More employees facing pay cuts
The high unemployment rate continues to have an adverse affect even on those who still have jobs.
The furloughs that popped up during the recession are being replaced by a highly unusual tactic: actual cuts in pay.
Local and state governments, as well as some companies, are squeezing their employees to work the same amount for less money in cost-saving measures that are often described as a last-ditch effort to avoid layoffs.
A new report on Tuesday showed a slight dip in overall wages and salaries in June, caused partly by employees working fewer hours.
Though average hourly pay is still higher than when the recession began, the new wage rollbacks feed worries that the economy has weakened and could even be at risk of deflation. That is when the prices of goods and assets fall and people withhold spending as they wait for prices to drop further, a familiar idea to those following the recent housing market.
When it comes to public jobs, many of these cuts may be justified, as we’ve seen many examples of inefficiencies in the public sector. In that sense some of these adjustments are good for the overall economy in the long run.
That said, many of these cuts are painful, and this won’t help get the economy moving in the short term.
Posted in: Your Compensation
Tags: recession, unemployment, unemployment rate