This little-known program could be a windfall to reopening businesses.
MICHIGAN — It’s a little known program that is helping keep employees of local businesses on the payroll during the pandemic.
The effort to help hard-hit Michigan businesses reengage as the state gradually exits the first great test of the novel coronavirus pandemic has hundreds of Michigan businesses taking part in Work Share programs.
Work Share allows employers to offer reduced hours to employees while still allowing them to collect partial unemployment to balance out the lower pay from the reduced hours. Michigan Advance reports that 700 Michigan employers are already participating in more than 1,700 of these Work Share plans.
What Is Work Share?
The program allows Michiganders to make up to the unemployment payment of $362 per week That gets prorated based on hours worked. But through July that figure is increased by the Coronavirus Aid, Relief, and Economic Security (CARES) Act which grants $600 per week regardless of hours worked.
So for every hour cut by a business engaging in Work Share, recipients receive $9 dollars from unemployment in addition to $600 given by the CARES act.
The state Department of Labor and Economic Opportunity (LEO) gives this example of a breakdown:
LEO’s website explains that a worker who normally makes $1,000 a week, but has their hours cut by 30% can make $1,408 a week using Work Share for fewer hours.
That $1,408 comes from this math: Their normal wages for 30% fewer hours would be $700 per week. Added to that is 30% of their unemployment eligibility, which is $106 in this case, brings their total for the week to $806.
That might not be enough to convince them to come back, especially as workers risk exposure to the virus. The ‘Gander reported that a viral spread through the auto industry has contributed to stalling out the industry’s reignition.
So the current version of Work Share adds in another $600 incentive, bringing the total to $1,406, which is actually a higher wage than the employee would’ve had at their normal hours.
So it’s the $600 that makes the system so appealing. That additional money, though, will expire at the end of July unless extended by Congress. This gives businesses a limited amount of time to learn about and propose Work Share plans to help aid their reopening, absent intervention from Congress.
“As businesses are reopened, Work Share can help employers bring back their employees from unemployment faster and allows employers to retain their workforce and avoid layoffs,” said LEO.
So Why Aren’t More People Using It?
But according to state numbers, only 3% of the 1.7 million Michiganders eligible to participate in Work Share programs actually are. Susan Houseman, vice president at the Upjohn Institute in Kalamazoo and an expert in labor economics told the Lansing State Journal that this is in large part due to how relatively unknown the Work Share program actually is.
“The use, so far, nationally has been extremely low, which has a lot of people puzzled,” she told the Journal. “A lot of people don’t know about the program and are just learning about it, and even fewer people have experience using it.”
The $600 from the CARES Act encourages employees to come back to work even if on a reduced schedule, and reduced hours are incredibly common as the various sectors of Michigan’s economy re-engage.
As CNBC notes, Congress is unlikely to extend Work Share past July 31 and is eying different policies to replace it. One Republican idea would replace the easing of reduced hours with a “bonus” given to those returning to work, while a Democratic proposal would phase out the $600 incentive.
Businesses seeking to take advantage of the program while it lasts can apply online or call LEO’s Office of Employer Ombudsman at 1-855-484-2636 for more information.