Cushioning Workweek Cuts

As the downturn has deepened, companies are cutting workers' hours to avert, or supplement, layoffs. Nearly 7 million people worked part time in March because of slack business conditions, the Bureau of Labor Statistics reports, roughly double the number a year ago. Now more companies are using a little-known government program to lessen the sting of workweek cutbacks and hold on to experienced, trained employees.

Under "short-time compensation" or "work-sharing" programs offered by about a third of the states, employers that slash work hours instead of jobs can apply to have unemployment benefits replace part of employees' lost pay. Rules (and payouts) vary by state, but companies typically must maintain health and retirement benefits and get an O.K. from any unions involved. The 26- to 52-week payouts usually make up about half of workers' lost wages.

Usage is soaring. Washington State reports record participation so far this year, with 1,400 employers signed up, vs. 145 a year ago. In February, Connecticut paid out $933,734 in work-sharing claims, 10 times more than in September. And 895 employers signed up for New York State's program in the first quarter alone, up from 462 for all of 2008. "It's not a permanent solution," says Cheryl Saunders, administrative director for Dielectric Laboratories, a Cazenovia (N.Y.) maker of telecom components. "But it's a good way for us to retain employees." The company plans to put roughly 14% of its 175 employees on work share in April.

Why don't more states offer the benefit? Rich Hobbie, head of the National Association of State Workforce Agencies, says states are wary because the law behind the programs, which grew out of the 1980-82 recession, is murky on how much flexibility they have in setting benefits. Besides, with their rising deficits, states face more urgent problems. That's why one group, the Center for Law & Social Policy in Washington, D.C., has proposed a temporary national program to fill the gap. Work-share compensation "is clearly an option that should be on the table more than it is," says Neil Ridley, a senior policy analyst for the group.

Drive, He Thought

As auto sales stall, Honda Motor (HMC) has cut costs—delaying construction of a new plant, for instance, and quitting the Formula One racing circuit. But Japan's No. 2 car company continues to plow millions of dollars into robotics research, including a newly announced technology aimed at controlling robots with the power of human thought. At a Tokyo briefing on Mar. 31, Honda unveiled a system that allows a robot to follow four mental commands—a request to bend a leg, say. It works with 90% accuracy, the company says. After a training session, the human gives the orders via a helmet that measures the brain's electrical currents and blood flow as commands are made mentally. Nicho Hatsopoulos, an assistant professor of neuroscience at the University of Chicago who studies brain-machine interfaces, says it's impressive that the system requires just a few hours of human training but adds that advances in voice recognition may obviate a method that uses "a helmet with lots of gizmos." Honda says it foresees consumer applications—thinking a car trunk open, for instance. But R&D director Yasuhisa Arai concedes that "practical uses are still way in the future."

Google Ads on the Go

For years marketers have been intrigued by the notion of location-based advertising. Now online ad juggernaut Google (GOOG) is testing the idea. In March it began placing local-business ads on Urbanspoon, a GPS-enabled mobile app that identifies what neighborhood a mobile user is in, then recommends places to eat. In a depressed ad market, says Josh Martin, a senior analyst at researcher Yankee Group, "this may be a way for Google to convince advertisers that instead of paying $1,000 for 1,000 impressions, they can pay $1,000 for dozens of more valuable impressions."

A Chicken in Every Pot(hole)

Call it shovel-ready public relations. In March, Kentucky Fried Chicken, owned by Yum! (YUM), spent $3,000 to finance the repair of 350 potholes in Louisville, then sprayed each spot with the message: "Re-freshed by KFC." "We thought we could refresh the streets and try a new form of advertising," says KFC spokeswoman Laurie Schalow, adding that the chalk ads fade out in a month. KFC plans to run similar repair programs in other cities, including Chattanooga and Warren, Ohio. Will asphalt ads bring more traffic to KFC outlets? Brand consultant Laura Ries is skeptical. "What does deep-fried chicken have to do with potholes?" she asks.

The Good Business Issue
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