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The British government announced Friday that it would launch an ambitious initiative to prevent mass layoffs amid the coronavirus outbreak. The plan will provide grants to cover up to 80 percent of the salaries of millions of workers whose jobs are now threatened. In return, employers will keep them on payroll during the economic crisis that is only beginning to unfold.
“We are starting a great national effort to protect jobs,” declared the chancellor of the Exchequer, Conservative politician Rishi Sunak, when he announced the part of the British response that seeks to avoid nothing less than a depression.
“We want to look back on this time and remember how, in the face of a generation-defining moment, we undertook a collective national effort—and stood together,” he tweeted. “It’s on all of us.”
The British initiative won’t save every job or ease all the pain, but it is an example of how to go big to fight layoffs and save small businesses—and some congressional progressives are taking it to heart.
As House Democrats and Senate Republicans spar over how aggressively to respond, the example set by the UK’s Conservative-led government reminds us how miserably uninspired and insufficient the US response to layoffs has been so far.
“[Sunak] said there would be no limit on the funding available to pay people’s wages,” The Guardian reported. “The payments will be backdated to the start of March, will be up and running within weeks, open initially for at least three months, and could be extended if necessary.”
Describing the program in epic terms—“unprecedented measures for unprecedented times”—the chancellor said, “I know that people are worried about losing their jobs, about not being able to pay the rent or mortgage, about not having enough set by for food and bills…. to all those at home right now, anxious about the days ahead, I say this: you will not face this alone.”
He also pleaded with companies that are on the brink of collapse to avoid shutting down. “The government is doing its best to stand behind you. And I’m asking you to do your best to stand behind our workers.”
There’s good reason to believe the plan could succeed.
Work-sharing initiatives are not a new idea in Europe. Germany has long experience with them. In the aftermath of the 2008 financial meltdown, a New York Times headline from August 2010 read, “Defying Others, Germany Finds Economic Success.” Reporting strong economic growth when other countries were struggling, the Times piece noted that a “vast expansion of a program paying to keep workers employed, rather than dealing with them once they lost their jobs, was the most direct step taken in the heat of the crisis.”
More recently, Deutsche Welle explained, “One of the major reasons—if not the major reason—for the recession back then not ending up in a massive job cull was the unprecedented expansion of short-time work programs especially in the manufacturing and service industries across the nation.”
With the coronavirus outbreak spawning an epic economic upheaval in the United States, congressional Progressive Caucus cochair Mark Pocan says the federal government should ramp up support for work-sharing initiatives to avert mass unemployment. “At a time when workers live in fear of losing their next paycheck, we must do everything in our power to protect their livelihoods.” He’d like to go as big as Britain or Denmark, which this week established a program in which the government covers 75 percent of the salaries of employees who would otherwise have been laid off—while their employers pay the remaining 25 percent.
Pocan acknowledges that could be a tough sell with the Republican Senate. But he and Representative Rosa DeLauro, the Connecticut Democrat who chairs the House Appropriations Committee’s Subcommittee on Labor, Health and Human Services, Education, and Related Agencies, argue that this is just the kind of idea that needs to be part of the federal stimulus plan. So they have developed a pair of bills that build on existing US programs to help avoid as many layoffs as possible during the coronavirus pandemic.
The bills, the Preventing Layoffs During a Public Health Emergency Act and the Layoff Prevention Act, would expand federal support for state work-sharing programs and provide additional incentives for businesses that keep American workers on the payroll for at least some portion of the week. Under their plan, companies that are preparing to lay off workers would be able “to reduce hours instead of their workforce—helping them save on rehiring costs—while employees will keep their jobs and receive a portion of Unemployment Insurance (UI) benefits to make up for lost wages.”
There’s interest among top House Democrats, Pocan says, though he expects Republicans will fight over how much additional funding the federal government might provide for state UI programs, which is necessary to make the initiative work. But, with DeLauro, he’ll fight for the most ambitious approach possible because, Pocan says, “Work sharing is one of the most impactful tools we can utilize to reduce widespread layoffs nationally during this pandemic.”
DeLauro, a longtime advocate for work-sharing initiatives, championed them during the 2008 financial crisis and succeeded in incorporating financing and grant provisions for a work-sharing initiative dubbed “Short-Time Compensation” in the Middle Class Tax Relief and Job Creation Act of 2012.
During President Obama’s tenure, existing work-sharing programs were extended and new ones were developed. Eventually, 29 states embraced the concept. Unfortunately, the federal financing lapsed toward the end of his presidency. “Work sharing programs were a bright spot in the aftermath of the financial crisis,” DeLauro says, “and we should immediately reinstate federal support for them in the next coronavirus response package.”
Working people and families are facing an unprecedented threat to their economic security, and many do not know how they are going to be able to put food on the table and pay their bills. Congress can help make a difference in people’s lives right now. By expanding federal support for work-sharing programs, workers would be able to keep their jobs and companies can avert layoffs and costly rehiring. Moreover, with fewer workers unemployed, there is less of a burden on the Unemployment Insurance benefits system—which is currently being strained in many states.
DeLauro and Pocan’s proposals can be ramped up quickly.
“More than half of all states already have work-sharing programs that give small businesses and their workers the flexibility to reduce employee hours while allowing workers to collect partial unemployment insurance to compensate for lower hours,” explains Pocan, a union printer who has for years operated a small business in Wisconsin. He argues that the legislation would help small-business owners like himself—as well as sole proprietors—keep the doors open.
“People are getting hit so hard, from so many directions. This helps workers keep their jobs and keep money in their pockets, and it gives small business owners a fighting chance to stay afloat.”