The COVID-19 pandemic and economic shutdown has led to millions of workers—particularly in the low-wage service sector—losing their jobs. Unemployment insurance (UI) is the primary program providing cash assistance to workers after a job loss. An alternative to UI, the Short-Time Compensation (STC) Program, preserves employer-employee relationships by avoiding layoffs and reducing workers’ hours. Compared with UI, however, few employers in the United States participate in the STC program. STC could be a valuable tool for supporting both workers’ economic security and business continuity during downturns, but limited evidence exists on the benefits of STC to workers and employers.
Researchers at the California Policy Lab aim to address this gap. Using 20 years of administrative data from California and firm-level data, economist Till von Wachter and his team will analyze and compare labor market outcomes for workers participating in the UI and STC programs during the COVID-19 crisis and, as a point of comparison, the Great Recession. They will analyze outcomes for workers by race, ethnicity, and gender, offering insights on how well Black and Latinx workers, women, and young workers—all of whom have suffered disproportionate job losses during the pandemic—are served by each program. Their research aims to inform current policymaking around UI and STC and expand awareness and utilization among employers of the STC Program.