Short-time compensation (STC) is an alternative to employee layoffs, whereby a larger group of workers simply work shorter work weeks and are compensated for their lost work time with partial Unemployment Insurance (UI) benefits. STC may offer a mechanism for neutralizing the pre-layoff bias inherent in the regular UI system by allowing UI compensation to be paid under a much broader set of conditions than those that apply to total layoffs. As it has bee implemented in the United States, STC is viewed as a work-force stabilization program to be used during periods of economic downturn that are expected to have only short-term effects on the labor needs of employers. Despite some previous efforts to evaluate the advantages and disadvantages of the STC program, many uncertainties have remained. This report attempts to resolve some of these uncertainties by addressing the major issues surrounding STC as defined by the U.S. Congress.