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Federal government spending millions to fund 'layoff prevention programs' in several states

Thomas 'Tom' Perez, U.S. secretary of labor, speaks during an interview in Washington, D.C., U.S., on Thursday, Oct. 23, 2014. New Jersey Governor Chris Christie has 'got his head in the sand' when it comes to the plight of minimum-wage earners in his state, Perez said. Bloomberg/Bloomberg via Getty Images

The federal government has provided millions of dollars in grants to fund state-level programs aimed at encouraging companies not to fire people during lean economic times.

The idea behind these short-time compensation programs, or STCs, is to let companies shed some of their labor costs when they need to, without having to lay people off entirely.

Thomas 'Tom' Perez, U.S. secretary of labor, speaks during an interview in Washington, D.C., U.S., on Thursday, Oct. 23, 2014. New Jersey Governor Chris Christie has 'got his head in the sand' when it comes to the plight of minimum-wage earners in his state, Perez said. Bloomberg/Bloomberg via Getty Images Labor Secretary Tom Perez has distributed millions of dollars to reimburse the 'layoff prevention programs' of several states. Bloomberg/Bloomberg via Getty Images

Instead of layoffs, companies can reduce the available hours to a group of workers. Those workers can then seek reimbursement from STC programs run by states, in the form of a partial unemployment benefit.

Under a law passed in 2012, the federal government is now reimbursing states for these programs, to the tune of a few million dollars per state.

The 2012 law extended a payroll tax cut that has since expired, and also extended federal unemployment aid. The same law included language proposed by Democrats to allow the federal government to fund state-level STCs.

The Department of Labor, which is in charge of distributing the grants, calls STC's "work share" programs. So far, the department has given a $3.7 million grant to Ohio. It also gave $2.1 million to Washington state, and $2.7 million to Texas.

Under the federal law, Labor Department grants can be used both to fund state-level STC programs, and to advertise their existence. On Thursday, for example, Labor awarded a $2.8 million grant to Michigan, but said only $946,000 of that would fund Michigan's new STC program.

The remainder, nearly $1.9 million, will go toward "educating the public about the advantages of STC, promoting the program and increasing enrollment of employers into the program."

The federal law allows the government to fund existing STCs, or new ones that are just being set up by a state. Labor Secretary Tom Perez said the programs are good way to help avoid layoffs and the ripple effect they can have on local economies.

"Providing employers with tools like short-time compensation to retain their skilled workers during temporary business downturns is good for local communities, the state and the overall national economy," Perez said. "Michigan is leading by example by instituting this innovative program, and I encourage all states to take advantage of the federal resources that are available to start or expand programs of their own."

Friday morning, the federal government released a report that said the unemployment rate fell to 5.8 percent, but also said the labor force participation rate is still near historic lows.

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