Faces, numbers and stories from behind the downturn.
BERLIN, Conn. — As companies struggle to make it from recession to recovery, many are turning to a novel but unheralded program that cuts their costs while sparing their workers’ jobs.
Under the program, known as work-sharing, employers reduce their workers’ weekly hours and pay, often by 20 or 40 percent, and then states make up some of the lost wages, usually half, from their unemployment funds.
Even though 17 states have adopted the program, and many executives and economists hail it as a way to keep workers employed and companies staffed with skilled labor, only a fraction of the businesses and workers that are actually eligible are benefiting.
That is largely because of inertia and ignorance, government officials say. Many companies are unaware of the program’s existence, and few states advertise it — even though the program is credited with saving hundreds of thousands of jobs in Germany, whose work-sharing program has inspired other nations.
With unemployment in the United States above 9 percent and climbing, pressure is growing on the states that have work-sharing to increase the number of companies and workers that participate, and on the 33 states that don’t have work-sharing to embrace the program.
At his metal-working plant here in Connecticut, Andrew Nowakowski, president of Tri-Star Industries, says the program is good for employers, workers and the economy.
“It’s a lot better than layoffs,” said Mr. Nowakowski, whose skilled machinery operators make metal parts for products as diverse as cellphones and car engines.
His 29 nonmanagerial employees now work three- or four-day weeks. “The alternative would have been to lay off three to seven workers,” he said, “but that would mean that when things become busier, I’d run the risk of not having the trained people I need.”
Tri-Star’s employees like the program even though it means lower take-home pay. “Without this, it would have been four or five guys out the door, and one of them could have been me,” said John Drzata, who runs an elaborate, five-spindle precision lathe that etches threading into metal parts.
Jim Cassidy, who works Monday through Wednesday, uses the extra days off to go camping in the Berkshires, although some workers use them to look for spare jobs, like painting.
“We get to keep our jobs and keep our benefits,” Mr. Cassidy said. “You lose your job, you lose everything.”
The State of Connecticut makes up more than half the wages the workers lose because of shorter workweeks. New York participates in the program, too.
States have different unemployment insurance formulas, but generally, a worker being paid $600 a week, if laid off, might receive $300 in jobless benefits. With work-sharing, if that worker’s hours drop 20 percent, wages would fall to $480 and work-sharing would make up at least half of the lost wages ($60), for a total of $540 a week.
With savings from reduced income taxes and from commuting fewer days, some workers nearly break even.
The state and federal governments have hardly publicized work-sharing, in contrast to the European Union, whose leaders have urged the Continent’s employers to embrace work-sharing to combat rising unemployment.
But since the downturn began, some states have beaten the drum to make sure more employers are aware of the program. Mr. Nowakowski first learned of Connecticut’s program last October when a state official phoned his office manager to publicize it.
As a result of such outreach efforts, 5,000 Connecticut workers are participating in work-sharing, up from 250 a year ago.
In Washington State, 39,119 are participating, up from 6,039 a year ago. And in Massachusetts, 10,127 workers are, compared to 621 a year ago — and 458 employers, up from 31 last year.
“I frankly don’t understand why there aren’t more states that participate in this program,” said Suzanne Bump, the Massachusetts secretary of labor and workforce development.
Many states are not participating because they did not focus on the program during good times and because it could create new burdens and paperwork for already overloaded unemployment agencies. “But that pales compared to the program’s benefits,” said M. Patricia Smith, the New York State labor commissioner.