Roundtable: Melding Hiring Incentives and Work Sharing: Addressing Unemployment by Hiring At Reduced Working Hours
(Employment & Training)

Saturday, November 10, 2012: 1:45 PM-3:15 PM
Pratt A (Sheraton Baltimore City Center Hotel)

*Names in bold indicate Presenter

Organizers:  Susan N. Labin, Consultant
Speakers:  Dean Baker, Center for Economic and Policy Research, Randall Eberts, W.E. Upjohn Institute for Employment Research and Carolyn Heinrich, University of Texas at Austin
Moderators:  Susan N. Labin, Consultant

Hiring incentives and work sharing are in the recent jobs legislation as components of solving the continued unemployment problem. Tax credits are being used as incentives for hiring the currently unemployed. Work sharing or short-time compensation operates in the unemployment benefit system and reduces working hours of those currently employed in order to avoid lay-offs. This Roundtable would explore the melding of these two mechanisms by creating incentives for hiring at reduced working hours and thus, address long-term as well as short-term unemployment. Populations that could be targeted will be discussed in terms of the need for hiring incentives, advantages and cost-savings implications, suggestions and challenges for policy mechanisms, and next steps needed to propel such solutions forward. Work sharing is an international term that refers to reducing working hours to avoid lay-offs. It has been used in Europe, South America, and Asia as well as in the US. In the US nearly 20 states have been using work sharing and the new jobs legislation provides federal funding to support states. Both international and domestic work sharing or short-term compensation is intended for cyclical unemployment and provides unemployment benefits to supplement wages when hours are reduced to keep more workers employed. This Roundtable will take the core of the work-sharing concept-working fewer hours so more people are employed, expand and apply it to the unemployed and explore employer incentives outside the unemployment benefit system. One rationale is to address longer-term structural unemployment as well as extended cyclical unemployment. The impact on unemployment could be significant, e.g. hiring at 32-hour weeks rather than 40-hour weeks could reduce unemployment by 25%. Some possible advantages will be identified for a number of target populations including the need for targeting and the kinds of cost-savings that may accrue. For example, those over 50 have been hard hit with the Great Recession and once they lose their jobs, they are having extended periods of unemployment. Hiring this population at reduced hours will allow it to stay in the work force longer, postpone drawing on social security and Medicare, and will likely show health and well-being outcomes. Similarly, the population with limited labor market attachment or longer-term unemployment, such as youth with less education could be targeted. For this population, employer incentives for hiring could be tied to training programs and the reduced working hours would allow time for concurrent job training. Other potential target populations could include those unemployed over 180 days, parents of young children, and the disabled. Challenges and the structuring of incentives would be explored. For example, obstacles to higher take-up rates include the limitations on employer flexibility. Usually employers have to designate specific workers who will have their workweek shortened and for how long. Taking into account some of the solutions, advantages, and challenges that will be addressed, the Roundtable will also discuss next steps for moving such policy solutions forward.

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