Michigan expects to save $80 million in payroll costs by participating in a work sharing program that reduces work hours among more state employees.
Researchers and state officials have touted work sharing during the coronavirus pandemic to help spare full layoffs. While only a few dozen Michigan employers participated in the state’s work sharing program prior to the pandemic, interest has spiked with more than 400 companies now participating, as MiBiz previously reported.
Gov. Gretchen Whitmer announced today that the state would participate starting Sunday through July 25 in an effort to help lower the state’s anticipated multi-billion-dollar budget deficit. Under the plan, affected state employees will take two temporary layoff days per pay period. Some state managers will not participate but will take one layoff day every other pay period. More than 31,000 state employees will be affected by the change.
“As we continue to combat COVID-19, it’s clear that we’re facing unprecedented challenges that will lead to serious budget implications for the state of Michigan,” Whitmer said in a statement. “Utilizing this federal program keeps state employees working so they can continue to provide critical services to Michiganders and protects their paychecks so they can continue to support their families.”
The Wall Street Journal reported last month that 26,000 people across the U.S. were receiving unemployment benefits through work sharing in late March, up from 9,000 during the same time period a year earlier.
State officials have encouraged companies to participate in work sharing because the costs of the program are being covered by the federal government. The state’s Unemployment Insurance Agency administers the federal program.
Under work sharing, also known as short-time compensation, more employees work reduced hours but can still collect partial state unemployment benefits based on the reduction. State employees will retain their health insurance and other benefits. These employees are also still eligible for $600 weekly unemployment benefits from the federal government under the CARES Act.