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Indiana loses out in Work Share dollars
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Indiana loses out in Work Share dollars

A rare proposal that enjoyed support from business, labor and anti-poverty groups ended up on the cutting-room floor in Indiana.

As a result, Indiana lost the opportunity for millions in federal funds that Work Share proponents say could have helped employers retain skilled workers and employees retain their jobs and benefits during economic downturns.

However, the program is opposed by the state's Department of Workforce Development. Department spokesman Joe Frank notes the initial unemployment insurance claims in the state are at their lowest in 14 years. 

In addition, he wrote, "the challenges and risks, including fraud, outweigh the benefits."

Although the state missed the deadline for about $2 million in federal dollars that could have been used to implement the program and publicize it to firms, proponents like the Indiana Chamber of Commerce and the Indiana Institute for Working Families will make another attempt to get the measure passed in the next legislative session.

According to the Indiana Institute for Working Families, the Work Share program gives the employer the option of reducing the hours and wages of all employees or a particular group of employees instead of laying off workers. Instead of laid-off workers getting full unemployment benefits, impacted workers are eligible for partial unemployment benefits to supplement reduced paychecks.

Michigan and Ohio were able to pass legislation to put the Work Share program into effect in their states, and Missouri recently reauthorized its program.

As part of The Middle Class Tax Relief and Job Creation Act of 2012, which was supported by Gov. Mike Pence as a U.S. congressman, Indiana would have been eligible for a $691,620 in implementation funds to launch the program and $1,383,241 in outreach funds to educate employers about the program.

The liberal Center for Economic and Policy Research estimated in a 2012 policy brief Indiana potentially could save more than $17.1 million in state unemployment costs through federal funding provided for three years under the program. It estimated Illinois could have saved nearly $54 million annually.

The program also was supported in an April paper by conservative economists Kevin A. Hassett and Michael R. Strain published by the liberal Center on Budget and Policy Priorities.

In their paper, the authors contend the Work Share program in Germany helped that country maintain employment levels better than many other countries during the recession.

In Illinois, the sponsor of the bill to implement the program noted it received support from labor and business. It gained unanimous approval in the Illinois House, but Rep. Steve Stadelman said it became entangled with other legislation that caused it not to become law. Stadelman hopes it can be passed before the end of the year to allow Illinois to meet the deadline to allow the state to get some of the federal money available for the program.

Indiana lost its chance since lawmakers will not be back in session until after the deadline. Still, the bill's advocates are planning to make another push to approve the bill based solely on the merits of the program. The bill introduced this year died in committee without coming to a vote.

LaPorte Republican Tom Dermody, who sponsored the legislation in the last session, said there has been some discussion about the program not being needed as much with the economy improving in the state. He said, however, the state needs to be prepared ahead of time in case of another economic downturn. 

Mike Ripley, a lobbyist with the Indiana Chamber of Commerce, said it is an issue supported by labor and the chamber, as well as both chambers, and "we can't get it to move."

With the program being opposed by the Department of Workplace Development, there is concern Pence would veto legislation allowing for the program's implementation.

Ripley said the department has expressed concern the program could hurt the state's unemployment trust fund, although Dermody and others say studies on the program in other states have shown that is not the case.

Dermody said he thinks the opposition is, it can be viewed as a government entitlement and government should keep out of the workings of private business.

Derek Thomas, of the Indiana Institute for Working Families, said some opponents have opposed it because they liken the program to socialism. Thomas, however, counters the Work Share program can be viewed less as socialism than regular unemployment insurance.

Workforce Development spokesman Frank said his department has not asserted that Work Share is a form of socialism.

"We do feel that work-sharing would negatively affect the solvency of the UI (Unemployment Insurance) Trust Fund and would also very likely result in increased costs for all Hoosier employers, however," Frank wrote.

Dermody sees the program as a way to help a segment of the population that politicians often say needs assistance.

"Everybody talks about the middle class, and this is a way to keep them working during the downturn," he said.

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