State program pays partial benefits if hours are reduced
The last thing anybody wants to do in this tight economy is lose their job. And the last thing employers want to do is start laying people off.
So how can employers and employees avoid that situation altogether?
One possible solution that is available to Washington businesses is the Shared-Work Program through the Employment Security Department. This program will pay employees up to 20 hours worth of unemployment benefits should the company they work for reduce their hours.
For Achim Fuchs, general manager of Teal-Jones Lumber Services in Sumas, the program has been a lifesaver. The lumber industry has seen a dramatic drop in demand in the last three years, due in part to the slowdown in construction. And when there is less lumber to dry and cut, Fuchs is forced to shut the plant down for a day or two.
“It’s a last resort,” he said. “It’s not a tough decision because it’s the only decision.”
Every day, Teal-Jones receives several truckloads of lumber from Canada to process and package. And if those trucks don’t keep a steady supply coming, that means less work for the planar facility.
“We try to bring in more than we can go through in one day, but we never have more than two days worth of supply to go through,” Fuchs said.
But with the Shared-Work Program, Fuchs doesn’t have to worry about laying people off during slow periods.
“This way we keep people working on a steady basis and they’re not out of pocket for a day or two of work,” Fuchs said. “It’s a win-win for us and the employees.”
Program in high demand
A true sign of the times, the Shared-Work Program is in record demand.
As of mid-December, 17,000 employees at 475 different companies in the state were participating in the Shared-Work Program, the highest number since the program started, said Mark Varadian, a spokesman for the Employment Security Department. And the list of businesses waiting to join is growing every day.
The Shared-Work Program was created by the state Legislature in 1983 to help businesses keep the doors open and to allow employees to take partial unemployment benefits.
“We recognize that there are times when a business can’t afford to stay at full production and we want to give employers options other than laying people off,” Varadian said.
For example, if a company had to reduce payroll by 40 hours, that could be achieved by cutting eight hours from five positions rather than cutting a whole position. Then those five employees will receive one day’s worth of unemployment benefits for that week.
According to the ESD, the average weekly unemployment benefit is $350, which equates to $70 a day. It’s not much money, “but a little extra money always helps, especially with the way the economy is,” said Som Prak, the inventory manager at Teal-Jones.
Prak is in charge of making sure all the finished lumber is stored properly and makes it onto the right outgoing truck. He estimates that he only used the program to cover four or five days of missed work last year because there is always a need to move inventory.
Taking time for continuous improvement
The Shared-Work Program is only one way to be creative with employee hours. If business is slow, Chris Ortiz, president of Kaizen Assembly in Fairhaven, recommends reassigning employees to help with continuous improvement projects. It may cost more in the short term to keep these employees around during the slow times, but the company will be better off in the long run, he said.
Ortiz specializes in lean training and consulting. For him, this slow economy is the perfect time for companies to re-evaluate workflow to find areas that could be improved.
“When a company is slowing down, that is the best time for continuous improvement projects,” Ortiz said. “Find out what you can run better and where you can improve.”
When business is booming, improvement projects often get pushed to the side in order to meet production demands. Staff members are sometimes too busy with the day-to-day grind to take a step back and look at the overall production process.
Thus, when demand drops, Ortiz recommends assigning staff to look for areas of improvement or train staff to work in other areas of the company. In the end, the company will end up with better skilled employees and smoother operations.
Even Toyota, the longtime model of efficiency, is taking a step back to analyze their production system, Ortiz states.
“I’ve been asking people, ‘Do you want to be a Toyota company or a GM company?’” Ortiz said, referring to GM’s recent request for federal bailout money. “If you have the resources and ability to do it, re-evaluate your business and improve operations so you can be stronger when business picks up again.”
Shared-Work saves on retraining costs
Without the Shared-Work Program, Fuchs is certain he would lose his best employees at Teal-Jones. The company would most likely be forced to cut jobs and wait until the market turned around to hire people back.
“Limping along understaffed is not the answer. Eventually you have to re-staff and by then, the more motivated people will have found another job,” Fuchs said. “This program strengthens our work force and helps us keep grade A employees.”
It also saves Teal-Jones from the expensive task of retraining new employees, which in the long run, can save the company a lot of money.
“Employers have enough trouble finding and keeping experienced staff,” Varadian said. “If you can keep people who are already trained and know the job, then both sides win. The employer can ramp up again quicker when the business picks up and the employees are still getting paid.”
The one downfall of the program is that it creates a lot of paperwork, Fuchs said. Employees have to fill out a claim form every week, even if the company did not take any unpaid time off, and all of that paperwork goes through Fuchs.
Fuchs estimates that the company closed for a total of about 12 days last year, but he did paperwork all year long.
“The paperwork keeps going all year, but I think it’s worth it,” he said. “Otherwise we’d be struggling with higher turnover.”
This program is run by the Employment Security Department. It allows employees to claim up to 20 hours of unemployment benefits if their company is forced to reduce hours.
To be eligible for the program, businesses must first be accepted to the program. Full-time hourly employees are then eligible to receive benefits for lost hours. Companies may participate for only two years at a time and may reapply after one year off.
“This is not something that is going to be a permanent fix, so don’t build it into your business model,” said Mark Varadian, a spokesman for the Employment Security Department.
For more details, visit the Web site www.esd.gov.wa and search for Shared-Work Program.