Short-Time Compensation: The AFL-CIO Perspective

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Short-time compensation: the AFL-CIO perspective

In 1975, the proposal that shorter workweeks be financed through the unemployment trust funds was cautiously but favorably received by AFL-CIO President George Meany, who wrote to Lillian Poses that the Federation's ". . . general view is in favor of the plan as long as it remains voluntary and safeguards are included in state legislation to protect all parties.'

As high unemployment continued, States began cutting unemployment benefits and it became clear that using trust funds to pay for a reduced workweek would mean worse hardship to those totally unemployed. And because benefits had lagged far behind wages, it looked as though senior workers in higher wage classifications would lose a higher share of their incomes, and not just for a few weeks, but for months or years.

Blindness to these threats to well-paid workers with secure jobs on the part of those who continued to promote work sharing as a "win-win' solution to layoffs eroded support among labor leaders. Repeated citations of the great success of German and Canadian experiments with work sharing turned out to be overstated, if not misrepresented. Both the German and Canadian counterparts of the AFL-CIO, the Deutscher Gewerkschafts bund Bundesvorstand (DGB) and the Canadian Labour Congress (CLC), reported problems and shortcomings that made it clear that foreign experiences were irrelevant and nontransferable to the American scene. The AFL-CIO then set about formulating its own concept of how short-time compensation could be made to work in the United States.

While discussions were going on within the AFL-CIO and jointly with the Department of Labor, the California legislature adopted the experimental short-time compensation law which has been extended three times since 1978 and will run through 1986. Although the California AFL-CIO neither supported nor opposed the Shared Work Unemployment Compensation bill, the plan proved more positive than might have been expected in that time and place, and a number of labor leaders strongly supported its passage and extension. Many workers gained from the bill under existing contracts --about 20 percent of the agreements allowed employers to reduce the workweek before resorting to layoffs. Previously, when employers exercised this option, considerable numbers of workers lost income without being able to qualify for unemployment compensation. In meeting this need, California's shared work bill opened the way for further development and experimentation and helped lay the foundation for the executive council's resolution of August 5, 1981, endorsing the concept of short-time compensation and outlining the conditions needed to make the concept's promise a reality.

First, the council said that short-time compensation must not be viewed as an alternative to active government programs to stimulate employment opportunities and the economy. This is vital because work sharing redefines employment while creating no new employment opportunities. This tends to hide a large part of the unemployment problem by inflating the statistic, "Working part-time for economic reasons.' In 1985, there were 5.4 million workers in this category, and although it is better than being unemployed, it reflects the failure of our economy to provide full employment. This general concern is strongly shared by the German and Canadian labor movements.

Secondly, the needs of those completely unemployed must be given the highest priority. If short-time compensation increases costs to the unemployment insurance fund, as it certainly may, legislators face the options of either reducting benefits to the unemployed in one way or another or of increasing revenue. And in today's political climate, it is nearly impossible to raise revenue for social needs. This approach--of looking at the costs to the fund--regards unemployment insurance and short-time compensation as a closed system. …