In recent decades, layoffs were the standard procedure for shrinking labor costs. Reducing the wages of those who remained on the job was considered demoralizing and risky: the best workers would jump to another employer. But now pay cuts, sometimes the result of downgrades in rank or shortened workweeks, are occurring more frequently than at any time since the Great Depression.
State workers in Georgia are taking home smaller paychecks. So are the tens of thousands of employees in California’s public university system. The steel company Nucor and the technology giant Hewlett-Packard have embraced the practice. So have several airlines and many small businesses.
The Bureau of Labor Statistics does not track pay cuts, but it suggests they are reflected in the steep decline of another statistic: total weekly pay for production workers, pilots among them, representing 80 percent of the work force. That index has fallen for nine consecutive months, an unprecedented string over the 44 years the bureau has calculated weekly pay, capturing the large number of people out of work, those working fewer hours and those whose wages have been cut. The old record was a two-month decline, during the 1981-1982 recession.
I found myself pondering what was said about hiding the reduced circumstances from this couple’s four children. I can well remember some 50+ years ago, when I was around 11 or so, and my father lost his job. He soon got another one, but I was just old enough to realize how serious the situation was, and to worry terribly about it. So part of me sympathizes with them. On the other hand, this couple still have a good joint income. They worry about their children being disappointed in not receiving enough gifts. I wonder whether they should, instead, reflect on what they most truly give their children, which is unconditional love, understanding, faith and an inspiring example. Once they take that on board, they and their children will be stronger than any amount of gifts can make. I do not mean this as criticism. For this couple, and others like them, I have great respect.
They’ve done this at my dad’s company, twice. I think he’s down to 85% of what he was making before. They took a 10% cut, got back 5%, then another 10% from the “permanent” salary. For hourly employees I think they did this by reducing hours, rather than hourly wages. My wife is currently advocating a 3% cut at her company to reduce the number of layoffs. In both cases it is seen as a way to avoid getting rid of people you’ll need when business picks up again. Excess folks have already been cut, and you’re looking at core competencies now. You don’t want to put yourself in a position of being unable to take on new business when sales recover. So you give folks a little more time off and when the work is there add the hours back in.
To my mind, this just accentuates the immorality of CEO’s and other executives that ran companies into bankruptcy receiving huge bonuses, despite their poor performance. This is such a breach of fiduciary trust between shareholders and management and also a breach of the social contract between labor and management that I fear for the continued existence of capitalism. People all over the nation and from across a broad spectrum of the economy are all suffering with loss of employment, under-employment, and reduction in their compensations…all the while the executives at AIG (et al) party on with taxpayer money and continue with their lavish compensation packages for performance that is abysmal. Not to be inflamitory, but rather cautionary…this is the sort of thing that leads to revolutions. Unbridled greed and a tin ear to the public outcry against the unwarrented compensation of senior executives may have dire consequences. I would think that in the interest of self preservation that these folks would start to look long and hard at the status quo and begin a serious process of re-evaluation.