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Work Sharing Could Save States $1.7 Billion Per Year
Work Sharing Could Save States $1.7 Billion Per Year
Source: Center for Economic and Policy Research
Though the unemployment rate ticked down slightly in April, the latest data show that millions of Americans continue to be laid off from their jobs. Work-sharing programs could help curb some of these job losses and shave billions of dollars off state budgets across the country. A new CEPR issue brief examines the work-sharing provisions of new federal legislation and the potential savings.
Work-sharing programs, also known as short-term compensation, can be beneficial to both employers and employees. Rather than laying off workers, employers can shorten workers’ hours. The workers, in turn, receive pro-rated unemployment insurance (UI) benefits for the hours not worked and remain employed. Employers are able to retain trained employees, and, when demand picks up, avoid the costs of hiring and training new workers by simply increasing the hours of existing staff.
Provisions of the recently passed Middle Class Relief and Job Creation Act offer federal support for work-sharing programs, giving states more incentive to promote work sharing. Prior to passage of the law, states had to pay the regular UI benefits provided to workers in work-sharing programs. Under the new law, the federal government provides 100 percent of work-sharing UI benefits for up to three years in states that already have work-sharing programs and 50 percent for up to two years in states that enter an agreement with the federal government to provide work sharing.
Though take-up of work sharing is low at the moment, potential savings of $1.7 billion dollars per year nationwide may make the programs more attractive. Participation has varied from state to state, with Rhode Island seeing over 20 percent of UI claims from work-sharing when the program was at its peak in 2009. If other states saw similar levels of participation, the savings would be substantial. Among states that already have work-sharing programs in place, California could realize savings of $319,377,200. New York could save $158,581,600 and Pennsylvania could save $136,180,800. Among states that do not currently have work-sharing programs, New Jersey could save $57,359,700; Illinois could save 53,976,600 and Ohio could save 35,620,300.
Unemployment Rate Does Not Tell the Full Story: Long-term Hardship a Tremendous Burden on Millions of Workers and the Economy
Unemployment Rate Does Not Tell the Full Story: Long-term Hardship a Tremendous Burden on Millions of Workers and the Economy
Source: Center for Economic and Policy Research
Overall unemployment has ticked down slightly from the peaks of the recession, but long-term unemployment remains historically high, threatening the long-term economic security of workers and the country as a whole. A new report from the Center for Economic and Policy Research sheds light on the demographics of the millions of workers struggling with unemployment and under-employment.
“Long-term Hardship in the Labor Market” breaks out workers considered long-term unemployed by the official BLS standard according to race and gender, education, and age. The authors also expand the conventional concept of long-term unemployment and capture further dimensions of long-term hardship including discouraged workers, workers marginally attached to the workforce, and workers who are part-time for economic reasons.
The report shows that under the standard measure of long-term unemployment, half of all unemployed black men have been jobless for more six months or longer, followed closely by roughly 49 percent of unemployed Asian men, black women and Asian women. However, the alternative measure shows that black men are much more likely than other workers to experience long-term hardship. About 9 percent of all black men in the labor force, compared with 7 percent of black women, 5 percent of Latino women and 4 percent of Latino men had been unemployed for six months or longer in 2011.
Health-insurance Coverage for Low-wage Workers, 1979-2010 and Beyond
This paper uses data from the Current Population Surveys for 1980 through 2011 to review trends in health-insurance coverage rates for low-wage workers (defined as workers in the bottom fifth of the wage distribution in each survey year). In 2010, over 38 percent of low-wage workers lacked health insurance from any source, up from 16 percent in 1979. The biggest reason for the decline in coverage is the erosion of employer-provided health insurance, either through a worker’s own employer or as a dependent on another family member’s employer-provided policy. Over the last three decades, the role of public insurance in providing coverage for low-wage workers has increased, though not nearly enough to offset the declines in private insurance. In 2010, about 10 percent of low-wage workers had coverage through Medicaid, double the share in 1979. While a great deal of uncertainty still surrounds the Affordable Care Act (ACA) and its likely impact on employers and workers, reasonable estimates based on consensus projections suggest that the ACA will have a substantial positive effect on health-insurance coverage rates for low-wage workers. Even so, the ACA will likely leave an important share of low-wage workers, especially low-wage Latino, African American, and Asian workers, as well as many immigrant workers, without coverage. At the same time, if the ACA is blocked – in the courts or in Congress – there is every indication that coverage rates for low-wage workers will continue their long, steady decline.
Down and Out: Measuring Long-Term Hardship in the Labor Market
From peak to trough, the United States lost almost nine million jobs in the most recent economic downturn. What was completely unprecedented about the most recent recession, however, was the explosion in long-term unemployment. The depth and length of the recession pushed the long-term unemployment rate – the share of unemployed workers who have been unemployed for 27 weeks or longer – to over 40 percent throughout the entirety of 2010 and 2011. The official concept of “long-term unemployment,” however, is incomplete and, in some cases, even potentially misleading. As tracked by government statistics, the long-term unemployed are only a relatively small part of the population facing extended, sometimes permanent, spells without work.This paper proposes rethinking our understanding of long-term unemployment in two ways. First, we encourage shifting from a narrow focus on long-term unemployment toward a broader concept of “long-term hardship” in the labor market. Many workers or potential workers who do not fit the official definition of long-term unemployment – including “discouraged” and “marginally attached” workers and those involuntarily working part-time jobs – face long-term hardship in the labor market, but are not captured in the standard measure of long-term unemployment.Second, we suggest complementing the standard measure of long-term unemployment, which reports the share of the unemployed who have been out of work for six months or more, with an alternative measure, which reports the share of the total labor force that has been unemployed for six months or more. This alternative measure avoids some counter-intuitive properties of the standard statistic and is better for making comparisons across demographic groups.
