IF Workshare Time Extension Included in Next Stimulus Bill, Oregon State and Local Governments Have Tool That Could Save $125 M to $735 Million In 26 Weeks.

In the next Federal stimulus bill it's understandable that much of the focus will be on securing some type of extension of the current unemployment supplement, now at $600 per week. 

However, for Oregon (and Washington state also) a time extension of the 100% Federal funding of Workshare/short-time compensation program would provide a tool that could help achieve significant state and local budget savings. Therefore an extension of the current December 31, 2020 deadline to at least June 30, 2021 should also be a key Oregon priority.

To illustrate potential state and local savings from a 100% federally funded Workshare time extension I constructed 4 Oregon scenarios, all lasting 26 weeks:

• Scenario 1A: 10,000 state and 10,000 local government employees take 8 Workshare hours per week. [That's 24% of state government employees and 5% of local government employees].
• Scenario 1A: 10,000 state and 10,000 local government employees take 16 Workshare hours per week. [That's 24% of state government employees and 5% of local government employees].
• Scenario 2A: 25% of state and 25% of local government employees take 8 Workshare hours per week. [That's 10,243 state government employees and 51,590 local government employees].
• Scenario 2B: 25% of state and 25% of  local government employees take 16 Workshare hours per week. [That's 10,243 state government employees and 51,590 local government employees].

All scenarios use the 2019 average annual wages and employee counts posted on the Oregon Quality information website for Employment and Wages by Industry (QCEW). 
State government data is HERE; local government data is HERE.  [IF the mix of wages for state and local government employees covered by Workshare agreements skewed the  wages from the average wages I used this would obviously change the savings possible from 100% federally funded Workshare]. 

The 2 page PDF file I posted HERE and embedded below shows that the range of budget savings is from $126M to $735M. (The graph on page 1 illustrates the results detailed in the table on the second page). 

In addition to reducing current state and local budget costs for wages, use of 100% federal financing may also avoid increases in future state and local government UI insurance costs that would normally follow increases in UI claim rates.

Absent significant new federal resources, staff reductions of some kind will likely be part of any state and local budget reduction effort. Workshare DOES mean a reduction in service hours to the public, but it also reduces the need for mass layoffs and Workshare employees retain their fringe benefits, including health insurance.

Also, IF supplemental UI payments continue, those supplemental payments plus reduced wages can combine to make up for all of reduction in wages (and more, depending on the level of supplementation] that result from a cut in work hours. This will reduce the need for other forms of income support for Workshare employees, freeing up those resources for others with greater needs. 


Originally created and posted on the Oregon Housing Blog.