Why Work Sharing Wont Work

James Sherk / December 10, 2009

With over 15 million Americans out of work Congress is searching for ways to reduce unemployment. The latest idea, put forward by Sen. Jack Reed (D-RI) is “work sharing.” Under work-sharing, companies reduce the hours (and pay) of all their employees instead of laying off some workers and having the remaining employees work normal hours. The government then gives workers a pro-rata share of unemployment insurance payments to partially compensate them for their lost earnings from their lost hours.

Work sharing seems like a simple solution to the unemployment problem. Why not encourage companies to share the work that needs to be done instead of forcing some workers into unemployment? It prevents workers job skills from deteriorating and companies from having to retrain new workers when demand picks up. It makes so much sense that several European countries have already tried it. Studies of their experiences show that work sharing perfectly illustrates H.L. Mencken’s point: for every complex problem there is an answer that is clear, simple, and wrong. (more…)