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Program Busier as Jobs Slow

Work Share Helps Firms Keep Employees in Times of Cuts

July 15, 2001|LISA GIRION | TIMES STAFF WRITER

When electricity costs skyrocketed amid a slowdown in orders for the metal casings that Del Mar Industries Inc. molds for computer makers, a little-known state program helped the Gardena company avoid layoffs.

The program, called Work Share, pays partial unemployment benefits when companies reduce workweeks or temporarily shut down to save money.

Launched in 1978 to help businesses avoid shedding workers during occasional or seasonal downturns by promoting reduced schedules, Work Share has never been more popular.

Claims have been on the rise since February, with 5,500 people filing for the first time in June, up from 741 a year earlier.

"Last year, it was really very, very minimal," said Gail Shinn, who manages the Employment Development Department's Work Share program. "Then, all of a sudden, it jumped."

The program has grown so fast that callers to its information line have gotten a recording saying a response could take as long as three days. To keep up, Shinn has added 10 people to her staff since April for a total of 34.

"We are a small office, and it's a statewide program," Shinn said. "The goal is to be able to answer people when they call."

California pioneered Work Share and remains one of only a handful of states that provide partial unemployment benefits, Shinn said.

Many manufacturers are shortening shifts to avoid operating during peak electricity price periods and others are reducing weeks or shutting down for a week or two because business is off, said Glenn Lindsay, manager of unemployment insurance services for the Employers Group, a statewide association of 5,000 companies.

Employers need to cut costs, but they are worried about losing experienced workers. Many have heard something about Work Share and want to know if it could help, he said.

"Employers are getting very antsy and restless, and they are hoping this will save the day," Lindsay said.

Word about the program is spreading quickly via e-mail loops shared by human resource managers struggling to cut costs without losing workers.

Even as the economy idles in neutral, retention remains job one for many manufacturers such as Del Mar, which relies on machines and techniques that take years to master and which competes for a limited pool of skilled laborers. Instead of laying off any of its 150 experienced machine and die-cast operators, the plant has scaled back its production workweek from four 10-hour days to three and shut down operations during the first week of July.

To ease the blow on workers' wallets and reassure them of their value, Del Mar got permission from Work Share officials to dip into its unemployment insurance account this month to supplement its workers' reduced wages.

Under the program, a full-time, minimum-wage worker who loses a day a week, for instance, would lose $50 in pay but receive an unemployment insurance check for $22.

"They are not going to be getting a big chunk of money," said Armando Rangel, Del Mar's human resources manager. "But still, it's some money coming in."

Del Mar hopes it's enough to keep them through the slow times.

"We don't want to have to keep churning them over," Rangel said. "The learning curve is so long on these machines. These are big machines where there is a lot of room for error, and it can cause some nasty accidents."

Program Seen as Good Temporary Solution

The program is funded through unemployment taxes paid by employers, who must apply annually to participate.

Employers fill out schedule forms for each worker for each week a Work Share check is desired and then mail the forms to the Work Share office.

The state draws the checks against what the company has paid in unemployment taxes. The amount a worker can draw is capped, like unemployment insurance benefits, and varies depending on wages. If the employer stays on the program too long, there is a chance the draw on its unemployment insurance funds could trigger a rate increase, said Lindsay of the Employers Group.

Employers "want to know, 'Should I lay off five, or put 25 on Work Share?' " Lindsay said. " 'What's the cheapest cost for my unemployment insurance?' "

His answer?

"If you think it's going to be temporary, it's a good way to retain employees."

Sometimes an employer will reduce hours and obtain Work Share supplements for workers only to have the downturn drag on longer than expected, Lindsay said. "At some point, you are going to have to bite the bullet and let them go."

Some employers complain that filling out the forms is tedious and time consuming. Information about the program is available online at http://www.edd.ca.gov, but the forms can't be submitted via the Internet.

Another drawback, said Delia Herrera, office manager for Magnesium Alloy Products Co., "is if you've been on it for a while, and you lay off somebody, they may not have much left" in unemployment benefits.

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