A little-used program for businesses to cut payroll costs and retain workers is getting increased attention as Maine employers look for ways to survive the severe economic downturn caused by the coronavirus pandemic.

Under the Maine Department of Labor’s WorkShare program, employers can reduce workers’ hours instead of implementing layoffs, while workers collect a modified unemployment payment to replace lost income, including a temporary $600-per-week federal benefit.

“It is essentially a layoff aversion program,” said Evelyn deFrees, director of external affairs at the labor department. “Broadly, it helps businesses keep the trained workers they have and helps workers stay connected to the jobs they have with the hope there will be a turn for the better for everyone involved.”

The approach appears tailor-made for the current challenges faced by businesses across all sectors of the economy. But few employers in Maine have turned to WorkShare. Just three companies were using the program before March 15, according to the labor department. Since then, 175 employers have signed on and 2,300 workers are receiving WorkShare benefits.

Those businesses span sectors and include law offices, accounting firms, lumber operations, restaurants, breweries, veterinarians, inns and dentists among others, deFrees said.

The number of WorkShare programs covers only a fraction of thousands of the Maine companies that have lost revenue and employees, and tens of thousands of workers who have been laid off or furloughed from their jobs.

Far more Maine businesses took advantage of federal Paycheck Protection Program forgivable loans, which also are intended to keep workers paid and connected to employers. Small employers in Maine took out more than 25,700 such loans worth $2.2 billion through the end of May.

Maine isn’t alone. WorkShare enrollment is low across the country, a mystifying situation, said Susan Houseman, an economist with the W.E. Upjohn Institute for Employment Research in Kalamazoo, Michigan, who has studied the program.

Quincy Hentzel, president and CEO of the Portland Regional Chamber of Commerce, photographed outside her Portland office Tuesday, said a state program that could help Maine companies retain skilled workers is being underutilized. “I don’t think there has been a lot of exposure to the program.”  Derek Davis/Staff Photographer Buy this Photo

“It’s a little puzzling to many of us why it is not being used more nationally,” Houseman said. About 200,000 U.S. workers receive WorkShare benefits, according to the latest federal statistics, a minuscule amount compared to the roughly 21 million U.S. residents who were collecting unemployment benefits as of May 30.

Federal statistics may be out of date, but Houseman suspects the program went unnoticed by employers as stay-at-home orders forced business closures triggering a flood of unemployment claims three months ago.

“Businesses likely didn’t know about it – the recession hit really quickly and the states didn’t have the bandwidth to advertise and promote it,” Houseman said.

WorkShare can still help, she added. Under the CARES Act, the federal government will pay for benefits through the program, and it can be used to rehire employees at reduced hours as businesses tentatively reopen.

“I think it is going to be an important program moving forward because we are going to be in this situation for a long time,” Houseman said.

Maine adopted WorkShare in 2011, one of several states to do so in the midst of the Great Recession. Currently, about half of the states have a WorkShare program. Companies can enroll in the program if they avoid laying off at least 10 percent of their workforce during a temporary, unanticipated slowdown in business.

Employers can reduce hours by at least 10 percent and as much as 50 percent across the entire company or a single unit or shift. Workers with reduced hours receive a modified unemployment benefit proportional to the amount of time cut.

The state works with employers to develop individual plans to address their workforce needs, said deFrees, of the Maine labor department.

Plans can be modified as business needs change, but hour reductions and payments are intended to be consistent, rather than fluctuating from week to week, she said. Plans typically last two to six months, but businesses can stay on WorkShare longer.

“The idea is that at the end of a very bad time, employers have trained workers, and workers have the jobs they were trained on,” deFrees said. “The workers aren’t out in more dire circumstances, and employers aren’t looking for more workers.”

Going into the pandemic, Maine’s unemployment rate had been below 4 percent for 51 consecutive months Employers’ biggest concern at that time was finding enough qualified workers. But in April, the state’s unemployment rate shot up to 10.6 percent.

The economic recession triggered by the pandemic is unusual because it is linked to a public health threat, as opposed to financial disruption like the Great Recession a decade ago. Businesses that survive want to find ways to keep the workers they have, instead of spending the time and money to hire and train replacements.

That seems to be what makes WorkShare such an attractive option, said Quincy Hentzel, president and CEO of the Portland Regional Chamber of Commerce.

Hentzel said her organization established a WorkShare program last month, concerned about the future of funding from membership dues and programs.

“I have spent the last three years building my team at the chamber; the last thing I wanted to do was lay them off and lose them,” Hentzel said.

She suspects part of the reason there has been lackluster interest in the program is because employers simply don’t know it is an option. Hentzel didn’t know about it herself until she heard about it during a call with Labor Commissioner Laura Fortman in April.

During a webinar with members about the program last month, it seemed clear the existence of WorkShare was news to many, Hentzel said.

“You could tell there was a lot of interest, and you could tell people were hearing about this for the first time,” she said. “I don’t think there has been a lot of exposure to the program.”

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