Worthless

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NorthReport
Worthless

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Ken Burch Ken Burch's picture

Uh....North, are you OK?

I hope the thread title isn't an expression of your self-esteem level tonight.

What's going on?

Ken Burch Ken Burch's picture

Oh...I see. 

Thanks for the additional post. 

NorthReport

More Workers Face Pay Cuts, Not Furloughs

The furloughs that popped up during the recession are being replaced by a highly unusual tactic: actual cuts in pay.

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.

A period of such slack economic demand produced a lost decade in Japan, and while it is still seen as unlikely here, some policy-making officials at the Federal Reserve recently voiced concern about the possibility because the consequences could be so dire.

Pay cuts are appearing most frequently among state and local governments, which are under extraordinary budget pressures and have often already tried furloughs, i.e., docking pay in exchange for time off. Warning that they will have to lay off people otherwise, many governors and mayors are pressing public employee unions to accept a reduction in salary of a few percentage points, without getting days off in exchange.

At the University of Hawaii, professors have accepted a 6.7 percent cut. Albuquerque has trimmed pay for its 6,000 employees by 1.8 percent on average, and New York's governor, David A. Paterson, has sought a 4 percent wage rollback for most state employees. State troopers in Vermont agreed to a 3 percent cut. In California, teachers in the Capistrano and Pacheco school districts have accepted salary cuts.

"We've seen pay freezes before in the public sector, but pay cuts are something very new to that sector," said Gary N. Chaison, an industrial relations professor at Clark University. Outsize pension costs and balanced budget requirements are squeezing many states as tax revenue has come up short.

It is impossible to say how many employers have cut workers' pay, because the government does not keep such statistics. Economists say a modest but growing number of employers have ordered wage cuts, especially in the public sector. In a 2010 survey by the National League of Cities, 51 percent of the cities that responded said they had either cut or frozen salaries of city employees, 22 percent said they had revised union contracts to reduce some pay and benefits, and 19 percent said they had instituted furloughs.

 

http://www.nytimes.com/2010/08/04/business/economy/04paycuts.html?_r=1&hp