Will Wisconsin embrace an alternative to layoffs in its crisis relief bill?

Democrats and Republicans agree on a tool to help business and workers fight the pandemic’s economic fallout

Work stations in a casual environment with computers and office decoratoins
"Crew Collective & Cafe" Photo by Annie Spratt on Unsplash

Congressman Mark Pocan (D-Wisc.) has become an evangelist for a program that allows people to collect part of their salary and benefits from working a percentage of their previous hours while getting the remaining percentage of their pay from unemployment benefits.

He says the program — called work share — is good for employers, employees, the economy, the unemployment fund and state government.

Congressman Mark Pocan
U.S. Rep. Mark Pocan

“We’re doing everything, it’s like a mini campaign around this issue,” says Pocan. 

When it comes to work share, Pocan holds up Wisconsin Republicans and Democrats alike who are rallying around the program, setting aside partisanship and singing the same tune. “I think this should be as non partisan as it appears it is … in Wisconsin.” he says.

Work share can be used to avoid layoffs, or to help businesses rehire gradually after shutting down.

“We’re going to need something to help people reopen,” says Pocan. “This allows a small business to ramp back up, putting workers on part time, getting to full time. … At the end of the day, the employee has more money in their pocket. The small business is able to ramp up and the [unemployment insurance] account will be more solvent. It really is a win-win-win.”

Pocan gives the example of a small business that would otherwise only be able to hire back one person. Instead that business could hire two or three people at 40% or 50% time. “So more people will be working and having something to do, and have more money in their pocket.”

“Surge” payments for unemployment benefits during the crisis can, according to the federal Department of Labor, also apply to work-share participants.

The program can also help avoid layoffs during downsizing. Employers can keep trained workers on staff. Workers keep their health benefits. The economy and government benefit because people are able to spend more.

Just over half of the states — including Wisconsin — have a form of work share (also called short-time compensation) already operating. In the current climate, Pocan is adamant that all states have a work-share program, and programs should be expanded in states that already have one. 

He is working to get Wisconsin to expand its program while getting the federal government to expand its program in its next pandemic relief bill, so it is even more flexible and benefits more workers and employers in the current economic climate. 

Pocan has pitched a “more robust work share program” to Democratic leadership in Congress, as well as the House Committee on Appropriations he sits on and other fiscal and labor committees. In Wisconsin, he’s been talking with Assembly Speaker Robin Vos, Minority Leader Gordon Hintz, other legislators and Gov. Tony Evers’ office. He says he also had an extensive conversation with Legislative Fiscal Bureau director Bob Lang, who is revered by Democrats and Republicans alike on matters fiscal. Pocan says all reacted favorably. Currently work share expansion is in the version of the bill that the Legislature has proposed for COVID relief, and it was in the governor’s proposal and the Republican caucuses’ bills, albeit with small variations.

“I think they’ve got a really great proposal,” says Pocan of the Wisconsin Republicans’ plan. “The only devil in the details is how easy it is for business to access, but the department should be able to work that out.” 

head shot of Caleb Frostman
Caleb Frostman

Count Department of Workforce Development Secretary Caleb Frostman among work share’s fans. Frostman believes there’s an increased appetite for it now.

“Work share is one of those things it’s just rare to find that is a win-win when you can protect the balance of the [unemployment] trust fund and help people earn more income while staying attached to their benefits,” says Frostman. “Gov. Evers and the legislative bodies want to help business, they want to help the people and work share is one of those things. It’s kind of a no-brainer, so I’m optimistic it will be included.”

Work share secrets

Wisconsin is one of roughly half the states that already have a program in place and its description shows how well it works: “Work-Share avoids layoffs, allowing workers to remain employed & employers to retain trained staff during times of reduced business activity.” 

But it has many restrictions (size of business, percentage of time employed) and could be federally funded through COVID-19 relief bills to make it far more appealing to employers and employees. 

After the $2.2 trillion Coronavirus Aid, Relief, and Economic Security (CARES) Act did not include an expansion of the program federally and in all states, Pocan began lobbying to make sure it was not overlooked in future bills with a recent opinion column in The Hill.

