Work Sharing: A Success Story

by Seth Harris on September 14, 2011 · 7 comments

On Monday, I traveled to Rhode Island to visit the Pilgrim Screw Corporation with members of the state’s Congressional delegation.  I toured Pilgrim’s offices and factory with Senators Jack Reed and Sheldon Whitehouse, Congressman Jim Langevin, and senior officials from the Rhode Island Department of Labor and Training, as well as Pilgrim’s President Geoff Grove and other members of the Grove family. This family-owned and operated company manufactures and sells bolts, pins, rivets and other fasteners, and employs more than 60 people across three states.  Pilgrim has been in the Grove family since it was founded in 1932.

The purpose of our visit was to highlight an innovative proposal in President Obama’s American Jobs Act– a federal Work-Sharing program.  Work-sharing allows employers to retain skilled workers at reduced hours when business slows down, instead of laying them off.  Under the President’s proposal, employees working fewer hours would receive partial unemployment insurance benefits while maintaining part-time employment with their employer.  Employees avoid being laid off, keep their skills sharp, and stay attached to the active labor force.  Small businesses like Pilgrim are able to hold on to their experienced workers during tough economic times, and retain the capacity to scale up production quickly when orders increase.

Twenty states have work-sharing programs, including Rhode Island.  The results have been impressive.  In the Ocean State, one in every six workers in the UI system receives partial work-share benefits instead of full UI benefits.  From 2007 through the middle of 2010, Rhode Island’s Work-Sharing program prevented more than 13,000 layoffs.  The program helped Pilgrim avoid laying off 35 workers in their Rhode Island facility over the last several years.  Similar programs in countries like Germany and Japan have reduced levels of unemployment between 0.5 and 1 percentage point.   

The success of Rhode Island’s work-sharing program led Senator Jack Reed to propose federal legislation earlier this year. Senator Reed’s bill served as the basis for the work-share proposal in President Obama’s American Jobs Act.  President Obama’s proposal would support all 50 states creating work-share programs.  While we were on-site Monday, Geoff Grove – who’s seen the benefits of work-sharing first-hand – said it best: “The work-sharing program in Rhode Island has been a lifeline for Pilgrim.  It’s helped a small manufacturing business like ours to maintain the institutional knowledge and skills that are crucial for our success.”  Small businesses and workers across the country are eager to have the same opportunity Pilgrim has had.

Rhode Island’s work-share program allowed Jorge DeLeon, an employee of Pilgrim for the past 17 years, to stay on Pilgrim’s payroll when demand for the company’s products slowed down.  Instead of laying him off, the company reduced Jorge’s hours by 20%, with the state UI system making up part of the difference in lost wages.  After 6 months, Pilgrim restored Jorge’s full-time schedule.  Pilgrim kept an experienced worker on its payroll, and didn’t have to search for a new employee when orders increased.  Jorge maintained most of his wages, and stayed employed instead of joining the rolls of the full-time unemployed.

Work-sharing is only one of the unemployment insurance reforms President Obama has proposed in his American Jobs Act to transform the unemployment system into an employment and re-employment system.  He has also proposed to provide tax relief to small businesses and working families, put construction workers back on the job repairing roads and bridges, and keep teachers in the classroom while modernizing schools around the country. 

Small business leaders like Geoff Grove and workers like Jorge DeLeon are looking to the federal government to take action to get our economy moving again and put Americans back to work.  The President sent his American Jobs Act to Congress on Monday.  America’s small businesses and working families need action now.

{ 7 comments… read them below or add one }

1 Majed El Zein September 14, 2011 at 11:30 am

very good

2 Michelle Cooper September 14, 2011 at 7:28 pm

I think this is a great idea for an employer that is having to deal with a reduction in orders so that they don’t have to whittle down their experienced work force. For the employees, partial UI benefits to offset their reduced wages helps to keep them in a job that they want to keep and that they are good at, until business increases at a level when they can once again work full time. Obviously, this is less of a drain on government (tax payers), but it keeps our business competitive when times are tough. At that’s the point…we don’t want to see our business forced out of the market because of a down economy. This is a great creative idea that doesn’t require more govenment!

3 steven jobs September 20, 2011 at 11:35 pm

Tremendous work! You own the talent of creative writing. I personally liked the way it has been drafted especially the perfect drafting of brilliant ideas. And yes i have bookmarked your site.

4 Art November 5, 2011 at 2:51 pm

I believe this is a solid bridge program but have two issues.

(1) How do we know we are just not stepping in to shore up a badly run company and subsidizing its survival when just done the street is a company that can take the share and grow to positive cash flow and produce a higher quality product at a lower cost. With the government subsidizing the less efficient higher cost producer don’t we get on thin ice? If the high cost producer folds won’t most of the folks just move to the low cost producer to meet the same market demand?

(2) When, what, why, how do we get out of subsidizing businesses when the economy turns?

5 Veterinarian Kevin January 17, 2012 at 9:10 am

Outstanding!
Yes, business is off, revenues are down and as a veterinarian and animal hospital owner, I am looking at ways to keep my skilled workforce in place. The cost savings of letting someone go is never less than hiring someone back and training that new veterinary technician.
Keep up the great work!

6 Home Security January 19, 2012 at 1:03 pm

Super!

Employee retention, allbeit at lower wages, is a win-win until company revenues pick up again. Let’s face it. Getting unemployment is not an uplifting experience. Nor is the process of finding and training new employees.

Keep it up and we will all get there. Thanks!

7 Mentalism January 23, 2012 at 9:49 am

Just let us work, that’s what we’re saying. This should help those with jobs and that is great. Maybe this will open it up for all without current jobs too. Fingers crossed and wanting to work.

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