Business retention is a major component of community development. States generally have economic development agencies often tasked with recruiting new employers to locations with larger populations.
However, there may be limited resources available to assist smaller, established employers in rural areas. State workforce development agencies may offer options to avert or delay business layoffs or closures, including subsidies for incumbent worker training. Eligible business owners may not be aware of the resources which may be available to them via their state workforce development agencies.
Shared Work Unemployment Compensation Program
The Shared Work Unemployment Compensation, Workshare or Job Sharing Program provides an alternative for employers faced with a reduction in workforce. It allows an employer to temporarily reduce employees' hours and divide available work, or hours of work, among specific groups of employees in lieu of layoffs. It allows the employees to receive a portion of their unemployment benefits while working reduced hours to partially replace their lost wages.
To qualify for benefits under the Shared Work (SW) Program, employees must be regularly employed by an employer whose plan to stabilize the workforce has been approved in advance by the state administrator of the program or an authorized representative.
Workshare programs benefit businesses, workers and states. Businesses retain their trained workforce for easy recall to full-time work when economic conditions improve. Workers keep their jobs instead of being laid off.
While not fully replacing the lost wages, the unemployment benefit supplements a worker's income until they are recalled to full-time work. States save money by paying only partial unemployment claims, instead of paying full benefits to laid-off workers.
Advantages:
- Production and quality levels are maintained.
- Rapid recovery to full capacity is possible because of the retention of an experienced work force.
- When the economic climate improves, administrative and training costs of hiring new employees are minimized.
- Affirmative action gains are protected.
- Employee morale is maintained.
- Employees retain their skills and advancement opportunities.
- Public assistance expenditures may be lessened.
Work Opportunity Tax Credit (WOTC)
WOTC is a federal tax credit that encourages employers to hire workers from targeted groups. The tax credit is designed to help job seekers gain on-the-job experience and move towards economic self-sufficiency, as well as help employers reduce their federal income tax liability. Currently, the maximum tax credit ranges from $1,200 to $9,600, depending on the employee hired.
The employer must hire from among the following groups of job seekers to qualify for the WOTC (subject to verification and compliance with additional eligibility criteria).
- Qualified IV-A recipient: This target group refers to an individual who is a member of a family receiving assistance under a state plan approved under Part A of Title IV of the Social Security Act relating to Temporary Assistance for Needy Families.
- Qualified veteran
- Qualified ex-felon
- Vocational rehabilitation referral
- Qualified summer youth
- Qualified food stamp recipient
- Supplemental security income (SSI) recipient: This target group refers to any individual who is certified by the designated local agency as receiving supplemental security income benefits under Title XVI of the Social Security Act for any month ending within the 60-day period ending on the hiring date.
- Long-term family assistance recipient
- Unemployed veterans
- Long-term unemployment recipient
Training Trust Fund and Incumbent Worker Training Programs
State workforce development agencies may administer Trust Fund or Incumbent Worker Training Programs providing innovative training support opportunities for qualified employers. The funds may be used to support employers in their efforts to provide training for prospective, new and incumbent workers. These monies may be used to help fill certain gaps in skills development training that may be otherwise unavailable.
Job Fairs and Employee Recruiting initiatives
State workforce development agencies may assist with coordinating job fairs on behalf of specific employers and may also assist with recruiting, interviewing and vetting potential job candidates.
Liquidation of Excess Assets/Negotiation of Municipal Rents or Utility Abatement
State workforce development agencies may be able to assist with liquidation of surplus equipment or supplies to generate needed cash. There may also be the possibility of renegotiating rents at municipally-owned facilities or negotiating reduced utility rates or deferred payment schedules.
For additional information on any of these programs, your state's workforce development agency should be able to serve as a resource.
CDAC Member Spotlight
Jay Bassett is the division chief for the Governor's Dislocated Worker Task Force with the Arkansas Department of Workforce Services (ADWS). He is responsible for organizing the Task Force services upon notification of a business layoff or closure and oversees the Trade Adjustment Assistance, Rapid Response and Reemployment Services programs. Bassett is also chairman of America's Job Link Alliance.
Prior to joining ADWS, he worked at Alltel Communications Inc. and Windstream Communications Inc. in the legal department and the federal and state regulatory compliance department with focus on risk management, legislative research/analysis and emergency response and preparedness plan development. He earned his law degree from the University of Arkansas at Little Rock William H. Bowen School of Law and has a bachelor's degree in history and psychology with a minor in English, also from UALR. He is also a graduate of the University of Central Arkansas' Community Development Institute. Bassett is a member of the Community Development Advisory Council (CDAC) for the Federal Reserve Bank of St. Louis.
CDAC members are experts in community and economic development and financial education. They complement the information developed through outreach by the District's Community Development staff and suggest ways that the Bank might support local efforts. A list of current members is available at https://www.stlouisfed.org/community-development/community-development-advisory-council.
Bridges is a regular review of regional community and economic development issues. Views expressed are not necessarily those of the St. Louis Fed or Federal Reserve System.
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