Work share programs allow businesses to reduce employee hours, instead of laying them off completely, while also allowing those workers to file for partial unemployment to make up for lost pay,” Pocan wrote. “In this set-up, businesses can try to stay afloat instead of completely closing, workers receive some pay and benefits from their employer on top of their unemployment pay, and state unemployment systems don’t face the full impact of every employee being laid off at once. Businesses stay open, workers receive more pay, and states save money – everyone can win.”

University of Maryland economist Katharine Abraham, who served on the White House Council of Economic Advisors in the Obama administration, and Susan Houseman, vice president and research director at the Upjohn Institute for Employment Research, made a similar argument in an opinion column in Politico:

They say it would have more direct positive impact on the economy than simply sending checks to everyone because the money goes where it is most needed and most likely to be put immediately back into the economy. 

“By helping to keep people in their jobs, work-share programs mitigate unemployment,” they write. “And short-time compensation benefits are well targeted, reaching exactly the people who are suffering a drop in earnings and are likely to need the money the most.”

Abraham and Houseman say one big problem is that few employers even know the option might exist, even though half the states already have that option in some form of a short-term compensation program, businesses do not know about it.  When some places used them during the most recent recession, surveys show high business satisfaction.

How the feds can help Wisconsin

Wisconsin — in particular —  will continue to hear more on the topic because Pocan is one of the two members of Congress drafting legislation, along with his friend Rep. Rosa DeLauro (D-Conn.), called the “Layoff Prevention Act.” 

Pocan’s goals are that every state establish a work-share program, there should be no minimum number of employees a business must have to participate, workers participating should get the additional weekly unemployment benefits from the CARES Act and businesses should be permitted to reduce the hours an employee works down to “at least” 20% of regular hours.

And the federal government would pay for the program, so it’s “free money for the states,” says Pocan.

Economists Houseman and Abraham add that the federal government should subsidize state participation during the COVID-19 crisis and states without such a program need to adopt one immediately as part of their unemployment insurance system. 

“It’s better for workers and for their communities if temporary downturns don’t turn into permanent job loss. Every state in the country needs this option,” they say.

The fine print

With the Wisconsin Legislature taking action to expand its program before any federal expansion, the state has to act with one eye on what the federal government might do. 

Frostman warns that if Wisconsin were to violate federal restrictions, it would open the state up to dire consequences, all the way up to losing the state’s unemployment insurance grant.

Photo of worker with heavy mask and smoke from welding
Photo by Rob Lambert on Unsplash

So the bill must stay within the federal limits — unless or until they are altered. Frostman would like to see legislators build in flexibility, to accommodate future federal changes in the number of hours participants need to work and other limits, without the Legislature needing to convene to approve a change. 

And Frostman says the bill must treat employees who are in the same job unit uniformly.

“We have seen an uptick in interest, not astronomical but definitely a noticeable increase in the utilization of Wisconsin Work Share and we’d like to see more of it,” Frostman says. “So this might be a way to get that done.”

Pocan says the state version of the bill addresses all his major criteria: It streamlines enrollment for businesses which should increase participation. It lifts the cap on the percent of job time that can be shared from 50% to 60%, which is the federal limit, although there is talk that could go as high as 80% or greater. And Wisconsin’s program would no longer be limited to employers with at least 20 employees participating. Under the current  bill companies only need to have two people sharing to qualify.

“The state has addressed everything it can without additional federal action,” says Pocan. “The concern still exists that 23 states don’t have a program like this and you can benefit no matter where you live in the country. It’s a plus for workers, a plus for small business owners and it’s a plus for the state account, so we’d just like to see this used as aggressively as possible as the economy makes efforts to come back.”

Melanie Conklin
Melanie Conklin is proud to be a native of the state of Wisconsin, which gave humankind the typewriter, progressivism and deep-fried cheese curds. Her several decades in journalism include political beats and columns at Isthmus newspaper, the Wisconsin State Journal and other publications. When not an ink-stained wretch, she served time inside state, local and federal government in communications. She is excited to be back at the craft of journalism as Deputy Editor of the Wisconsin Examiner. It’s what she’s loved ever since getting her master’s degree in journalism from the UW-Madison. Her family includes one husband, two kids, four dogs and five (or more) chinchillas.