Report: Work Share Program Would Have Positive Impact on Indiana

CYNJvbRUoAA_kOmA new report released today by the Indiana Chamber of Commerce encourages the state to implement a voluntary work share program, labeling it “a clear stabilizer during a business cycle.” Work share would enable employees to stay on their job at reduced hours during tough economic times and collect partial unemployment compensation.

The policy – currently in place in more than half the states – has enjoyed support on both sides of the aisle the last few years, but has yet to make much progress in the state Legislature. The Indiana Chamber hopes this research, led by Michael Hicks of the Center for Business and Economic Research at Ball State University, will help get the ball rolling to pass work share legislation. The research was conducted at the request of the Indiana Chamber Foundation and the Indiana Department of Workforce Development.

The overriding conclusion reached by Hicks is that a “work share program would reduce business costs for participating firms by reducing search and hiring costs, and would stabilize families and communities.”

He continues, “We anticipate that unemployment and earnings will suffer less volatility associated with an economic downturn. This may have longer term impacts by reducing long-term unemployment and increasing consumer spending and growth in sales tax revenues over the short run.”

The report notes that the manufacturing sector, particularly the medium-sized manufacturing firms, would be the ones using the program the most. Indiana remains the most manufacturing intensive state in the country.

These findings confirm what advocates have been saying for several years, remarks Indiana Chamber President and CEO Kevin Brinegar.

“The benefits are real and significant. Work share allows employers to maintain a skilled, trained and stable workforce, while at the same time, employees keep their jobs and benefits instead of facing unemployment and further financial uncertainty.

“There is no negative impact on the state’s unemployment insurance fund,” he offers. “Instead of paying full benefits to a smaller group of recipients, a larger group of employees will receive reduced benefits.”

Here’s an example of how a work share program unfolds. Instead of laying off 10 workers due to decreased demand, a company could keep the full workforce in place but reduce the hours of 40 workers by 25%. The impacted employees would receive three-quarters of their normal salary, as well as be eligible for partial unemployment insurance benefits to supplement their reduced paycheck and keep full benefits.

Brinegar explains that “work share is generally a temporary solution used by employers for no more than six months during an economic slowdown.”

Tom Easterday, executive vice president for Subaru of Indiana Automotive in Lafayette, believes now – while the state’s economic picture is still bright – is the perfect time to enact a work share program.

“If we wait until there’s another economic downturn to take action, then it will be too late. Businesses across Indiana may already be impacted and jobs will be in jeopardy. Now is the time to prepare by implementing an efficient and effective workshare program, so it’s in place when needed.”

In the report, Hicks replays the unfortunate domino effect that took place in Kokomo in 2009 when two large automakers (GM and Fiat-Chrysler) suspended manufacturing for two months. While they could afford to continue employment due to their cash reserves, their large supply chain of smaller companies could not and were forced to lay off employees.

“Work share would have likely enabled some of these operations to continue at a slower pace. … The commercial benefits would have accrued primarily to these smaller manufacturing firms and would likely have stabilized the Kokomo economy significantly during this time.”

Brinegar reveals that early estimates place the annual costs to establish and operate a work share program in Indiana to be between $1 million and $1.5 million. He believes a nominal yearly surcharge of $10-$15 for those Hoosier businesses currently paying into the unemployment insurance fund would reach that amount and make the most sense.

“The amount is so small, especially for the possible benefits to an employer down the road,” he begins. “This group also received a per employee break recently when the state executed the early payoff of the federal unemployment insurance loan. This saved each business more than $126 per employee.”

Establishing a work share program in the state is one of the Indiana Chamber’s 2016 top legislative priorities.

The work share research document is available at www.indianachamber.com/labor.

Tour Events in Lafayette, Southern Indiana Connect Education with Industry

20140625_TF_Subaru_Legacy_Associates-8The Indiana Chamber recently co-sponsored two industry tours that brought educators and employers together to find ways to align efforts and better meet the needs of students.

The first event was in Lafayette at Subaru of Indiana Automotive. Educators, counselors and administrators listened to representatives from Caterpillar, Nanshan America, Kirby Risk, Duke Energy and Chrysler Group. Each employer seemed to be facing the same issue – a significant portion of their employees will soon be eligible for retirement and the current talent pool cannot replenish their workforce.

The group toured the Subaru plant, where they saw nearly every process for building a vehicle. Subaru, like many manufacturers, hires employees of almost all educational backgrounds, from high school diploma to master’s degree.

The next industry tour was in the southwest region at NSA Crane, a United States Navy installation. The base is the third largest naval installation in the world by geographic area and employs approximately 3,300 people.

Representatives from GKN Sinter Metals, TASUS Corporation, Cook Group and Jasper Engines all spoke about their workforces. Overwhelmingly, employer needs center on soft skills (communication, basic math and professionalism) and workforce readiness.

Matt Weinzapfel of Jasper Engines reported that 48% of their workforce hold an associate’s degree and/or technical certification and 36% hold no post-secondary degree, while only 16% hold bachelor’s degrees.

