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September 1984, Vol. 107, No. 9
past and present
Short-time compensation (STC) is a program voluntarily entered into by an employer (and by the union, where present) whereby, in lieu of extensive layoffs due to economic conditions, some or all employees work a partial workweek (usually 4 days), and receive a partial, prorated unemployment benefit (usually for 1 day). For example, an employer would adopt a 4-day workweek for 6 months, rather than laying off 20 percent of the workers for that period. Because the unemployment benefit would replace about one-half of the lost wages, workers would get about 90 percent of their regular income. Few added costs are involved because about the same total amount of benefits is used as for layoffs, but they are spread among more people. The program is temporaryusually lasting 6 months, although in California, it can last up to a year if high unemployment prevails. Six StatesCalifornia, Arizona, Oregon, Washington, Florida, Marylandhave amended their unemployment insurance benefit to permit short-time compensation for reduced workweeks.1 A seventh State, Illinois, has a short-time compensation plan, but it is not part of the regular unemployment insurance trust fund. Canada has a similar program, and most of Western Europe and Japan have some form of short-time compensation program.
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1 See Fred Best and James Mattesich, "Short-time compensation system in California and Europe," Monthly Labor Review, July 1980, pp. 12-22. The Department of Labor's evaluation of existing State programs is scheduled for completion in 1985, pursuant to the Tax Equity and Fiscal Responsibility Act of 1982 (P.L. 97-248, Part III, Subtitle 6) which also requires the Department to give technical assistance to State with short-time compensation programs.
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