Public Assets Institute > Policy Areas > Family Economic Security > Reduced layoffs—that would be worth celebrating

Reduced layoffs—that would be worth celebrating

The Labor Day holiday is intended to celebrate working people. But this Labor Day there are still many Vermont workers who are out of work. Between February 2008 and October 2009, Vermont’s private sector employers eliminated more than 14,000 jobs in response to the recession. Since then, they’ve added back about 10,000 jobs, but are still below pre-recession levels.

Unemployment is hard on everyone. It’s a loss to employers who have spent time and money to train their employees. Idled workers lose job skills and struggle to provide for their families. Communities suffer when too many people don’t have regular paychecks and can’t support the local economy.

To lessen the economic costs and the human suffering from unemployment, Vermont could do more to promote alternatives to laying off workers when the economy goes soft. Work-sharing is one such alternative.

Instead of using unemployment funds to compensate people who aren’t working, the money is used to help businesses to keep all—or most—of their employees during an economic slowdown. The employees maintain their skills and continue to be productive, and the employers have a stable workforce that’s ready as soon as the economy turns around.

About half of the states, including Vermont, allow work-sharing, but it’s a practice that should be adopted by more employers. The federal Department of Labor recently announced that grants were available to states to help them promote their work-share programs. Vermont could be eligible for just over $200,000 if it applies for the new federal funds.

We’re coming up on the fifth anniversary of the start of the Great Recession. Although we clearly have not recovered yet from the last collapse of the economy, it’s not too soon to start planning for the next one.

Vermont has taken some important steps to rebuild its unemployment insurance fund. The Legislature raised the base salary on which employers’ contributions are calculated, and going forward those contributions will increase with inflation. Having a healthy unemployment fund in the future won’t just benefit those who get laid off through no fault of their own, it also will help other businesses that depend on Vermonters with money in their pockets to buy local goods and services.

Using some of those unemployment funds to keep Vermonters in their jobs during the next recession would be another big step forward in state labor policy. Layoffs ought to be a last resort, not the first response to economic storm clouds. We all benefit when we have a stable work force and Vermonters feel that their labor is valued.  As we enjoy this Labor Day weekend, let’s commit ourselves to having more Vermonters keep their jobs during economic slow downs, giving them something to celebrate on future Labor Days.

Posted by Jack Hoffman on August 31, 2012 at 12:09 pm

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