of the year.

The primary goal of the program is that it exists in lieu of an equal percentage of full layoffs. Therefore, rather than eliminating 20 percent of the workforce the employer instead cuts back on everyone’s workweek by that same percentage. By doing so, the company saves money and everyone remains employed. With only a slight and temporary decrease in income they all remain active in our economy and their households remain relatively vibrant.

The State’s tagline for Shared Work is “the layoff alternative”. And, what a great alternative it is…it saves money and people!

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