By Walter Alarkon - 11/16/09 11:00 AM EST
Senate Democrats crafting a job creation bill are considering a proposal to give money to workers who cut their hours in order to avoid layoffs.
A bill sponsored by Sen. Jack Reed (D-R.I.) would give unemployment compensation to employees who accept a reduced work schedule to allow their companies to avert layoffs or to hire more employees. Reed's proposal for work-sharing was mentioned during the Senate Democrats' lunch Tuesday, when Majority Leader Harry Reid (Nev.) announced that an initiative focusing on jobs would soon be a priority, Reed's office said.
Reed's plan calls for up to $600 million for the program, which would last for up to two years. Rhode Island and 16 other states already have their own work share programs, which have saved more than 146,000 jobs this year so far, according to the Labor Department. Reed's bill would provide funding for existing work share programs and grants for states that have yet to start them. If all 50 states participated in work share programs, between 400,000 and 500,000 jobs a year could be saved, according to Reed's office.
“Work share programs provide businesses with the flexibility to reduce hours instead of cutting jobs,” Reed said in a statement. “This plan will help prevent layoffs, make businesses more productive, and save taxpayers money by keeping people on payrolls and off unemployment benefits."
A federal work-sharing program is one of several proposals likely to be considered by Democrats as part of a new jobs bill. Reid's announcement Tuesday that he is looking at ways to boost job creation came on the heels of the October jobs report, which showed the unemployment rate hitting double digits for the first time since 1983. President Barack Obama is making his own jobs push, announcing this week that he will convene a jobs summit next month.
The renewed focus on jobs reflects concern among Democrats about a jobless economic recovery. Though the U.S. economy began growing again in the third quarter, White House and independent economists expect the unemployment rate to remain above 10 percent into next year. The Obama administration's own projections expect the jobless rate to average more than 9 percent for 2010 and more than 8 percent for 2011.
Reid hasn't tipped his hand on what the coming legislation will include. Labor unions have called for more aid to states to help prevent cutbacks of public employees, loans for small businesses and more investment in infrastructure projects.
Republicans have attacked the Democratic approach to restarting the economy, noting that the centerpiece has been the $787 billion stimulus. Though independent economists said the stimulus has created about 1 million jobs, Republicans have used the persistent high unemployment rate and the record $1.4 trillion 2009 deficit to attack Democrats' economic policy.
Republicans will be eager to paint any new Democratic legislation as more spending.
"The best unemployment program is a job and Republicans believe it's time to start giving American businesses the opportunity to create more, but if Democrats continue to hinder economic growth with their reckless tax and spend approach, nobody's gonna be headed back to work anytime soon," the aide said.
But a federal work-share program is winning some support from nonpartisans.
Prominent economists pushing the work-share idea include Mark Zandi, an economic advisor to Sen. John McCain's (R-Ariz.) 2008 presidential campaign who also advises Democrats. Dean Baker, co-director of the left-leaning Center for Economic and Policy Research, and Paul Krugman, the New York Times columnist. Krugman touted the benefits in his column Friday, noting that German's work-share program has helped drive down its unemployment rate, which has gone from about 9 percent last year to less than 8 percent in October.
Zandi, the chief economist at Moody's Economy.com, said that increased small business loans and more work-share programs could be an economical way to create more jobs. Zandi told the Joint Economic Committee last month that expanding work share to all 50 states would cost less than $2 billion and would provide more "bang for the buck" than unemployment insurance extensions. Congress passed and Obama signed last week a extension of unemployment benefits that cost $2.4 billion.