President Obama signed the new payroll tax cut bill into effect last night — another piece of legislation that shows the Republicans in Congress are finally backing down at least a little bit on their market fundamentalist obstructionism.
One of the best and most under-reported aspects of the bill is a provision that encourages employers to promote work-sharing as an alternative to layoffs. Such programs have worked well in Germany and other countries.
One of the nation’s best economists, Dean Baker of the Center for Economic Policy Research, has been touting the concept for years and released the following statement in praise of the new law:
For Immediate Release: February 23, 2012
Contact: Alan Barber, (202) 293-5380 x115
Washington, D.C.- Dean Baker, a co-director of the Center for Economic and Policy Research, released the following statement today applauding the signing of work-share legislation by President Obama.
“The work-sharing provisions in the Middle Class Relief and Job Creation Act of 2012 go far in keeping American workers employed. The President’s signature on this legislation means that the federal government will now provide support for work-sharing programs nation-wide, giving them more incentive to promote work-sharing.
“Work-sharing programs provide employers with an alternative to layoffs. Prior to passage of the law, unemployment insurance (UI) allowed workers to collect up to 50 percent of their prior wages in UI benefits. Under work-sharing, struggling companies can cut hours rather than workers and UI benefits paying 10 percent of their lost wages. This means that instead of a worker losing their job and receiving half their pay, they would now stay on their job after having their hours cut by 20 percent and get 90 percent of their pay.
“This benefits both employee and employer. Workers will be able to remain on their job and not lose valuable skills, getting most of their previous wages but working fewer hours. Employers will be able to keep trained workers on their work force and once demand picks up, they won’t have to hire and train new people, they just increase hours for the existing staff.
“Introduced in Congress by Senator Jack Reed (D-RI) and Representative Rosa DeLauro (D-CT), work-sharing enjoys a range of support on both sides of the aisle and has already been successful in several states in the United States as well as Germany, where the unemployment rate is currently lower than its pre-recession level.
“At the moment, the take-up rate for work-sharing programs is low. However, the new provisions will give states more incentive to promote work sharing as an alternative to layoffs. With 2 million workers being laid off each month, if work-sharing could reduce this number by 10 percent, it would generate the equivalent of 2.4 million new jobs a year. The signing of this law could make a difference in the lives of millions of workers and their families.”