WASHINGTON, DC - Today, after reports showing payrolls fell by 190,000 workers last month and the U.S. unemployment rate climbed to 10.2%, U.S. Senator Jack Reed (D-RI) continued his call for Congress and the Obama Administration to take new, cost-effective steps to prevent more layoffs, aid businesses, and create jobs.

"Despite signs of recent economic growth, today's unemployment numbers are a grave reminder that we need to redouble efforts to prevent layoffs and encourage businesses to start hiring again. The package of tax cuts and unemployment insurance benefits signed into law this morning is a step in the right direction, but we need to do more. Indeed, we should pass work-share legislation to provide businesses with the flexibility to reduce hours instead of cutting jobs," said Reed, a member of the Banking Committee. "These kind of work-share programs work. The 17 states that have adopted work-share programs have already saved 150,000 jobs this year alone. They have helped people keep their jobs, their health benefits, and saved taxpayers millions of dollars. We should expand work share nationwide so that more businesses and workers can take advantage of this program."

Work-share programs help people who are currently employed, but in danger of being laid off, keep their jobs. These programs help prevent companies from hemorrhaging more jobs by allowing employers to reduce their workers' weekly hours and pay, and states make up some of the lost wages from their unemployment funds. Companies are able to remain competitive by lowering costs and keeping a skilled work force, employees keep their jobs and health benefits, and states only pay a fraction of the price it would cost if the workers went on unemployment.

Nationally, 17 states -- including Rhode Island -- operate work-share programs to help people keep their jobs and help companies avoid expensive re-hiring and re-training costs. However, not enough states have work-share programs, and it is often under-publicized and underutilized by businesses in states that do.

The New York Times noted: "States have different unemployment insurance formulas, but generally, a worker being paid $600 a week, if laid off, might receive $300 in jobless benefits. With work-sharing, if that worker's hours drop 20%, wages would fall to $480 and work-sharing would make up at least half of the lost wages ($60), for a total of $540 a week. With savings from reduced income taxes and from commuting fewer days, some workers nearly break even."

Rhode Island has one of the highest unemployment rates in the nation at 13%. Without work share, the state's unemployment would be above 13.8%. According to the Rhode Island Department of Labor and Training, WorkShare has prevented over 5,800 Rhode Islanders from losing their jobs in 2009, a major increase from the 2,896 jobs saved in 2008.

Employer participation in Rhode Island's WorkShare program continues to increase and is a very viable option for employers. For example, Hope Global, a Cumberland-based manufacturer of textile products, successfully implemented a four-day week last winter which helped the company reduce lay-offs. The company has since restored employees to regular work schedules.

Like in other states, the Rhode Island WorkShare program's popularity has increased beyond manufacturers, as approximately 500 employers have active plans including architecture, engineering, and financial companies and firms in the service industry like heating and plumbing businesses.

In August, Reed introduced the Keep Americans Working Act (S. 1646), which would provide temporary federal financing of benefits for up to 26 weeks over two years. States requiring an employer to maintain health and retirement benefits would receive a larger share of federal funds. Reed's bill would also provide funding for competitive start-up grants to states that currently do not have work-share programs.

"This plan will help prevent layoffs, make businesses more productive, and save taxpayers money by keeping people on payrolls and off unemployment benefits," said Reed. "My goal is to expand this program to allow more companies to take advantage of it and help more employees keep their jobs and their benefits as we work our way through these tough economic times."

In a November 2nd op-ed in the New York Times, economist Mark Zandi wrote: "the government could help minimize the number of new job losses by promoting work-share programs. Nothing damages morale at a company more than layoffs; the experience not only is crushing for those who lose their jobs, but also weighs on those who remain, including managers. Layoffs are also costly, given severance expenses and the costs of rehiring or training new employees when business picks up again. Seventeen states offer effective work-share programs. Under these arrangements, employers cut workers' hours — not their jobs — and states make up a portion of workers' lost wages with unemployment insurance payments. Congress should provide financing to expand such programs nationwide."

Zandi, who analyzed Reed's bill, estimates that Reed's work-share proposal offers a very high "bang for the buck." Every dollar devoted to finance state work-share programs results in $1.69 in GDP.

Reed also noted that the work-share model was successfully adopted by the German government. Today, the unemployment rate in Germany is 7.6%, the same jobless rate it had going into the recession.

The 17 states that currently operate work-share programs include: Arizona, Arkansas, California, Connecticut, Florida, Iowa, Kansas, Maryland, Massachusetts, Minnesota, Missouri, New York, Oregon, Rhode Island, Texas, Vermont, and Washington.

U.S. Senator John Kerry (D-MA) cosponsored S. 1646, and Reed has been working to bring this proposal to the Administration's attention.