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Short-time compensation (STC), also known as work sharing, is an optional program within some state unemployment insurance systems. Under STC, employers experiencing a temporary reduction in business lower the average hours of employees in lieu of laying off workers. Employees whose hours are lowered receive Unemployment Insurance (UI) benefits in proportion to the reduction in their hours, while businesses retain valued employees and avoid future recruitment and training costs. Although STC is a potentially important mechanism for mitigating unemployment, employer use has been low in most states with the program. Lack of awareness among employers about the STC program has long been hypothesized as a reason for the low take-up.

The Chief Evaluation Office (CEO) of the U.S. Department of Labor (DOL) contracted with Westat and its subcontractors—the Upjohn Institute for Employment Research and Social Dynamics—to conduct demonstrations in Iowa and Oregon that rigorously evaluate the effectiveness of informational campaigns designed to increase employer awareness and use of STC.

Research Questions

• What were the effects of the interventions on program awareness?
• What effects did the informational campaigns have on program use?
• What were the costs of the interventions?
• What are other potential barriers to STC use?

Key Takeaways

• In the absence of an informational campaign, employer awareness was low.
• Relatively modest outreach, primarily consisting of mailings, raised awareness among targeted Iowa and Oregon employers by an estimated 15 to 30 percentage points.
• The informational campaign also increased STC adoptions among Oregon employers receiving the information by an estimated 58 to 100 percent. Increased awareness did not translate into greater take-up in Iowa, likely due in part to the strong economy prevailing in Iowa during the study.
• A large majority of prior users have strong, positive views of the STC program and do not find the costs of participating in STC a barrier, suggesting scope for significant expansion in program use in the future.
• Outdated IT systems may be a significant barrier to states’ ability to expand the STC program.

Citation

Houseman, S., Bennici, F., Labin, S., Abraham, K., O’Leary, C., Sigman, R. (2017). Westat. Demonstration and Evaluation of the Short-Time Compensation Program in Iowa and Oregon Final Report. Chief Evaluation Office, U.S. Department of Labor.

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The Department of Labor’s (DOL) Chief Evaluation Office (CEO) sponsors independent evaluations and research, primarily conducted by external, third-party contractors in accordance with the Department of Labor Evaluation Policy and CEO’s research development process.