Illinois Finally Implementing Work-Share Program That Could’ve Saved Up To 124K Jobs During COVID
The Illinois Department of Employment Security is finally implementing a so-called work-share program — first authorized under a 2015 law — that could have saved anywhere from 43,600 to 123,900 jobs statewide during the COVID-19 pandemic, according to research from the University of Illinois and Illinois Economic Policy Institute.
Work-share laws, also known as short-time compensation, allow companies to avoid mass layoffs by reducing workers’ hours so they’re still employed, while also allowing them to receive partial unemployment benefits. The concept is popular in European countries and more than two dozen other states have work-share programs.
While Illinois has had such a law on the books for nearly seven years, work-share was never actually implemented during former Gov. Bruce Rauner’s term or the first half of Gov. JB Pritzker’s administration. But the state’s employment agency is belatedly making good on the program — just as the state’s economy has reopened from all COVID restrictions. To help with the endeavor, the U.S. Department of Labor last week announced Illinois will receive a $4.2 million grant from the federal government.
But work-share will come too late for the thousands of Illinois workers laid off permanently during the pandemic, losing wages, healthcare benefits tied to their employment and sometimes getting divorced from the workforce completely.
“It’s really frustrating, it’s disappointing,” State Sen. Steve Stadelman (D-Rockford) said. “State government failed its workers, failed its employees by not implementing this seven years ago.”
Dormant law, lost opportunities
Stadelman pushed for the law in 2014, which passed the General Assembly unanimously that year and was signed into law by Gov. Pat Quinn in his final weeks in office. He blames Rauner for not bothering to carry out the program, though it was supported by his allies in the business community. In 2015, Illinois had to return $4.3 billion in federal startup costs meant to help the state implement work-share.
But Stadelman also points to another missed opportunity for the Pritzker administration at the beginning of COVID.
In spring of last year, the $2 trillion CARES Act approved by Congress included a provision allowing states without a work-share program to enter into an agreement with the federal Department of Labor to operate one temporarily.
Under such an agreement, the federal government also would reimburse states for unemployment benefits paid out to workers whose hours had been reduced anywhere from 10% to 60%. It would also allow those workers to both collect partial unemployment benefits for their cut hours in addition to enhanced unemployment benefits — $600 extra per week for the first four months of the pandemic, and $300 weekly since December, set to expire in September.
But Stadelman said his inquiries to former IDES Director Thomas Chan last year about taking advantage of that CARES Act provision were met with vague answers why Illinois couldn’t participate. A memo at the time indicted the agency would pursue a work-share program “with an approximate implementation schedule of 12 months after hiring a project manager, procuring a vendor, and securing federal funding.”
Chan resigned last August and was replaced with current director Kristin Richards. The agency applied for the federal grant funding in late May, shortly after the federal government announced it was available.
In a statement, Pritzker’s office said IDES is eager to put the $4.2 million federal grant to use in implementing and promoting the state’s work-share program.
“This valuable program helps employers avoid layoffs and keeps workers employed,” Pritzker’s office said. “The administration thanks our federal partners, including the Biden administration, for assisting the state in supporting working families and businesses as our economy recovers from the impact of the COVID-19 pandemic.”
Consequences and lessons learned
Illinois Economic Policy Institute Executive Director Frank Manzo, whose research with the University of Illinois last spring estimated that up to 124,000 jobs statewide could’ve been saved by work-share, said Illinois missed out on “free money,” and possibly could’ve had a more robust recovery from the COVID recession had the state taken advantage of the federal government’s offer last spring.
“Illinois still has one of the highest unemployment rates of all the states,” Manzo said. “It’s likely we would’ve been lower by now had we had the work-share program.”
Manzo said he stands by his and his co-author’s original estimates from last spring, though he’d like to revisit the topic now that Illinois’ economy is on the rebound.
It’s difficult to compare unemployment rates of different states, as each state has a unique mix of industries and types of jobs that were hit unevenly by COVID. But contrasting Illinois with Washington state’s much-lauded work-share program may offer a clue for how states with robust work-share programs fared against states without them; at peak last April, Illinois hit 16.9% unemployment, while Washington only got up to 15.4%.
That ILEPI-University of Illinois paper also estimated the state could have reduced its unemployment insurance costs by up to $1.1 billion in 2020 due to federal reimbursement for unemployment insurance. Instead, Illinois’ unemployment insurance trust fund, from which out-of-work Illinoisans’ unemployment benefits are paid out, faces a $5 billion deficit — more than twice what the state saw during the depths of the Great Recession.
“[Work-share] would have saved jobs, it would have saved businesses…would have saved unemployment insurance costs,” Manzo said. “Unemployment itself has devastating effects on people — [unemployed workers] tend to report lower levels of happiness, physical and mental health and higher mortality rates.”
But Manzo said he’s glad the program is finally being implemented so Illinois will be ready for the next economic downturn.
Suzi LeVine, Principal Deputy Assistant Secretary of the U.S. Department of Labor’s Employment & Training Administration, shares that view.
“Before the pandemic…I think a lot of states weren’t necessarily seeing the value proposition of it,” LeVine said. “I think it’s an opportunity to look at how they can get on board with it now.”
Illinois’ $4.2 million grant from the Department of Labor can be spent on technology to implement the program and educational outreach to employers. LeVine called work-share a “diamond in the rough, sparkling brightly in the spotlight” of the pandemic — but she said employers first have to understand the benefits of the program before agreeing to participate.
“It’s really a win/win/win for the employers, for the workers and for the communities who are then able to avail themselves of this economic boost,” LeVine said.
Manzo’s paper from last year also points to another incentive for employers to participate in work-share programs: money saved on training new employees when a business is ready to hire again. By increasing their workers’ hours instead of having to hire all-new staff, Manzo and his co-author estimated Illinois businesses could’ve saved a collective $1.2 billion in turnover costs from work-share in 2020 alone.