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How Much Does Employee Turnover Really Cost?
How Much Does Employee Turnover Really Cost?
Source: Center for Law and Social Policy and Center for Economic and Policy Research
Employee turnover costs businesses millions each year, but many employers don’t realize exactly how much it’s costing their company. To help human resource managers and business owners understand turnover’s toll, CLASP, the Center for Law and Social Policy, and the Center for Economic and Policy Research (CEPR) today are releasing a turnover calculator, a dynamic new tool that allows employers to calculate how much turnover costs in just 10 questions.
When an employee leaves or is laid off and a company looks for a replacement, expenses such as advertising, recruiting, background checks, benefits administration and staffing can add up to major costs. The turnover calculator allows businesses to vary wages, weekly hours, and recruiting and hiring costs to calculate the cost of turnover for different categories of workers. It considers typical hourly or annual pay as well how employers fill vacancies and how long it takes new employees to become proficient in the position.
With the economy still sluggish, many businesses struggle to maintain or increase their bottom lines. The turnover calculator provides employers the opportunity to measure their turnover costs so they can develop and plan for policies that save money and help their business.
CLASP and CEPR developed this tool as part of its broader advocacy work to ensure work life balance for employees. Forty-four million workers, or 42 percent, lack paid sick days. Research shows that employee turnover is less when workplaces have supportive policies such as paid sick days and paid family leave. Workers without such benefits often struggle with decisions to stay home to recover from illness or nurse a sick family member versus losing their job.
+ How Much Does Employee Turnover Really Cost Your Business?
The Impact of Cutting Social Security Cost of Living Adjustments on the Living Standards of the Elderly
The Impact of Cutting Social Security Cost of Living Adjustments on the Living Standards of the Elderly
Source: Center for Economic and Policy Research
During the negotiations over raising the debt ceiling, President Obama proposed cutting the annual cost of living adjustment for Social Security by switching to an index that would show a lower measured rate of inflation. This alternative index, the chained consumer price index (CCPI-U), shows an annual rate of inflation that averages approximately 0.3 percentage points less than the consumer price index (CPI-W) that is currently used to index benefits. While this change would lead to $122 billion in savings to the government over the next decade, it also means that beneficiaries would receive lower benefits.
Since the vast majority of retirees rely on Social Security for the bulk of their retirement income, this cut in the cost of living adjustment would imply a substantial reduction in the standard of living of retirees, unless they offset it by saving more during their working years or retiring later in life. While we cannot know for sure how workers in future years will adjust their behavior, this paper assesses their past response to changes in the cost of living adjustment. It finds that they were not able to raise their non-Social Security income in response to cuts in Social Security benefits.
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Work Sharing: The Quick Route Back to Full Employment
Work Sharing: The Quick Route Back to Full Employment
Source: Center for Economic and Policy Research
This paper outlines a proposal for a system of work sharing that would give employers an incentive to maintain workers on their payroll at reduced hours as an alternative to laying them off. The system would be attached to the existing system of unemployment compensation, with shorttime compensation as an alternative to unemployment compensation. This means that work sharing would require no new government bureaucracy. In fact, 21 states (including California and New York) already have short-time compensation as an option under their unemployment insurance system. In these states a governmental structure already exists to support work sharing, although there would have to be changes to make the system more user friendly so as to increase take-up rates.
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The Wage and Employment Impact of Minimum-Wage Laws in Three Cities
The Wage and Employment Impact of Minimum-Wage Laws in Three Cities
Source: Center for Economic and Policy Research
This report analyzes the wage and employment effects of the first three city-specific minimum wages in the United States –San Francisco (2004), Santa Fe (2004), and Washington, DC (1993). We use data from a virtual census of employment in each of the three cities, surrounding suburbs, and nearby metropolitan areas, to estimate the impact of minimum-wage laws on wages and employment in fast food restaurants, food services, retail trade, and other low-wage and small establishments.
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The Origins and Severity of the Public Pension Crisis
The Origins and Severity of the Public Pension Crisis
Source: Center for Economic and Policy Research
There has been considerable attention given in recent months to the shortfalls faced by state and local pension funds. Using the current methodology of assessing pension obligations, the shortfalls sum to nearly $1 trillion. Some analysts have argued that by using what they consider to be a more accurate methodology, the shortfalls could be more than three times this size. Based on these projections, many political figures have argued the need to drastically reduce the generosity of public sector pensions, and possibly to default on pension obligations already incurred.
This paper shows:
- Most of the pension shortfall using the current methodology is attributable to the plunge in the stock market in the years 2007-2009.
- The argument that pension funds should only assume a risk-free rate of return in assessing pension fund adequacy ignores the distinction between governmental units, which need be little concerned over the timing of market fluctuations, and individual investors, who must be very sensitive to market timing.
- The size of the projected state and local government shortfalls measured as a share of future gross state products appear manageable.
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