A program being implemented this fall by the Nebraska Department of Labor will give businesses across the state a new alternative to layoffs when economic times are tight.
The short-time compensation program, which takes effect Oct. 1, will extend partial unemployment benefits to groups of people who are still working, but whose hours have been trimmed by cost-saving employers.
Created by the Legislature in 2014, the program won’t replace workers’ lost wages dollar for dollar, but it allows them to keep at least part of their regular paychecks and avoid having to search for another job, said Nebraska Labor Commissioner John Albin.
Companies are also required to maintain their employees’ retirement and health insurance benefits.
“We all hate to loose skilled, dedicated employees due to economic distortions,” said Mike Boyle, vice president and plant manager for Kawasaki Motors in Lincoln, which cut jobs during the recession due to rapidly declining sales of its ATVs, utility vehicles and personal watercraft.
“Having an additional financial bridge could help employers avoid (or delay) the loss of their employees,” Boyle said.
Nebraska’s new program is modeled after similar short-time compensation programs in at least 21 other states.
Like Nebraska, many of those states came on board after witnessing how short-time compensation preserved jobs and limited unemployment during the recession.
“I think a lot of states realized, Wow, I wish we’d had this program before,” Albin said.
State Sen. Health Mello of Omaha, who sponsored the legislation to bring short-time compensation to Nebraska, said such programs have been credited with saving about 166,000 jobs nationwide in 2009 and nearly 100,000 jobs in 2010.
Those years provided an extreme case, but the pro-rated unemployment benefits available under the program can also help ease seasonal economic shifts that are common in some industries, particularly manufacturing.
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“It protects that workforce so that they don’t have to keep retraining people,” Mello said.
Recruiting and training skilled labor can represent a major investment for employers, and maintaining and boosting the state’s available workforce has been a particular focus of Nebraska’s business community in recent years.
While some Kawasaki workers require just a few days of on-the-job training, preparation for more technical positions, such as those operating computer-controlled machines, can take far longer.
“It may take months to get all the proper training in place for them to be able to do that work, and then years for them to be proficient,” said Boyle.
Losing those workers during slow seasons or economic crises is significant, particularly for smaller firms with tighter margins.
Several smaller-scale manufacturers — some still smarting from the recession, others leery of discussing layoffs or cutbacks — declined to comment for this story.
Yet Albin said some employers have already expressed interest in the program.
To qualify their workers, each employer must have a formal “work-sharing” plan approved by the Labor Department. All employees in the affected group must experience the same reduction in hours — at least 10 percent of their usual weekly hours — and the benefits may last no longer than a year.
That year can be critical for keeping trained staff on board as businesses weather financial storms.
Kawasaki’s Lincoln operation is generally large enough to take seasonal ebbs and flows in stride, Boyle said, although he acknowledged the short-time compensation program could prove useful to the company in the future.
“I really appreciate the state government looking at ways to bridge problems that business has,” he said.