regular UI for a period shortened to reflect the Firm UI Taxation. The California Unemployment Insurance Program is an "experience rated" system financed by taxes collected from employers in accord with the balance between tax contributions and UI benefits drawn by existing or former employees. Thus, California firm UI taxes vary between .4 and 3.9 percent of the first $6,000 of earnings for all employees. For the most Further details on the California program are provided in Recent Trends of Participation Participation in the California Work Sharing UI Program However, par was low and grew slowly during its first year. 1980 some 840 firms employing 37,475 workers had become certified. 2. 1980 Employer's Guide, California Employment Development Department, Sacramento, California, January 1, 1980, pages 19-20. has been increasing rapidly. Further, there is reason to believe that participation will continue to rise as the program gains greater exposure. The patterns of worker and firm participation in the program have been analyzed in preliminary fashion within a report which has been attached as Appendix II. Nonetheless, a few key points should be made about the use of the program. First, the industrial sectors of participating firms and workers has been varied, and, so far, somewhat distinct from that of those using regular layoffs with unemployment insurance. Early data analysis shows that a larger portion of firms using Work Sharing UI are in manufacturing than is the case of firms using layoffs.3 More important, this same data shows that 76 percent of the workers using Work Sharing UI are employed in the manufacturing sector. Interestingly, this pattern of industrial participation parallels that of Germany's long standing shorttime compensation program, which has been reported to have reduced full-time unemployment by one-sixth during the 1975 4 recession." Second, and contrary to common assertions, participation in the Work Sharing UI Program does not appear to be reduced by unionization. As of May 1980, some 11 percent of all certified firms were unionized. More important, breakdowns 3. Fred Best and James Mattesich, Op.Cit., pages 27-28. Gunther Schmid, "Selected Employment Policy in West Germany: Some Evidence of Its Development and Impact", Discussion Paper Series, International Institute of Management, Berlin, July 1978, page 14. of participating employees show that 25.5 percent of the workers who actually used the program were unionized. When one con 5 siders that about 21 percent of the national labor force is unionized, it does not seem that unionization is a deterrent to use of the program. Indeed, responses to a recent nationally representative survey of the American labor force not only found that 81 percent favored or were neutral toward the use of short-time compensation in their own work places, but that unionized workers were more positive about the program than non-union workers.6 Third, available data suggest that short-time compensation programs are not significantly more costly than regular UI in terms of the aggregate dollar value of benefits paid. State computations indicate that the average participating employee received $22.69 a week in benefits and that the equivalent expenditure for benefits for full-time layoffs among the same population of workers would have been $89.88 a week. While one must question whether the types of workers using Work Sharing UI have been notably different from those experiencing layoffs with regular UI, it appears that the average benefit amounts for Work Sharing UI have been only marginally greater than the current average weekly California UI benefit payment of $85.34. This issue, as others noted earlier, requires further examination before final conclusions can be made. 5. Fred Best, and James Mattesich, Op.Cit., page 28. 6. Fred Best, Exchanging Earnings for Leisure: Findings of an Exploratory National Survey on Worktime Preferences, Special Research Monograph No. 79, Office of Research and Development, Employment and Training Administration, U. S. Department of Labor, Washington, D.C., 1980, Chapter 4. Preliminary Indications of Program Satisfaction 7 As many of you may know, the California Employment Development Department has undertaken a special two year evaluation of the Work Sharing Unemployment Insurance Program. This evaluation will involve in-depth interviews with representatives of 300 businesses participating in the program and 300 businessess utilizing regular layoff procedures, surveys of 1,500 workers, and an analysis of official data obtained from state sources. We have only just completed the planning and development stages of this project. Thus, anything I can say at this time concerning program impacts on participants must be viewed as highly tentative. Before the evaluation project was established, an informal "satisfaction poll" of participating firm and union representatives indicated that the Work Sharing UI program was generally well received. Representatives from 30 businesses who actually used the program were interviewed by telephone in early December 1979. Of these firms, 25 strongly favored the program and 5 were neutral. Those favoring the program cited increased employee retention rates, worker approval, and flexibility in its administration as reasons. In addition, representatives from 17 of the 33 unions representating participating workers prior to December 1979 were also contacted. Of these seventeen, 14 favored the program and 3 were neutral. Major reasons given 7. Gratitude is expressed to Norman Skonovd, who compiled and summarized the data reported in this section. for approval were that the Work Sharing UI program was fairer than layoffs and that participating workers were generally better off in financial terms because they then lost only some of their earnings and retained most fringe benefits. Four union representatives reporting initial resistance from union members noted that opposition had dropped off once workers became familiar with the program. At this time we are only a week into the data collection phase of the evaluation and can present only preliminary data from ten in-depth firm interviews. While such a small number cannot be technically construed as representative of the larger population of program participants, this group is part of a random sample of businesses that have used the Work Sharing UI program. For these ten businesses, length of participation ranged from 6 to 19 weeks. The businesses total number of employees ranged from 10 to 40 and included four manufacturing firms, one retail business, three service industries, and one financial institution. A few selected findings are presented below: Reasons for Participation. Of these ter businesses, five indicated that the retention of valuable employees was the major reason for program participation, three cited the financial benefits which their employees derived, and two cited lower production costs resulting from evenly distributed work-time reductions among all employees compared to the full-time layoffs of a select few employees. |