The group toured the Crane naval base and learned about jobs in electronic warfare, strategic missions and special missions. The base also offers internships within the various sectors.

“All of these jobs sitting open can be filled if we break down the knowledge barriers and reach students,” said Dan Peterson, vice president industry & government affairs, Cook Group.

The Indiana Youth Institute hosted the events, with the Center for Education and Career Innovation and the Center of Excellence in Leadership of Learning also co-sponsoring.

Kokomo Mayor Says Home Buying Incentive Will Boost Local Economy

Kokomo is losing money because many of its workers live outside of their community, and thus spend more money there. The city’s mayor believes a home buying incentive will ultimately bring more money to the community. Read this press release and see if you agree:

Indiana cities are often in competition to attract new businesses to their communities. The City of Kokomo, Indiana has developed an incentive program it hopes will attract residents of nearby communities to purchase a house in Kokomo.

The city has enlisted the help of its major employers to draw employees who work in Kokomo, yet live elsewhere, to consider purchasing a home there.

The Kokomo Homeownership Investment Program provides homebuyers with incentives. Among those is a $5,000 reimbursement for exterior improvements on a newly purchased home. In addition a local moving company is offering a ten percent discount when moving a new resident or family to Kokomo.

Kokomo’s largest employers support the program and are promoting it to their workforce. Companies such as Chrysler, Delphi Electronics and Safety, and Haynes International were helped in recent years with municipal loans or abatements, and now these companies are returning the favor by touting Kokomo’s relocation incentives and benefits of living in the community in which they work.

Kokomo Mayor Greg Goodnight explains the economic data that inspired the program, “Twenty percent of our workforce lives outside of our community. The problem is compounded by the fact that this 20 percent earns 30 percent of the income generated here. We’ve been investing our city’s limited financial resources in quality of life projects. Now we are stepping up the campaign to attract our workforce to also live here.”

More Kokomo Homeownership Investment Program details can be found at www.trykokomo.org.

Big and Blue: Michigan’s Unemployment Rising, Tax Revenues Shrinking

Michigan is a beautiful state, but right now its economic situation isn’t. The Detroit News offered this article yesterday articulating just how true the phrase "no rest for the weary" is becoming for the Great Lakes State, noting a projected unemployment rate of 11% coupled with declining tax revenues:

Michigan’s jobless rate will top 11 percent in each of the next two years and state tax receipts this year will come in $870 million below estimates made in May due to the languishing economy, according to a revenue forecast released Wednesday.

The House Fiscal Agency report says unemployment in Michigan, which was 8.4 percent in 2008, will rise to 11.3 percent this year and 11.4 percent in 2010. The jobless mark will peak at 11.7 percent in the first quarter of 2010, the report predicts.

"Michigan’s economy and state revenue will be significantly affected by the national recession, the weakened level of motor vehicle sales, the tight credit conditions, and the financial condition of General Motors, Ford, Chrysler and their suppliers," the report says.

U.S. Senators: Auto Bailout No-Go for Now

The proposed $14 billion auto bailout, which passed the House, was defeated in a procedural vote by the U.S. Senate last night. However, both Indiana Senators, Richard Lugar (R) and Evan Bayh (D), voted in favor of allowing a vote on the measure.

Lugar says:

“A new Congress will be in place in a little more than three weeks and will be able to again consider options. In the meanwhile, the Administration has the funding and ability to extend credit to the car companies as they have already done in the financial sector,” Lugar said.

“In 1979, at the brink of collapse, the Chrysler Corporation came to Congress asking for aid. Senator Paul Tsongas and I worked more than six months to forge a deal based on tough love: assistance would be provided, but only on condition of substantial compromise by all parties,” Lugar said.
 

Auto Bailout Passes House

The auto bailout for the Big 3 (Chrysler, Ford, GM), worth $14 billion of assistance, passed the U.S. House of Representatives by a vote of 237-170. Here’s how Indiana’s Congressmen voted:

For
Andre Carson (D)
Joe Donnelly (D)
Brad Ellsworth (D)
Baron Hill (D)
Pete Visclosky (D)
Steve Buyer (R)
Mark Souder (R)

Against
Dan Burton (R)
Mike Pence (R)

The bill now heads to the Senate. Indiana’s junior Senator Evan Bayh (D) has this to say:

“We’re faced with trying to choose the best among unpalatable alternatives. Nobody wanted to give money to the banks or to the insurance companies, and nobody wants to give money to the auto industry. I don’t. But if the alternative is losing hundreds of thousands of jobs and having automakers, dealerships, part suppliers, and other retailers in local communities go down, we have to make a hard choice here.

“People think the economy is bad now, but if we let all these companies go belly up, and all those folks get laid off, I’m afraid it would be much worse.

“Indiana has a huge stake in this debate. If the big auto companies go down and thousands of jobs are lost, it’s going to hit us a lot harder than almost any place else in the country."