WASHINGTON, DC – In an effort to help return workers to the job, prevent layoffs, strengthen the safety net for workers, and ensure employers can maintain a highly skilled workforce, U.S. Senator Jack Reed (D-RI) is backing a series of proposals put forward by President Obama this weekend that would strengthen and modernize the nation’s Unemployment Insurance (UI) system by closing holes in coverage and improving connections to work. 

In his weekly radio address on Saturday, the President announced plans to ensure states provide a minimum 26 weeks of UI coverage and address holes in the UI system by expanding coverage to part-time, many low-income, and intermittent workers, and workers who leave work for compelling family reasons.  The President’s plan also would ensure workers have access to wage insurance.

Additionally, the President’s proposal also includes key elements of Senator Reed’s Layoff Prevention Extension Act, a bill that would extend the financing and grant provisions for the successful “work sharing” law Reed authored as part of the Middle Class Tax Relief and Job Creation Act of 2012.  As a result of Senator Reed’s efforts, an estimated $500 million in federal funding was made available to help states adopt or expand a short-term compensation program alternative to layoffs.

“We want to give people confidence and peace of mind that even if they lose their job through no fault of their own, federal financial support will be there to help get them back on their feet.  And that assistance, from UI to job training, should be delivered as efficiently and cost-effectively as possible.  That is what the President’s UI modernization proposal is all about: strengthening the safety net and making the system more effective so that it works better for businesses and individuals alike,” said Reed.

The concept of work sharing or “short-time compensation” is simple: it helps people who are currently employed, but in danger of being laid off, to keep their jobs during a business slow down or market shift.  By giving struggling companies the flexibility to reduce hours instead of their workforce, work sharing programs prevent layoffs and help employers save money on rehiring costs.  Employees who participate in work sharing keep their jobs -- along with health and retirement benefits -- and receive a portion of unemployment insurance benefits to make up for lost wages when their hours are reduced.

“It’s often said that the best job program is a job. That’s what work sharing is all about.  It is a proven, cost-effective program that saves jobs.  It benefits taxpayers, businesses, and workers.  We want more communities to benefit and save money while helping more workers earn a steady paycheck, and allowing companies to save when they’re forced to temporarily scale back,” said Reed.  “Extending this successful work sharing program is a smart investment in averting future layoffs and blunting economic downturns.”

Since becoming law, Reed’s work sharing law has helped save over 140,000 jobs nationwide, including 1,500 jobs in Rhode Island, according to estimates and analysis from the U.S. Department of Labor (DOL).  And it has saved states $265 million by reimbursing them for work sharing benefits they paid out to workers -- benefits that helped keep people on the job.  Since the law was passed, Rhode Island has received $7.7 million in federal work sharing benefits and grants, according to DOL.

Work sharing is paid for by the employers through their regular UI tax contribution or reimbursement process, with no deductions taken from employee wages to pay for the temporary benefits.

Before Reed’s bill became law (P.L. 112-96) in 2012, only a handful of states had work sharing programs.  Now, such programs enjoy broad bipartisan support and have been established in 27 states and the District of Columbia.

The $100 million in implementation grants made possible through Reed’s 2012 law expired at the end of 2014, and the 100 percent federal financing of these work sharing benefits will begin to expire at the end of this month.  The Layoff Prevention Extension Act of 2015 would extend these deadlines by two years so that states with existing work sharing programs, and those that are looking to enact a program, can qualify for federal support.

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