Posted Jan 20, 2009 11:54am EST by Aaron Task
Dealing with rising levels of unemployment is obviously going to be a big challenge for the Obama administration. But there's a new twist on the layoff leviathan that hasn't been seen in a major way in America since the 1930s: In addition to laying off workers, some corporations are asking remaining employees to take a pay cuts, and fairly large ones in some cases.
Consider these announcements in recent weeks, as compiled by The Wall Street Journal:
AMD: 1100 jobs cut and salary cuts of 5% to 20% for remaining employees.
Caterpillar: Cutting executives pay by 50%, up to 15% for non-executive employees.
Hutchinson Technology: 5% salary cuts for remaining employees.
Saks: Cutting 1100, says remaining employees will get no wage increases or 401(k) contributions for 2009.
YRC Worldwide: 10% pay cuts for drivers, 15% pay cuts for non-union employees.
Of course, most people would rather have a job at a lower salary than be unemployed - almost certainly including the 30,000 employees of Circuit City likely to lose their jobs as the electronics retail liquidates. But few Americans have much financial cushion to work with and lower salaries could mean more mortgage defaults and foreclosures, and certainly suggest even weaker consumer spending and confidence in the offing.
