This Strategy May Be the Secret to Avoiding Layoffs During a Recession

• Author: Chris Remington
• Posted: 2024-04-04

For most employees, the idea of a layoff is a huge concern right now. With thousands of companies on the verge of going out of business, laying off employees might seem like the only way for businesses to save on expenses. However, there might actually be a better solution.

What Is Work Sharing?

Work sharing is a practice that addresses a business' inability to pay their employees' salary. Unlike layoffs, no one is actually fired. Instead, employee hours throughout the company are reduced. As the name implies, employees essentially share jobs. Work sharing allows a company to keep all of their employees on the payroll. Keep in mind that work sharing is usually only a feasible option when employees are still paid as if they were working their full hours.

Most employees are not interested in work share if their pay is cut because they cannot afford to live on such reduced funds. So where does the extra money come from? This is where government assistance steps in. 26 states currently have permanent workshare programs. These work almost like unemployment, but it specifies that people in the program must remain employed and keep working reduced hours.

The Benefits of Using Work Sharing

Work share programs are somewhat unique in the wide level of support. Both employers and workers who try them praise work sharing. Furthermore, politicians on both sides of the aisle and economists agree that work sharing may be the most feasible option. There are a few key benefits associated with work sharing. Almost all of them are tied to the fact that employees can stay in their usual jobs.

Keeping employees on the payroll ensures that people can keep working on their regular projects. This makes it easier for employees to stay abreast of new industry standards, keep up with company protocol, and maintain relationships with their team. When the recession ends and business as usual can start up again, it is easy for both companies and their employees to return to their former tasks.

Is Work Sharing Better Than Layoffs or Loans?

Compared to other alternatives during COVID, work sharing is an excellent option. Unlike layoffs, work sharing allows people to remain employed. This makes it easier for companies to resume regular operations once the crisis is over. Work sharing is especially useful for times when no one is hiring. During the pandemic, laid off employees cannot easily find employment elsewhere, so they are usually stuck on unemployment. The cost of paying for a work share employee is typically less than the cost of the government having to pay unemployment for a laid off employee.

Many economists also believe work sharing assistance is better than government backed business loans. The problem with COVID assistance loans is that they require the business to eventually pay them back. When times are already uncertain, this is a risk many companies are uncomfortable making. Work sharing does not require the employer to take on any risk themselves because all additional costs are covered by the government.

Few Are Aware That Work Sharing Is an Option

Despite the obvious benefits and widespread availability of work sharing programs, many people are not aware that they exist. 30 million people are currently getting unemployment benefits, but only 1.5 percent of people on unemployment get their funds from a work share program. Meanwhile, other nations like Germany use work sharing as the main way of offering relief during economic downturns. Taking a look at these nations programs show that rolling out work share to a larger number of U.S. citizens could be beneficial to companies, individuals, and the government itself.

During the COVID-19 pandemic, policy makers have been pushing for an expanded work share program. Congress has begun working on coronavirus relief that includes the federal government covering states' costs for workshare programs. However, in many regions, lack of funding is not the main problem preventing work share from being used. Instead, the issue is that many businesses do not realize it is an option. By expanding awareness, it may be possible to provide this helpful program to more citizens.