Iowa is one of 17 states participating in a federal program that lets businesses keep workers on part-time and the workers qualify for unemployment benefits, too. Kerry Koonce at the Iowa Workforce Development agency says before this year, only a handful of Iowa companies signed up for the “Shared Work” program.
“But with this current recession that we are in, we actually have 70 (Iowa) companies using it in 2009,” Koonce says. Under the “Shared Work” program, workers still get a steady, if smaller, paycheck from their employer. They keep their benefits, like their health insurance, and they cannot be laid off.
Initially, a company could use the program for 26 weeks. This past spring, state lawmakers increased that to 52 weeks at the urging of companies like Vermeer Manufacturing in Pella. Vermeer used the “Shared Work” program in 2001 — during the last recession — but they had to lay off workers when that 26 week period was over.
Vermeer vice president Vince Newendorp says when orders start coming back in, he’ll have everyone on board to meet demand.
“We could be better positioned than maybe some of our competitors, going forward, to take advantage of that rebound,” Newendorp says.
Vermeer plans to go off the “Shared Work” program after the first of the year, as Newendorp says demand has picked up for the company’s heavy machinery.
While the companies that participate in the program have to pay some additional unemployment taxes, participants say it’s far less than they’d pay if workers were laid off. Plus, Koonce — the spokeswoman for the Iowa Workforce Development agency — says there’s the expense of hiring and retraining new workers once orders for company goods increase.
“It allows companies to keep access to their training workforce, since they’re expecting to come back to full employment,” she says.
At Vermeer, employees who are working part-time now are getting unemployment benefits that amount to roughly a hundred dollars a week. Danny Egbert, a machinist at the Vermeer plant just outside Pella, welcomes that extra money.
“You know, it ain’t a whole lot, but every little bit helps,” Egbert says. “I was down to 28 hours a week…It’s put a strain on everything.”
State officials say most of the 70 Iowa businesses that are participating in the “Shared Work” program are manufacturing companies like Vermeer.
Read more about the program’s eligibility rules. Here’s a Wall Street Journal article about the program’s impact nationwide.