Moneybox

How People Can Keep Their Jobs and Still Get Those $600 Unemployment Benefits

Pedestrians walk past the Los Angeles Times office building.
Good newspaper, labor policy innovators. Frederic J. Brown/Getty Images

On Friday, the Los Angeles Times and its newsroom union announced that they had reached a deal to avoid layoffs at the paper, which like other media outlets has been walloped financially by the collapse of advertising during the coronavirus crisis. The agreement hinged on a poorly publicized, little used, and potentially powerful program that exists in California and many other states: work sharing.

Under the plan, which state regulators still need to bless, staffers will have their schedules cut back to four days a week and accept a 20 percent pay cut until August. But as a result, they will become eligible to collect some of their state unemployment benefits, as well the $600-a-week federal unemployment booster that Congress created as part of the CARES Act, the economic relief bill it passed in March.

If the plan is approved, the Los Angeles Times will save a good deal of money—the equivalent of furloughing one-fifth of its guild staff. But because they will be collecting unemployment benefits while working, few Times journalists will actually have to sacrifice any income. In fact, many, if not most, of them stand to get a temporary raise.

It’s a tantalizing bargain, a rare potential win-win for a struggling company and its staff at a moment of economic catastrophe. You might assume, then, that many businesses would be rushing to take advantage of the same opportunity, especially given that other options, such as the Paycheck Protection Program, haven’t been universally helpful. But so far, work-sharing agreements have been a relative rarity during this crisis. According to the U.S. Department of Labor, by April 11, just 62,297 Americans claimed “short-time compensation” benefits—the formal regulatory term for shared work programs—compared with the more than 16.3 million who had been approved for ordinary unemployment insurance.

Why aren’t more businesses rushing to embrace work sharing? I can offer a bit of firsthand insight there. For the past few weeks, I’ve been working with Slate’s management on behalf of its editorial union to explore the possibility of setting up our own work-sharing program, and collaborated a bit with the Los Angeles Times’ guild leaders as we each tried to navigate the regulatory issues in different states. It turns out that even if you know about these programs, they’re still not that easy to set up right now, and sort of require a leap of faith that the government will administer them correctly. As our company’s CEO recently put it to me in a moment of mutual frustration, the whole thing is kind of a pain in the ass.

If you’ve ever heard of work sharing before, it’s probably because you’ve read one of the many articles about how Germany has successfully used the model—referred to there as Kurzarbeit—to save jobs during downturns. The basic idea is that instead of laying off workers, German businesses can cut them back to part time; in return, the government will cover 60 percent of their lost pay (67 percent if the worker has a child). So rather than lose their jobs at the Mercedes plant, Max and Hans get to, well, share them. The framework helped keep a lid on German unemployment following the Great Recession and is being used again there now that the coronavirus is decimating the global economy.

Here in the U.S., 27 states and the District of Columbia run their own shared work programs, according to the National Conference of State Legislators, which are similar in spirit to the German version. Employers agree to cut back hours anywhere from 10 to 60 percent, depending on the state, and workers receive a prorated share of the unemployment benefits they’d be entitled to if they were totally out of a job (so if your hours are lowered 20 percent, you get 20 percent of your weekly unemployment pay). Businesses can cover all of their workers in an agreement, or just some of them, which adds a bit of flexibility. But as hard as labor policy wonks have tried to talk them up, these schemes have never really gone mainstream in America, likely because they aren’t well-promoted, require a bunch of administrative work, and—crucially—the benefits aren’t usually super-generous.

So why are they suddenly so appealing? Simple. Right now, anybody who receives benefits from a work share program also automatically becomes eligible for the CARES Act’s full $600-per-week federal unemployment benefit. It wasn’t entirely obvious that this would be the case when the bill passed, but the Department of Labor clarified it in a regulatory guidance last month and reiterated it on Monday.

That changes the math dramatically.

Let’s use New York as an example, since that’s where I’ve been focusing most of my research (Slate’s mothership is located in Brooklyn.) Before the CARES Act, someone who had their hours cut 20 percent as part of a work-sharing agreement would have been eligible for $101 per week, at most (that’s 20 percent of the state’s maximum unemployment insurance benefit of $504). After the CARES Act, that same person would see an extra $701 per week. That means pretty much anybody with a base salary of less than $180,000 per year would get a raise during the work share period.

Here’s how that pencils out—the money chart, if you will:

Work sharing math
Based on a New York State work-sharing program, in which hours and base pay are reduced by 20 percent. Jordan Weissmann

The numbers work out pretty similarly in California, where the maximum state unemployment benefit is just a bit lower. The Los Angeles Times folks tell me that they expect 98 percent of their bargaining unit to be kept whole or get a bump.

The $600 weekly unemployment benefits that Congress created are only scheduled to last through the end of July, meaning that the beefed-up work share is a limited time offer. But even if it’s only a 10- or 12-week solution, I think most people would agree raises and three-day weekends are vastly preferable to layoffs, pay cuts, and furloughs. (As Kingsley Amis said: Nice things are nicer than nasty ones.) If they’re in financial trouble, businesses have every reason to at least consider the idea.

And yet, few seem to be.

One reason why is that work-sharing programs are pretty obscure. HR departments don’t necessarily know much about them. Nor do employment lawyers. I only found out about the extra $600 top off last month thanks to a university professor who actually advised members of Congress on unemployment policy in the lead-up to the CARES Act. At the Los Angeles Times, it was a similar situation: Reporter Matt Pearce discovered the idea while working on a story about the unemployment system. (He withdrew from the article and handed his notes to a colleague once he realized he would be working on the issue in his capacity as a union leader. Me? I’m obviously conflicted out the wazoo).

Even if you are aware that work-sharing agreements exist, setting one up is still a challenge. Without getting too deep in the weeds, the regulations governing these programs simply aren’t crystal-clear everywhere, since they were designed primarily with lower-wage, hourly employees in mind, not salaried workers, and getting answers to some basic question has been a bit of a journey. To give you a little taste: I started by ringing up the New York State Department of Labor’s official work share help line, which took me to a kind employee named Barb who, while helpful where possible, was not exactly in a position to answer hypotheticals that her bosses may or may not have ever contemplated. With a few days of work, I eventually managed to get some higher-ranking officials on the phone who could spell things out more at length. That is not a process thousands of businesses can, or should, replicate.

And that’s just one state. If you run a business with offices in multiple states, you’ll have to apply for a separate work-sharing agreement in each one, at least if you want to cover your entire staff. For Slate, that’s meant trying to make inroads at D.C.’s Department of Employment Services, which as far as I can tell is basically a black hole from which information cannot escape. (This is part of why Slate is still trying to decide whether to pursue work share.)

It’s also an open question how long it will take states to approve applications and start paying benefits. Nobody really knows right now. But given the way state unemployment offices have been overwhelmed, it’s fair to worry about it.

States should have every incentive to make these programs smooth and easily accessible. Unlike normal unemployment benefits, which come out of state coffers, the CARES Act made work-sharing benefits 100 percent federally funded. It’s a way to channel money from Washington to local employers that might have been cut out of other federal rescue efforts, like the ever-troubled Paycheck Protection Program.

As for other businesses? The advice I’ve mostly gotten from state regulators has been to apply, and work with them to iron out any kinks. It’s a nice deal if you can get it, and you can get it, maybe, if you try.